I am facing a triple risk of financial failure in this pandemic:
-- I am a Black woman.
-- I am divorced and therefore a single parent.
-- I run my own small business.
And like many mothers, I now have increased demands on my "second shift" -- mothering and household management -- due to a lack of in-person schooling.
The data do not lie. Black women and other women of color have been disproportionately hit by the economic fallout of the COVID-19 pandemic. While all of America is facing high unemployment, the jobless rate for Black women is one-fourth higher than the national average of all Americans, and for Latinx women, the rate is almost 50% higher.
Black and brown women are also more likely than White or Asian American women to be heads of household, leaving the brunt of a family's financial survival or failure on their shoulders. Meanwhile, recent research by the University of California, Santa Cruz, and a report by the National Bureau of Economic Research shows that 41% of Black-owned businesses -- some 440,000 enterprises -- have been shuttered by COVID-19, compared to just 17% of white-owned businesses. And we can't discount the impact of systemic racism on employability, income mobility and health outcomes.
You get the point. Being Black and avoiding being in the red, personally or as a business-owner, is no easy feat right now.
This means the need for financial preparedness and steadfastness is more important than ever for Black and brown women, and especially those who are single mothers.
Financial planners are advising a return to budgeting that matches your current cash flow. "Right now, cash is king," says Judith A. Griffin, MIB, AAMS, CRPC, a financial adviser at Griffin Financial Services Group. "Managing the household cash flow based on your current income needs to become a priority." That's an even greater necessity for Black and LatinX households, which tend to have lower levels of liquid assets.
Griffin says even if your first impulse is to use any additional funds to pay off debt, she suggests maintaining regular debt payments but holding on to cash to build emergency reserves. If you thought a three-to-six month reserve was enough, think again. There is currently so much uncertainty in the employment and financial markets, she suggests a six- to 12-month cash reserve. This may be unrealistic for some, but the key here is to save as much cash as possible.
Start by listing and prioritizing all of your expenses. Create one category for necessities such as rent, mortgage, food and utilities; make a second list for optional items such as entertainment, subscriptions, and new clothes. Eliminate unnecessary expenses and look at the ways the pandemic may be saving you money. Maybe you're not driving as much, so your gas expenses are down; limited options for eating out may have you doing more in-home cooking. Reallocate those funds to savings.
Reassess your savings and investments -- regardless of your income. Because of the unpredictability of the economy right now, financial planners are recommending reviewing your portfolio quarterly with a focus on your investing time frame. Are you closer to retirement, or do you have time for the markets to recover if they take another dive? This is particularly important for Black women whose general savings and retirement savings often lag the levels of White women. The disproportionate burden of wage inequality can't be ignored here, considering that Black women currently earn 61 cents for every dollar earned by White men -- and that's 18 cents less than White women. Less earnings, means less to save.
More Black women and women of color are self-employed, as I am, or in jobs that do not offer traditional retirement savings vehicles such as 401(K)s including all the corporate perks, such as matching contributions.
However, those with healthy savings and investments may be enticed to take advantage of lower real estate prices and interest rates to buy a home. "Mortgage rates are at all-time low, which is a plus for qualified buyers," says Rebecca E. Powell, a Senior Vice President at WellsFargo Advisors, who points out that those with the cash to buy outright or offer a hefty down payment may be able to get deals from cash-strapped developers.
Refinancing may be a smart move, but only if you can significantly lower your monthly payment or reduce the life of the loan, she says. "Before proceeding, determine how long you will be in the home to see if you will recoup the closing costs for refinancing."
It's also important to remember that banks are overwhelmed with themselves with covid-related staffing and volume issues-don't expect the refinancing process to be quick or even close to easy.
In addition to these practicalities, one of the most important strategies for Black women and other women of color may be a shift in thinking. As Black women, we have a strong cultural attachment to being independent and doing things on our own; for example, we start our own entrepreneurial ventures at much higher rates than White women.
But we also have more expectations of and responsibilities to our extended family and to our community. And if the pandemic has taught us anything, it is that we need to rely on others. In fact, Griffin suggests that one of the most important financial survival strategies for Black women across the income spectrum is to find community.
"Community will get us through," Griffin says. That could include single parents developing a safe "pod" to share child care and online school responsibilities or chipping in on bulk purchases of food and household items to save money.
If you don't have family living nearby, or if older relatives who used to assist you are no longer available because of COVID-19 health risks, this is the time to create a new community of neighbors and friends.
For some, this could mean putting aside your pride to take advantage of programs that assist single parents and minority-owned businesses. Resources such as www. FinancialAssistanceforSingleMothers.com offer lists of programs and organizations that offer grants and other support to single mothers, as does the Single Parents Alliance of America. Sites such as WealthySingleMommy focus on investing strategies and personal finance advice. CoAbode runs a home-sharing program that connects compatible single mothers looking to share a home and its expenses -- an idea that is also gaining traction among retirees.
Black small-business owners like myself should look into the many for-profit companies that are implementing programs to assist minority-owned enterprises and break down long-standing barriers to access to capital.
Short-term strategies like these can help single mothers and women of color financially survive this pandemic recession. But let's not lose sight of the longer-term policies we need to address the racial wealth gap in the U.S.; guarantee paid family leave and sick leave; and offer high-quality, affordable child care. Those are the long-term solutions we need to not just avoid financial failure in this pandemic but to actually thrive long-term.
Asking for myself, and about 15 million other single-mother families.
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Kimberly Seals Allers is a journalist who has covered business and investing at Fortune, the New York Post and Essence. She is the author of five books, including "The Mocha Manual to Turning Your Passion Into Profit" and, most recently, "The Big Letdown."