In March 2004, the United States Senate passed a resolution officially recognizing April as Financial Literacy Month. Many of the country’s non-profit and private financial education organizations promote this occasion by hosting contests, events, and by generally increasing awareness about personal financial money management.
According to President Barack Obama’s State of the Union address in January 2014, women — who comprise approximately half of the U.S. workforce — make 77 cents for every dollar that a man makes.
For minorities and African-American women in particular, the numbers are even dimmer. According to the latest U.S. Census Bureau figures, African-Americans in general have a net worth of $2,000 for every $100K that a white person owns. This further translates into $2 for every $100 and conversely, 2 pennies on the dollar. Moreover, a report released by the Insight Center for Community Economic Development in 2010 reveals that the median net worth of single white women ages 36-49 is $42,000. This figure represents 61% of the median wealth of white men. Forty-six percent of single black women ages 18-64 reported a zero or negative net worth. God forbid in the unfortunate event that any of the three “Ds” strike: Disability, Death or Divorce typically plunge a person into poverty.
These figures highlight income disparities. What about the consumption side-of-the-fence? I am blessed with opportunities and the privilege to travel frequently. As such, I have been to all four corners of the U.S. and major cities in-between. Do you know what I see? Wealth. Lot’s of it, but mostly “white wealth.” I recognize that much wealth acquisition is inherited throughout generations due to the exploitation of our ancestors through free slave labor. Nonetheless, the ultra-rich profit off of wealth-building commodities we consume on a daily basis that we don’t even stop to think about how they came into our realm.
Take something as mundane as salt and pepper, for example. These condiments are produced by their originator, go through a production and packaging process, supply chain management wholesale distribution, and on retail store shelves before ending up on our restaurant or kitchen table. Money is exchanging hands in the process. Are African-Americans a part of this wealth-building process?
Perhaps you’re watching an infomercial and you think, “Are you kidding me? Someone is selling something as silly as this?” Yes they are, and the joke is on us as the inventor laughs all the way to the bank because they identified a need and invented a product to fulfill that void in the marketplace.
As a final example, don’t think for one second that the celebrities who society idolizes are not generating cash cows. All an entertainer has to do now-a-days is Tweet or pronounce in front of millions during a televised awards show that his/her album or movie is about to drop, and devotee consumers rush in droves to consume their product.
Even if you are not entrepreneurially-inclined, the question is why don’t we start with the basics of personal financial money management and devise a budget, calculate our cash flow, and calculate our net worth? After teaching in this arena for a number of years now, answers predominantly include being too busy, not wanting to know and not knowing how.
As for #1 – being too busy – none of us can afford to not make and take the time to become financially organized. If there’s any mystery to human behavior it’s that most of us manage to prioritize the activities that we really want to do, and find the money for the things that we really want to buy. As for #2 – not wanting to know – consumers may not even want to open their mail because of fear of the contents therein. We have to prod ourselves to find out why is it that we don’t want to really know what our financial landscape is and get to the root of it so we can make improvements. As for #3 – not knowing how – this is where financial education comes in; to teach learners the tools they need to know to be wise stewards with their money and finances.
Simply put, a budget documents how much money is coming in, how much is going out, to whom and when. Cash Flow is just that–chronicling the movement of cash in and out of your household. My guess is that most people’s eyes would pop out of their heads if they sat down and — barring expenses — calculated how much money is flowing into their households in a given year. Doing so would beg the question, “Why isn’t more of this money retained and accumulated as savings?”
Net worth is defined as assets (everything you own) minus liabilities (everything you owe). Subtract the liabilities from the assets, and this is your net worth. Sometimes people confuse salary with net worth; they think that because they earn a certain amount of money, they’re doing all right. Net worth, not salary, is the true pulse of one’s financial health. I’ve seen people with low-to-moderate incomes retain much of what they earn, thereby boosting their net worth; conversely, I’ve witnessed people who earn over six figures who have little to show for it because their consumption is equally high.
If you are a busy professional and no longer want to wander in the land of “not knowing” or “not knowing how,” then I invite you to take the time to invest in your household finances. This is the point at which you shift the paradigm from being a consumer to being a producer.
If you are a busy professional and you 1) do not trust yourself to pin yourself down to calculate your own budget, cash flow and net worth; 2) no longer want to wander in the land of “not knowing”; or 3) want to simply learn these simple yet powerful financial tools, then why not consider stealing away with Just The Basics Financial Literacy for a weekend in the Poconos for a financial serenity retreat? You’ll come back home refreshed and enlightened.
Happy Financial Literacy Month!
Me’Shae Brooks-Rolling is a Certified Educator in Personal Finances (CEFP®) as designated by FinCert.org, affiliated with The Institute for Financial Literacy®. She is also the President of Just The Basics Financial Literacy and the author of “How To Save Money & Organize Your Finances”. For JTB’s Financial Serenity Retreat in the Poconos on May 2-3, contact Me’Shae at (315) 908-BOOK (2665), Facebook.com/JustTheBasicsFinancialLiteracy, or #FinancialSerenityRetreat.