Mastercard on 5 Ways To Build Financial Security Post-Pandemic

Originally published at mastercard.com by Mercedes Garcia. Mastercard ranked No. 5 on The DiversityInc Top 50 Companies for Diversity list in 2021.

 

Since the pandemic arrived, we’ve all felt the strain — emotional, physical and financial. But some communities have felt it more acutely than others because they struggle to access digital payments and formal financial services.

Unbanked and underbanked families — those who don’t have a bank account and those who rely on alternative financial services like check-cashing centers — have a harder time paying bills, buying essentials online and accessing their COVID relief checks in an increasingly digital economy. Many of these families don’t have a credit history, which makes it difficult to get credit to cover emergency expenses.

People of color are disproportionately underserved — 47.3% of Black households and 42.9% of Latino households, according to the U.S. Federal Deposit Insurance Corporation. COVID-19 threw the reality of this imbalance into sharp relief. Pew research from March found that lower-income adults, Latinos and Asian-Americans were among the most likely to say they or someone in their household had lost a job or taken a pay cut since the pandemic first took hold.

As we build back from this pandemic, it’s important that we bring financially underserved communities with us by giving them the tools they need to be more financially successful. That includes increased access to financial education programs for children, adults and business owners alike. Master Your Card, Mastercard’s community empowerment initiative, aims to help financially these underserved communities achieve financial equity. Over the past 18 months, we’ve expanded our curriculum to provide broader financial and educational resources, bringing the benefits of modern payment technologies to the communities that need them most.

Everyone can take advantage of our free online courses to learn key concepts, such as how to create a budget and tips for avoiding some of the most common pitfalls. Here are some of our top tips, from building financial foundations to building financial capability, that we believe can be useful for just about anybody.

 

1. Build emergency savings

Emergency savings help you handle unexpected events. With money set aside for things like car repairs or job loss, you can take better care of yourself and your family. You can place your savings in a checking account, a savings account or a prepaid card. Be sure to ask about fees or minimum balances that may come with any account. There are plenty of online savings accounts available today that have zero or very low minimum balance requirements. Aim to have three to six months of expenses in your emergency savings fund, but start smaller if you need to. Even $5 or $10 a week will add up. Don’t worry if progress seems slow — keep at it!

 

2. Create a budget

Determine your total monthly income and expenses to create a budget so you know where your money is going. Small things add up, so try to use the 50/30/20 rule: Set aside 50% of your income for your basic needs, such as housing, utilities, transportation and food; 30% for wants; and 20% for savings or paying debts. This approach can reduce your stress and help you reach both short- and long-term financial goals.

 

3. Use credit responsibly

Credit cards offer a variety of rewards, including cash back, insurance, points or miles redeemable for goods or travel. But remember: Every time you make a purchase with a credit card, even through a “buy now, pay later” service, you are borrowing money. Unless you pay your credit card balance in full and within the established time, you will owe additional money in interest and fees. Know your limits and stick to them.

 

4. Don’t be afraid to talk about money

Conversations about money can be stressful, but having proactive family conversations can help. Seize opportunities in your daily life to speak openly about money, savings and inheritance and create “teachable moments” with your kids, regardless of what age they are. Even a preschooler can — and should — learn the difference between borrowing and owning, and why it’s important to return borrowed items.

 

5. Protect your identity and data whenever you spend and save.

Identity theft can cause both loss of money and emotional stress. Protect yourself by having a strong password, signing up for fraud alerts and regularly monitoring your credit report. You can access your credit report for free at annualcreditreport.com; you are entitled to one free credit report from each of the three credit reporting bureaus once a year. As online commerce has accelerated during the pandemic, so has fraud — when making an online purchase, make sure the site is secure. The beginning of the website URL should say “https” — the “s” at the end stands for “secure” and means your information is encrypted.  

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