Earl "Butch" Graves Jr., president and CEO of Black Enterprise, says it's time African Americans had a heart-to-heart about our financial future.
It’s time to shift gears. I truly believe young people hold the best chance for getting on the road to building significant wealth and, in turn, sustaining this process to pass it on to future generations. It’s sad to say that many of my contemporaries have engaged in freewheeling spending, made a meager attempt at investing, and failed to protect their assets — placing them and their families in a financial hole that will take years, if not decades, to climb out. You, however, can avoid similar pitfalls.
First, realize the difference between wealth and income. It may sound rudimentary, but many of us confuse the definition of net worth — what you own (assets such as your home, savings and checking accounts, and stocks and mutual funds) minus what you owe (liabilities such as your mortgage, auto loans, and credit card debt) — with wages and earnings. Depending on how finances are managed, many professionals with six-figure incomes can—and do — have a negative net worth.
Second, change your behavior. Despite a financial crisis, a recession, and a weak recovery over the past few years, some still have yet to learn the harsh lessons that come with conspicuous consumption. In fact, a friend of my son tried to convince me that waiting several hours to buy a pair of $180 Air Jordan XI Concords—you know, the sneaker frenzy that resulted in violence and arrests — was actually a good investment. He told me how reselling “the kicks” would eventually produce a tidy profit of $50. I quickly shared with him the value of an investment with a much greater long-term return for his 200 bucks: 10 shares of GE stock with reinvested dividends.
Read Earl Graves Jr.'s entire piece at Black Enterprise.