574/16/2021
People tend to tiptoe around the subjects of politics, religion, race, estate planning, physical & mental health and finances. But why are so many silent on these very crucial topics. It is not as if not talking about them will diminish their importance or will make the need for the conversations to disappear from our life. In fact, not talking about finances just creates a larger problem. Stop skating around the issue of finances and start the money talk conversations that everyone needs to have during Financial Literacy Month.
“Stop being afraid to talk about it (finances). Like if we are willing to talk about everything else under the sun then we should be able to talk about our finances and what we want to do with them,” said Erika Jones, Assistant Vice President of Community Development Officer for Frost Bank. “It’s such a negative push because of all the “bad things” but there are so many good things that come with it as well.”
Let’s begin sifting through the bad and good by pulling up a seat at the table to talk about money.
Starting the Conversation
Financial literacy is a major problem around the globe that has been compounded by the pandemic. Many were already living above their means when the health crisis hit and a year later people are completely tapped out with empty bank accounts, no money saved, and no source for additional resources. If there was ever a time in history when a financial education was desperately needed its now. Data indicates that worldwide there are over three billion people who are financial literate. This means people don’t have the basic understanding or the importance of budgeting, saving, and investing. A financial education on all levels is needed as finances is a subject that one should never closed the book on. With April being Financial Literacy Month, there is no time like the present to get smart about your money.
“The fundamentals come down to how do you use what you have and how you mange the money that you are given,” said Jones. “I think part of the problem is people feel like they don’t have enough (money) and they end up making choices that puts them in a bigger hole because they think that they are trying to have the perception of having money or have the perception of being able to obtain certain things, materialistic things that they really can’t afford. So it is really about figuring out what you can afford, how can you manage the money you have been given and how can you save a little bit on the side so that you wont end up in these holes or situations.”
Start your money conversation by asking yourself key questions to create a number of lists. First, jot down all the ways you spend your money. List all your bills, what you spend on food and entertainment, medical co-pays and don’t forget church tithes and charitable donations. Next note all of your income coming into your household. If your expenses outweigh your income, you have a major problem.
Making a list of your income and expenses allows you to see where you need to make cuts to avoid financial pitfalls. If you can’t figure this out on your own, don’t be afraid to ask for help with managing your money. Once this skill is understood move on to step two to learn about saving. The final step will be to learn about investing to allow your money to work for you.
Spender vs. Saver – Which one are you?
No one has to be taught how to spend money. We all have that down pat. Shift the conversation to how to save, and one could hear a pin drop. In most Black and Hispanic communities savings is like a bad word. In these communities, individuals like to do as my mom would say, “robbing Peter to pay Paul.” They need more discipline to control their frivolous spending. A conversation needs to be had on how to save money and the benefits of saving it.
Spenders need to learn how to save money by not giving in to all of their financial draining desires. While savers need to learn how to spend a little to enjoy life or how to make the right investments for their money to go further.
“Saving a little can go a long way,” said Jones. “Saving is all about people learning how to manage what they have and then they will get more and will know what to do with more.”
Saving is about making sacrifices. Stop buying Starbucks daily. Eat in sometimes instead of always eating out. Go in the store and buy only what you need not what you desire. It is ok to repeat an outfit or revamp your closet versus buying a new outfit every time you are invited to an event. Making small sacrifices can really add up. Try tracking every time you make a smart money decision to not purchase something on a whim and see how much you have saved yourself.
After mastering the art of saving, what’s next? Building a generation of wealth.
Building Generational Wealth
“Black people are late to the game in being able to build wealth for our families,” expressed Jones.“It is not taught. It is not something that is talked about. It is almost taboo to say I have a policy.”
However, Jones is proud to say she has not one but three life insurance policies. She has a family of five and wants to make sure that after she is gone from this earth that her family is not suffering financially while they are grieving. She has properly prepared her family estate including her parents. This is not rushing someone off to an early grave but setting up your family’s financially legacy that they can build upon.
No matter where you might be financially the key is to develop and nurture your relationship with money. No one person knows everything. Your relationship with money will not always stay the same. As life happens, your finances will adjust. One can start off young blowing money. Then when one gets married and starts growing their family, the money relationship will change. Successfully managing your money requires you to always be flexible and smart. So start those conversations, seek help from those who know and utilize all available resources.
Helpful Resources
Feed the Pig provides tools, tips and resources to help people save money. Create a profile to track your savings over time, watch videos, take quizzes to test your personal finance knowledge, and identify ways you can start saving and make changes that will help you reduce debt and grow your savings. This site is part of a national campaign sponsored by the American Institute of Certified Public Accountants and The Advertising Council.
MyMoney.gov is the U.S. government’s website dedicated to teaching the basics about financial education. Whether you are buying a home, balancing your checkbook, or investing in your education, these resources will help you maximize your financial decisions. Throughout the site, you will find important information from 20 federal agencies and bureaus designed to help you make smart financial choices.
360 Degrees of Financial Literacy is a free program of the nation’s certified public accountants to help Americans understand their personal finances through every stage of life. The website contains articles addressing such topics as "Freshman Finance 101: Money Management Skills for College Students" and "College students and credit cards: What you don't know can hurt you."