I struggled with what to write today, so I called my mom to talk about it. I call my mom a lot for advice, and in typical form, she delivered. We talked about the goal for this blog as a chronological blueprint for generating wealth that Black professionals could follow. We also talked about the best way to get back to the blueprint. Her advice for me will be the theme of this post: Just take the first step.

I love the Martin Luther King, Jr., quote this advice invokes: “Take the first step in faith. You don’t have to see the whole staircase, just take the first step.” In many ways, this is what I did in November 2016 when my spouse and I opened our first brokerage account. We had no real idea what we were doing. In hindsight, there were three real steps we took that might be helpful as you take your first step to generating wealth:

Eliminate ALL your consumer debt

America’s credit card balance totaled $357 billion as of September 30, 2021. While this number is significantly lower than pre-pandemic days, it is still quite high. The average American carries a balance of $5,525. Black Americans are faring better than average, carrying only $3,940 on average. This is still too high. Here’s why:

As of this writing, the average credit card interest rate is about 16.13%. This interest rate represents the additional balance a cardholder will accrue on any unpaid balances at the end of a billing cycle. Credit card companies typically express this interest rate as an average percentage rate, or APR. Here’s the rub, though. APR gets applied to a cardholder’s monthly balance although it represents an annual rate. Which means, the longer you carry a credit card balance, the bigger the hurdle you face in generating wealth.

Let’s illustrate through a quick example. Kevin carries the average balance for Black Americans ($3,940). He also has the average interest rate (APR) of 16.13%. Using some quick math…

• Divide the APR (16.13%) by the number of days in the year (365) = 0.000442 (the daily periodic rate)

• Multiply the daily periodic rate (0.000442) by Kevin’s average balance ($3,940) = 1.741156

• Multiply this number (1.741156) by the number of days in Kevin’s billing cycle (30) = 52.23468

As you can see, Kevin pays (rounded to the nearest cent) $52.23 each month – on top of his average balance – to his credit card company. And not to himself in the form of wealth.

Even worse is that this example is grossly oversimplified. I haven’t touched on the different types of APR a credit card holder may face on any number or type of credit card. The moral of the story here is – carrying a balance on your credit card (or any consumer credit instrument) carries you away from generating wealth. Eliminate it!

We were fortunate to not have any consumer debt when we started our wealth creation journey. If we had had this kind of debt, we would’ve worked to eliminate all of it first.

Build Emergency Savings

I know this advice is “long in the tooth,” but that’s because it works. Most personal finance pundits recommend keeping between three to six months’ worth of expenses in an emergency fund (usually a savings account).

Less than half of Americans have that. In fact, 1 in 4 of those Americans report having no emergency fund at all according to Bankrate. Of course, COVID-19 made financial health precarious for many Americans, but disproportionately affected Black Americans.

The Federal Reserve Board’s most recent Survey of Consumer Finances revealed that only 42% of Black households have a savings account, and “many with an account said they were not saving enough to meet emergency expenditures.”

An entire blog series could be devoted to the pitfalls of having no emergency savings, so suffice it to say that this would be my second priority after eliminating all consumer debt.

Open a Brokerage Account for Investing

As I mentioned in an earlier post, Black investing is a full 19% lower than White investing despite the stock market remaining one of the best tools we have in our wealth creation toolkit. After eliminating all consumer debt and building an emergency savings of 3-6 months’ worth of expenses, I urge all of you to take this important and truly life-changing step.

What first step would you take to generating wealth?

Let me start with an apology. I want to apologize to my readers for this blog’s false start in 2021 on the journey to building wealth. While there is no good excuse, here’s what happened:

• I quit my job after being told the company would not honor the title and compensation increase for an internal job I landed that was two levels higher than my then current position.

• I accepted a new job that increased my seniority, my base salary by 50%, and my overall compensation package by 63%. In this new job I am also one of only two Black male senior leaders globally out of an employee base of over 1,000.

• A second close family member passed away, within twelve months of my grandfather.

• My spouse and I moved half-way across the country.

• We got a dog.

According to Thrive Global, I experienced four of their “10 Most Stressful Life Events” all before the Fourth of July! The rest of 2021 then became more about surviving transition. Specifically, I struggled to navigate what Adam Grant calls “languishing,” a feeling of emptiness and stagnation – a general lack of joy – that zapped my motivation.

There were many challenges in 2021. You might ask – what did I learn from them? Were there any bright spots?

I learned one big lesson and have one even bigger bright spot from the year.

Building wealth requires knowing your worth, and being brave enough to embrace it

It is hard to quit a job, even one you might hate. It is all the harder, then, to leave a job you love. And that’s what I did. I quit to pursue the career and income growth for which I was qualified and earned.

I wish we talked more about the emotional challenges of quitting a job. For better or worse, jobs can be closely tied to our identity and our sense of self-efficacy. In fact, Pew Research Centers estimates that 51% of Americans “get a sense of identity from their job.” It is no surprise, then, that leaving a job – even for a better one – can generate loads of anxiety and self-doubt.

I’m not alone. Almost three percent of the American workforce quit their jobs in October 2021 alone, and 41% of workers considered leaving their jobs in 2021, with no signs of slowing down. The Great Resignation continues and could be a powerful moment to reflect on your worth and ensuring you’re taking the steps to embrace it.

Compounding is powerful for building wealth

There is no way around it – I took my eye off my financial ball in 2021. Our budget went out the window to accommodate moving, unexpected family expenses, and frankly a period of low financial discipline. However, our wealth grew, a lot.

The chart below is from our Personal Capital account. You’ll see that despite contributing less than half of our pre-tax and after-tax forecasts for the year, our wealth grew almost $350,000 to end the year just above $1.3 million.

I attribute most of this growth to massive gains the stock market delivered in 2021. The S&P500 gained 26.9% this year. Our wealth took care of itself in 2021, even delivering five figures in dividends. This happened thanks to our well-diversified, passive investment portfolio.

Where do we go from here?

With your support, I’d like to start anew. Let’s pick this journey back up where we left off.

What can you do to start your wealth journey anew in 2022?