March 2, 2009

Study Shows Disconnect Between African Americans' Attitudes and Actions When It Comes to Personal Financial Planning

We urge all villagers to make a declaration of financial empowerment in 2009. As such, we were glad to hear from that African Americans are more optimistic about their financial future over the next year than the general population, but the majority of those responding acknowledge they don't have a financial game plan and many don't know where to start.

A new survey of 1,200 participants commissioned by The Smiley Group and Nationwide Insurance shows 58 percent of African Americans expect their household situation to be better a year from now, compared to only 30 percent of the general population sharing similar optimism.

While African Americans say they think their financial situation will improve in the next year, most of those surveyed indicated they are not taking deliberate actions to better their financial circumstances:
  • Less than half say they are proactive about their financial future
  • 3 in 4 say they do not have a written financial plan
  • 1 in 3 say they don't know where to start when it comes to personal financial planning

African Americans are more confident than their general population peers in their ability to make savings and investment decisions (52 percent vs. 43 percent), but are also more likely to indicate they are struggling with credit card debt (38 percent vs. 32 percent).

On saving for college, nearly half of all survey participants with children under 21 said they are very or extremely worried about being able to afford a college education for their children, while only about one in 20 of all survey participants say they actually have a college savings plan. Only 3 percent say saving for education is the most important goal.

African Americans aren't alone in their tendency to avoid the topic of finances. Like the general population, we rank sex and not having enough money as the top two topics they are least comfortable discussing with family members, far outranking religion or politics.

African American respondents admitted more frequently to taking some type of action to avoid conversations about finances (45 percent vs. 39 percent of the general population). Generally, of those who are willing to make this admission, actions taken to avoid the conversation included screening calls and cutting off a relationship.
Read the full article here.

I know that I need to do better. How about you? Am I the only villager who sometimes tries to avoid creditors? Is it time for us get serious about the Declaration of Financial Empowerment?


Renee said...

I think that this post does not take into account that blacks routinely make less. I don't believe that we are being overly indulgent. You cannot make breaks from straw. How far can a dollar even stretch? People are always saying that we need to conserve but everyone still has to eat and the cost of living keeps going up. I don't believe that most seek to live outside of their means.

msladydeborah said...

I decided last year to take matters into my own hands regarding my finances.

My first priority is to educate myself about money.
I recently joined WeSeed, which is a site that provides users with virtual money to learn how the stock market works. It is free and easy to navigate. What sold me on signing up was the opportunity to have an active learning experience.

The second thing that I have been working on is monitoring how my money is spent. I have been payin close attention to what I purchase and why it is necessary. I have also had to alter how I spend money since my new job came with a pay cut. I found alternatives to supply myself with things that I enjoy. More trips to the library than the bookstore.
Walking to work and packing lunch daily has been a tremendous economic help.

Saving money is important. I have been working towards setting new savings goals since my earned income is less.

I use to not be real interested in finance related shows and publications. But now I make it a weekly habit to read or listen to at least one expert on the subject.

I think that it is important for AA's as individuals and as a collective group to seriously consider money matters. We have lived in a capitalist nation too long without having our own economic resources. While many of us want to blame the system. We also need to consider how much economic power we actually have. Billions of our dollars have been poured into the consumer end. We need to start finding ways to be on the production end. said...

Hi there,

This is a good discussion.

I do believe that MANY blacks are indulgent... many are driving cars to impress people that they can't in places that they can't afford just to appear successful...

Cable is $100 a month in some cities and how many black folks think that cable is a necessity? I haven't owned a television in ten years and black folks think THAT is just sooo strange... as if a television is an essential of life...these are people who don't know how I can read 60-80 books a year but television is vital to their daily existence. {shaking my head}

I think that we have to really think about the importance of DELAYED gratification... credit card spending is all about "I want it now, now, now!"

Black on Campus said...

I think it is absolutely time for African Americans to get real about finances. I believe that this begins with taking education more seriously. Although there is an overall gap between Black annual wages, and the income of average income of our white counterparts, that gap closes for Black people with advanced degrees.

African Americans believe deeply in education (contrary to the popular stereotype), but research indicates that we are not so effective at teaching our children effective strategies for learning. A disturbing proportion of Black children (more than half in many urban areas) enter kindergarten already behind their white and asian counterparts. Many of our children who start out behind only fall farther behind as the years go on. By the time they reach high school, there is little change of catching up. College is out of the question, and graduate school isn't even a thought.

Financial solvency begins with a good foundation, and that foundation is, in my opinion, a good education.

Villager said...

Renee - I wish you were right ... but my experience is that people have lived well outside of their means over the past decade. Credit card debt alone runs rampant in our community. Anyhow, it is a time of reckoning for all of us. We need to live within our means now...

Lady D - Remarkable insights! Out of curiousity ... are you tracking your expenses and such via an automated product like Quicken? I co-sign your support of the local library. I use it (and Netflix) instead of Blockbuster. I hope that others are following your advice and getting more personal about financial literacty...

Villager said...

BWBTT - Hmmmm.... you had me until you suggested that I get rid of my cable (smile). I admit that this is my remaining luxury...

Ajuan - There is no substitute for education. My grandfater was a big advocate of graduate education. Why do you think that getting a Masters (or JD) from graduate school is important?

RiPPa said...

I'd like to know who are the Negroes they spoke to for this "study". Given the fact that systematically, Black people are at a disadvantage economically, there is no way one can be optimistic.

Anyone looked at the employment rate for Blacks lately?

In a year from now, it's going to be a lot worse.

AAW said...


I see your point that blacks routinely make less but you have to admit that blacks of today make significantly more than the previous generations.

The difference between today's generation and a couple or a few generations back is the difference we use the money - THERE IS NO STRETCHING GOING ON WITH OUR CURRENT BLACKS. Let's be honest! Before this recession really took a turn for the worse, many of us spent money as if it was going out of style rather than live the simple life.

Villager said...

RiPPa - I wasn't in the study, however, I must admit that I resemble many of the findings! My achilles heel in my current life is finances. I've allowed myself to get overextended and I've ignored many financial wellness steps that need to be taken. I'm hopeful to do better in 2009. The attitudes described in this study hit home for me. Then again ... maybe it's just me!

Villager said...

AAW - Amen!