Dr. Tonya D. Armstrong



Leveraging Hope to Launch Resilient Leaders

I was preparing for work earlier this week when my 13-year-old daughter approached me with a “random” question that stopped me in my tracks: “Mommy, how old do I have to be to start a 401(k)?”  You might appropriately surmise that my daughter does not yet work in a company that offers this retirement vehicle, so technically, she cannot yet begin her retirement savings in this fashion.  Nevertheless, I was amazed by her foresight at such an early age and highly motivated to teach her about Roth IRAs and stock options.  Even she understood the power of compounding interest! As you can imagine, we will be thinking even more creatively about ways for her to generate income using her talents and acumen, and ways to increase her savings and overall financial literacy so that she can begin building wealth from an early age.

According to Black Enterprise magazine, building wealth is one of the most important tasks we can accomplish for the uplift of our families and communities.  First, though, many of us must get out of debt before we can truly begin building wealth.  Unfortunately, we may have debt spread across several credit cards, financial obligations, and loved ones.  Some advise that after you establish an emergency fund (which can vary from $1,000 to six to eight months’ worth of expenses), you can begin by committing to discontinue your use of credit cards.  Some even cut up their credit cards or put them in the freezer. Next, begin paying off one card at a time.  Whether you begin with the credit card with the smallest balance or the highest interest rate, most advise that the best strategy is to roll over payments from one card to the next smallest/highest until they eventually are all paid off.  If paying off debt has been difficult or next to impossible, it may be important for you to create another income stream, usually in the form of a new job with regular and predictable income.  The earnings from this job are best earmarked specifically for debt repayment, or you’ll be tempted to “treat” yourself to one thing after another, until your debt is merely remaining stagnant or even worse, growing with your additional indulgences.  A gentle yet firm accountability partner can help keep you on track with your debt repayment goals.  Yes, it is certainly true that “we work hard for the money” (in memory of Donna Summer) and we deserve to reward ourselves every now and then.  Yet when our goal is total financial freedom, we cannot allow our rewards to shoot our dreams in the foot!  During this part of your journey, it’s better to identify rewards that are low to no cost, or to enjoy rewards that result from sacrificing another item in your budget.  Once you are liberated from debt, your rewards will be more affordable, more meaningful, and guilt-free!

Another important aspect of obtaining a solid financial footing is in monitoring your spending.  Overspending is more of a threat to some than to others.  If you equate your worth as a human being with the value assigned to material goods, you are at risk of placing your hard-earned money in a vicious exercise of false worth that is never truly captured.

Sometimes it can be disheartening to discover just how little discretionary income you truly have, that is, the money that is left over after you have accounted for all of your obligations.  Not only do you have to consider all of your bills, but even the “small” expenses add up.  Imagine how it feels if you are paid on a monthly schedule but have spent most of your earnings before a quarter of the month is over.  If you find yourself in this situation frequently, the most eye-opening practice toward resolving this dilemma is to record every transaction, whether you use a written log or an online resource such as mint.com.  You may be surprised to learn that your perception of your spending and your actual spending behavior may vary greatly.  Some have even recommended the use of the envelope system, in which you divide your cash into envelopes established for your major spending categories (e.g., utilities, fuel, dining out).   Once the cash is gone, it’s gone, signaling that it’s time to stop spending until more income is available.  Although turning to credit cards or payday loans is tempting, the interest rates on these options are often so high that we can be swept away by the storms of mounting debt in a matter of weeks and months.  Intellectually, we understand the ills of money mismanagement, yet often find ourselves in financial bondage.

If this describes you, your challenge is not merely increasing your income.  Increasing your income would likely be paired with increasing your expenses.  You may need to explore your relationship with money.  Ask yourself, “What does money represent to me?”  Power, survival, security, a necessary evil, freedom, a means of showing love to others, and status are some of the most common associations we make with money.  However, if your view of money is distorting your use of money, you may want to seek a therapist with expertise in money issues, such as someone certified in behavioral finance or financial social work.  She can help you better understand your relationship with money and redirect your thoughts and behaviors to better align with your financial goals.

Once you’ve become stable in your budgeting and saving, you’ll want to give thought to your priorities for saving and investing.  Because life happens, you will want to have a “rainy day” or emergency fund that is set aside strictly for emergencies, such as needing a costly car repair or having to pay out of pocket for an expensive prescription.  Next, consider your retirement savings.  Find a retirement calculator to determine how much money you will need in retirement.  Though daunting, that figure will hopefully motivate you toward more regular savings!  If you have an employer that offers retirement benefits, take advantage of those benefits, especially if your employer will match contributions—that’s free money!  As your retirement calculator will readily show you, however, depending on your job’s retirement plan and Social Security benefits will not be sufficient!  You will likely need to establish a retirement savings account such as an Individual Retirement Account (IRA) through your financial adviser.  Taking this step may seem intimidating if you don’t have exposure to or experience with financial planning.  However, find a representative at your local bank or credit union, or locate a sisters’ investment club to support you through this .

If you have children or want to support a child in a significant way, set aside a regular amount for their educational fund, whether for private education, college and graduate school education, or general educational opportunities.  Protect their future from as few student loans as possible.  Even more importantly, equip them with the tools to begin building wealth themselves!


À Votre Santé (“To Your Health”),


Dr. T

Tonya Armstrong