It’s okay, brothas. I know what you’re thinking. You just got your copy of your April 2009 issue of Black Enterprise, featuring the latest installment of the magazine’s Women & Money series, and you’re thinking: “Where is the love? Who’s getting hit the hardest by the current economic crisis? Who has the highest unemployment? Who is under the most pressure to provide for the women and children of our community, and who is more vilified when he fails to do so? Black men! That’s right: Us brothas! Where’s the series on Men and Money?”
Hey, I’m guilty of it too. Three weeks ago, I devoted my weekly Your Money segment on The Ride with Doug and Dede syndicated radio program to the “Five Mistakes Women Make with Their Money.†Okay, to be fair, I devoted the following week’s segment to money mistakes made by men, several of which I outline below. But it’s partly our fault–we don’t get a lot of financial advice because we are often too prideful to ask for it. So here is my expanded summary of the biggest money mistakes made by brothas, along with what we need to do to correct it–namely, admit we don’t know and take action to learn:
1. Ignoring good financial advice. Brothas, let’s be honest. Women get a lot of financial education directed toward them because they tend to be the most receptive to it. In fact, they demand it. While we wouldn’t be caught dead publicly admitting that we really don’t know the
difference between a growth investment and a value play, women don’t mind admitting that they have no idea–which is the first step to being open to learning. This is one of the reasons why the portfolios of female investors often out perform those of male investors. Investment pro Larry E. Swedroe, in his book The Only Guide to A Winning Investment Strategy You’ll Ever Need, put it this way: “It appears that a common characteristic of human behavior is that, on average, men have confidence in skills they don’t have, while women simply know better.â€While we’re sitting there pretending no one can teach us anything about money, the sisters are flooding financial literacy seminars, reading books, devouring magazine articles and frequenting web sites on investing specifically tailored to their needs. (Meanwhile, too many of us wouldn’t be caught dead in a seminar unless we were teaching it–even if we can’t even balance our own checkbooks.) No wonder magazines like Black Enterprise love to do packages such as “A Woman’s Guide to Managing Money.†As the Chinese philosopher Confucius said, “Real knowledge is to know the extent of one’s ignorance.†Brothas, if we want real financial knowledge, we have to swallow our pride and admit that we don’t know money, and then seek that knowledge as aggressively as the ladies do.
2. Trying to “get rich quick†or “hit it big†with the latest fad, wealth-building “secret†or “hot†stock. Let’s face it: When it comes to investing, we love the long ball. We
want to swing for the fences–forgetting that home run kings also tend to be strike out kings. Women, on the other hand, are much more likely focus on getting on base, relying on singles, doubles and the occasional triple to consistently bring in runs–that is, returns. I believe that this is another reason why the portfolios of all-female investment clubs have historically earned better returns than those of all-male clubs. I can’t think of one time a woman ever called or approached me with a “hot†stock tip or can’t-miss business idea–but I get such breathless pitches from brothas on the regular. I don’t know about you, but that tells me something.3. Not exchanging credit reports before “putting a ring on it.†I’m not picking on you; I’ve failed to do this myself (and paid the price–don’t ask), and I give the same advice to the sisters. (Yes, that’s where your woman got that crazy idea from.) As soon as you decide that she might be “the one,†you need to pull your credit reports (from all three major credit reporting agencies) and share them with her, and she needs to pull hers to share with you. Don’t try to be shy now. Most of you have shared far more intimate things with your woman by this point; now’s not the time to play coy. If she refuses to show hers (or you won’t show yours), you probably don’t have the trust and openness necessary to sustain a long-term relationship, much less a marriage. (‘Til debt do you part.)
If you both end up having good credit, great–set the date! If one of you has terrible credit, and the other doesn’t run away screaming, then at least you have enough going for you to come to some agreement for how you will handle your finances going forward, with all of the cards on the table. (Nothing like a previously unmentioned bankruptcy filing when it comes to ending a honeymoon period.) In any case, at least you know where you stand before you say “I do,†and her credit impacts your credit and vice versa. My favorite personal account of how a marriage can benefit from drawing a line in the sand about financial matters before setting a wedding date is a book I often recommend by Marilyn “The Money Lady†Logan, I Can’t Afford to Marry You: A Guide to Understanding the True Cost of Love.
4. Co-signing on loans, cell phone accounts, credit cards, for anyone you are not legally married to. I don’t care how fine she is, how much you want to provide for her and her/your kids, how much more money you make than she does. Don’t do it. Once you co-sign, you’re just as much on the hook for paying off the financial obligation as she is,
and your credit is just as much on the line. Better to loan her the money she needs or just buy her what she wants. Even if you never see that money again, at least your financial reputation and credit report will remain intact after she dumps you for that NBA prospect. (Oops. Did I say that last part out loud? Sorry.)5. Equating money with your manhood. Having more money does not make you more of a man; the lack of money should not emasculate you. Understanding and accepting this fact will go a long way toward avoiding stupid mistakes common for us guys, such as spending money we don’t have, investing in things we don’t understand and trying to impress others with possessions and “bling†of depreciating value, instead of investing in appreciating assets and adopting a strategy of disciplined savings and investing.
Hey, if we act right and take our own financial literacy seriously, maybe we can get Black Enterprise to do a Men & Money series. (Help me out here, brothas. There’s a reason we have a Women of Power Summit every year. That’s all I can say.) In the meantime, you should definitely read the Women & Money series. Much of it’s great advice regardless of gender. What’s good for the gander is good for the goose.
I know this post is a far cry from a guide to money for black men. But what can I say, brothas? We’ve got to start somewhere.
This blog is dedicated to my thoughts about money, entrepreneurship, leadership, mentorship and other things I need to get #OffMyChest. Follow me on Twitter at @AlfredEdmondJr.