The Financial Facts Of Life - Brief Article

Ebony, August, 1999 by Laura B. Randolph

HELLO, Sisters. Sit down. Get comfortable. Kick your shoes off. There s something we need to talk about. Something important. Something that could very well affect the way we live for the rest of our lives. What we need to talk about is money; specifically, how we see it, spend it, save it.

You know that slogan the hip-hop generation is always spouting, the one the twentysomethings have turned into the catch-phrase of the '90s--"It's all about the Benjamins?" Well, it turns out they're on to something.

Now, don't get all indignant. I'm not saying they're right; I'm just saying they're not totally wrong, either. While happiness will never be all about money--all the Benjamins in the world can't buy you health or emotional well-being or peace of mind we need to accept the fact that, in The Real World, it's a crucial part of the mix.

As author/entrepreneur Georgette Mosbacher so rightly points out in her book, It Takes Money, Honey: "Unless you have money, you cannot put a roof over your head, feed and clothe yourself, get medical care when you're sick, or provide any of those basics for your children or any other loved one who depends on you. Just try being happy under those circumstances."

You can't, of course. Those are just the financial facts of life. Which is why when, in an effort to attract African-American investors, two of the hottest financial firms in the country--Ariel Capital Management, Inc. and Charles Schwab & Co.--teamed up to survey middle-class Black folks about their attitudes toward investing, I was delighted. Then the results came out.

Before we get to the bad stuff, let me tell you the good news: The poll showed that, not only were Black folks more likely than Whites to have read books about investing, we chose it as our top goal for 1999. Unfortunately, that's all we did. When it comes to putting our money where our mouth is, it seems, we talk the talk, but we don't walk the walk. (Only about half 57 percent--of middle-class Blacks own any stocks at all, compared with 81 percent of Whites, the poll showed.)

What that means, says Ariel Mutual Funds President John Rogers of Chicago, is that Black folks "are still missing out on the greatest wealth-building opportunity in American history."

And no one is missing out more than Black women. We are the least likely to own IRAs, mutual funds, brokerage accounts, money markets, or any other investment you can think of. Of course, you know we Sisters gave a whole bunch of reasonable sounding explanations for our failure to sock away money for our future. Heading the list was lack of knowledge (66 percent of Black women invoked this defense) and lack of money (almost half of us said that after we pay the rent, buy the groceries and take care of the kids and the car note, there is simply nothing left).

While both explanations sound good, more often than not, they're bogus. What we don't know, we can find out. There is a wealth of information out there--books, free seminars, adult education classes--that not only spell out the basics of investing clearly and simply, many even lay out how we can start with as little as $50 a month. (Throughout the year, for example, Charles Schwab & Co. is hosting a series of free educational workshops specifically for the African-American community. For dates and times in your city, call 800-997-4151).

As for the "can't afford it" defense, experts say you don't need a lot of money to accumulate real wealth through investments. If you're serious about securing your future, all it really takes is a few dollars a week. "Think about how much money you could save every month just by cutting back on small things--a hair appointment here and there, a manicure, that latte and muffin you buy every morning," says Ariel Mutual Funds VP Mellody Hobson. "Cut out just one of them and I bet you'll have $20 this very week that you can save."

It's simple in concept and, believe it or not, not that hard to do. To make it work, you just need to start somewhere. Start by saving something--anything--every week. Five bucks is good. Ten is better. And $20 will really work. A 30-year-old woman who puts just $50 a month in stocks in a tax-free retirement plan that returns just 11 percent a year (the average growth rate for stocks over the last 50 years) will have more than $900,000 by the time she retires at age 65. And if she ups the investment to 8221 a month, she'll retire a millionaire.

I don't know about you, but I'm thinking a $200,000 nest egg is well worth giving up a few lattes. It's a pay-now or pay-later thing. A latte in my stomach now or a roof over my head later.

Whether you decide to fund your nest egg with latte or manicure or hairdresser money, the point is really this: Financial security is within our power. All we have to do to attain it is commit ourselves to a savings and investment plan that makes our money work as hard for us as we do for it. We can't afford to leave it up to luck or fate. It's like my mother always says: "If you want your money to take care of you, you have to take care of it."