Prudential: The New Faces of Wealth > The 3 Things That ‘Really’ Make Goals a Reality

The 3 Things That ‘Really’ Make Goals a Reality

The scientifically proven formula for success

Like many experts in the field of career development, Psychology professor Gail Matthews from Dominican University in California, heard about an often cited study from Yale Business School. The study found that over a 20-year period, people who wrote down their goals earned 10 times more money than those who did not. A survey from Harvard Business School had similar findings.

[Related: BE Modern Man: Top 5 Apps to Get Your Money Up]

While these two studies were often cited in motivational and academic circles, it eventually surfaced that there was no evidence that they actually took place. Yale and Harvard couldn’t even find that data.

Not to be deterred in her efforts to see if there was a connection between writing down goals and achieving them, Matthews conducted her own research.

“The widespread mention of this non-existent study in business circles as well as the need for research into the techniques used by business coaches provided impetus for my current research, which was focused on how goal achievement is influenced by writing goals, committing to goal-directed actions and being accountable for those actions,” said Matthews.

To conduct her research, Matthews recruited a variety of entrepreneurs, attorneys, educators, artists, managers, and other professionals from different parts of the world and broke them into five groups:

  • Group 1 was asked to think about their goals
  • Group 2 not only had to think about their goals, but they also typed them into a survey
  • Group 3 did all of the above and also wrote an action plan for each goal
  • Group 4 did all of the above and had to share their commitments with a friend
  • Group 5 did the same things but also had to send a friend a weekly progress report

The study looked at outcomes over a 1 month period.  When it was complete, Group 1 accomplished 43% of their stated goals.  Group 4 accomplished 64%, Group 5, the most successful accomplished 76%.

“This study provides empirical evidence for the effectiveness of 3 coaching tools:  Accountability, commitment, and writing down one’s goals,” said Matthews.

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Changing the Habits That Got You Into Debt

3 tips that will help you make better choices

About half of the people surveyed in a recent study by Prudential called the African American Financial Experience cite getting out of debt as a top financial priority. This is not surprising when you consider the finding by Demos that more than 40% of black households are borrowing to make ends meet, and the fact that blacks carry higher levels of student loan debt than other groups.

[Related: Love and Money: Is Your Boo a Burden on Your Bottom Line?]

Socioeconomic challenges like higher unemployment levels, and discrimination in the job market, definitely play a role in our debt burdens. Many blacks have simply had to take on debt to level their own playing field when it comes to things like getting an education.

Still, our financial circumstances have as much to do with what we believe about ourselves, and the consequent choices we make. Changing financial patterns must be addressed in the same way as changing other patterns that don’t serve us.

“We don’t understand change,” says Dr. Sara Johnson, senior vice president of research and product development at Pro-Change Behavior Systems, Inc.

“Change is a process. The key to successfully changing behavior is knowing where you are in the change process and applying the right technique at the right time. We often get anxious and jump to action long before the environment is in place that will allow us to sustain the change,” she adds.

“Before you get there, you need to start to add up the benefits. What would happen if I put more money toward debt than buying those new shoes? When you’re ready, set a date, and come up with a specific plan.”

Jacquette Timmons, a financial behavior expert and CEO of Sterling Investment Management Inc., says the following 3 tips will help you get your debt under control.

1.  Don’t say, “No.” Instead say, “No, for right now.” If you’re in debt because you’re not good with delaying gratification, this will help.

2. Remember to save whilst you’re paying down your debt. It helps to see something growing.

3. Know if your debt is because of a spending problem or earnings problem. If you’re not solving the right problem, it will prolong your debt elimination efforts and leave you feeling defeated.

Timmons, Johnson, and other experts say that when it comes to changing patterns, it is also imperative that you enlist the help and support of someone you trust, and ask them to help you stick to your debt elimination plan.

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Creating A Financial Plan You Can Stick To

Why so many of us have trouble with the ‘B’ word

You can’t be a financial journalist, expert, planner, etc., without noticing the distinct change of expression that comes over a person’s face when you say the ‘B’ word – Budget.

The very word ‘budget’ creates fear, thoughts of deprivation, and sacrifice, feelings that human beings are programmed to avoid. Unfortunately for many of us, that also means avoiding the rewards that can come with taking control of our financial lives and creating a blueprint that lays the foundation for achieving our goals.

[Related: Black Women and the Pay Gap]

Whether you call them ‘blueprints’ or ‘budgets,’ getting a clear vision of our goals is where the process begins. Click here to read Part 1 .

In addition, financial blueprints, or budgets, literally allow us to redirect our wealth to places that serve our highest values and ideas.

“Not having a budget is like going on a trip without a road-map or GPS. Budgets allow you to know where you are going financially and give you the best route to get there. Without it you will get lost,” says Ash Cash, financial expert and author of Mind Right, Money Right: 10 Laws of Financial Freedom.

Cash and I went on to discuss how to create a budget and why we have such a difficult time sticking to them.

BlackEnterprise: You say it’s important for everyone to have a financial blueprint, but particularly for Blacks. Can you elaborate?

Cash: Without getting too deep into the history of black economics, we have to realize that most Blacks have only been able to create ‘real’ wealth and financial freedom for the last 50 years – slavery lasted 223 years from 1640-1863, then reconstruction and Jim Crow laws lasted 102 years from 1863-1965. It wasn’t until the post-civil rights that we began to start seeing the tides change. With a buying power of $1.1 Trillion dollars it is important that we begin to budget in order to reclaim and build wealth in our communities. If we continue to freestyle our spending, our buying power will be taken for granted, and we will lose the true power that comes with financial freedom.

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College Not Closing Wealth Gap for Blacks

Federal Reserve study finds massive wealth gap between Black and White College Grads

A new survey by the Federal Reserve Bank of St. Louis paints a sobering picture of Black’s ability to create wealth, even if they have a college education.  Surprisingly, however, the research finds that Blacks with a college education not only fared worse financially than Whites, but they also fared worse than Blacks without a college education, when it comes to wealth building.

[Related: [STUDY] Wealth Gap for Black and White Homeowners Hurting Future Generations]

Between 2007 and 2013, median wealth for Blacks who had a college degree declined by 60%, versus just 37% for Blacks without a college degree.

“We think the most important factor between 2007 and 2013 was the concentration of assets in housing, combined with relatively high debt,” William Emmons, senior economic adviser at the Center for Household Financial Stability at the Federal Reserve Bank of St. Louis, and one of the authors of the study, tells BlackEnterprise.com.

(Image: Survey of Consumer Finances)

 

 

“When house prices declined, the debt did not go away. This amplifies the loss of wealth, what economists call ‘the leverage effect of debt…Among Black families without college degrees, fewer owned homes, so they were not as exposed to house-price declines,” Emmons adds.

The Prudential Financial “African American Financial Experience” survey recently found that nearly a quarter of the African American population has student loan debt. Emmons says student loan debt is also likely a contributing factor to wealth discrepancies among college educated Blacks and groups without a college education.

“If that student took on a mortgage or other debt soon after college, the overall debt burden could be excessive. The crash in housing values and the economy then would hit this young family very hard. We think this scenario occurred for many young black and Hispanic college grads,” says Emmons.

In addition, Emmons points out that a lack of generational wealth is playing a role in the financial fortunes of college educated Blacks.

“There is no question that families with more wealth can provide financial protection to family members when they suffer short-term difficulties. Because black and Hispanic families generally have less wealth than Whites or Asians, they could not provide as much assistance during the downturn. We can’t quantify this risk-sharing benefit but we know it exists.”

While debt levels and a lack of generational wealth make it difficult for college-educated Blacks to find their financial footing, Fed researchers say one of the most significant challenges this group faces is discrimination.

“We believe that discrimination remains a problem in many workplaces. It may be conscious or unconscious bias. There is strong evidence of discrimination in the experiments that send virtually identical resumes to employers but with different names—one that “sounds white” vs. one that “sounds black.” The resumes of the applicant assumed to be black receive fewer interview offers.”

Despite the discouraging findings, it’s important to keep in perspective that overall, families headed by someone with a college education have a median income that is 2 to 3 times more than families headed by someone without such a degree.

In addition, while this study and others bring attention to Blacks being on the losing side of the wealth gap, our financial lives are evolving.  Nielsen finds that Blacks earning more than $75,000 a year are the fastest growing income group in the country.

 

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[STUDY] Blacks are Increasingly Optimistic and Confident About Money

Prudential study finds growing financial savvy and affluence among African Americans

The 2015-2016 Prudential Financial African American Financial Experience study paints a picture of African Americans that is often missing from national conversations about blacks and money, which are usually focused on how we’re on the losing end of a given ‘gap.’

Through its research, however, Prudential turns the spotlight on the often overlooked fact that the African American experience with money is evolving at an incredibly fast pace, particularly given that wealth building has only been a viable option for many in the community for just 1 or 2 generations.

In fact, more than half of the African Americans surveyed, 56%, say they are better off financially than they were 5 years ago, and they feel better off than their parents were at their age.

[Related: [WATCH] Insuring Your Loved Ones Benefit From Your Estate]

“This study paints a picture of an increasingly financially savvy and affluent African American community,” said Mammen Verghis, vice president of multicultural marketing for Prudential. “We are seeing a group that is financially confident, focused on service, and open to receive assistance from professionals who can help them move closer to financial security,” Verghis adds.

While the fact that blacks are faring better financially than they were 5 years ago is not surprising – the economic recovery; albeit gradual, makes everybody feel better. A majority of survey participants are optimistic that their financial gains will continue, with 58% indicating they expect their next generation to have a better financial situation than their own, compared to 46% of the overall population.

“Each generation of African Americans is becoming more comfortable about conversations about money.  Managing money is a proactive thing. We understand that now,” says Alfred Edmond Jr., BE’s senior vice president and executive editor-at-large, and co-author of Loving in the Grown Zone: A No-Nonsense Guide to Making Healthy Decisions in the Quest for Loving, Romantic Relationships of Honor, Esteem, and Respect.

“We’re the first generation who didn’t have our major financial decisions handled for us through organizations like pensions or unions. We’ve had to make self-directed decisions about things like retirement planning, insurance, and debt.  Younger members have been born into that conversation,” Edmond adds.

A conversation that researchers say is the starting point for awareness and choices that will continue to improve the African American financial experience.

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[WATCH] Make Sure Your Loved Ones Benefit From Your Estate

Financial protection from the trials and tribulations of estate planning

In the short film, Black Heirlooms, filmmaker Amanda Brown begins the story by showing pictures of family, particularly her beloved grandmother Mee-Mah Royal. Soon after the montage of family photos, the dollar amount: $51,283.50 appears on the screen as Brown describes that “this is the amount of money that tore my family apart.”

After a stroke in 2009, Royal’s family became “irreconcilably divided” over her care and her estate. “The family she built was destroyed.”

[Below: Watch Video] 

Not only do battles over estates come between family members, but even when individuals do create estate plans, financial problems from estate taxes and probate—which typically take at least six months—can further complicate financial problems for those the estate is intended to help.

Financial advisers say life insurance should be a significant component of any estate plan.

“Life insurance is a great way to protect and create an estate for pennies on the dollar,” says ShirleyAnn Robertson, a financial professional based in Schaumburg, IL,with Prudential Advisors.

“When I’m talking to clients, the word ‘estate planning’ sounds a bit daunting. An estate plan is a map that reflects how you feel about your personal and financial affairs, and how you want them to be handled in case you’re incapacitated or in the event of death. Life insurance helps you create the financial security you intend when you pass on,” Robertson adds.

Life insurance proceeds don’t go through a probate process. Your designated beneficiaries get access to funds right away to pay bills and cover other expenses that could become a burden due to the loss of your income.

You can also work with an estate planning attorney or financial professional to insure that you have enough life insurance to cover the costs of settling your estate. The top federal estate tax rate is currently 40%. Some states also impose separate inheritance or estate tax. If you fall into these estate tax categories, life insurance can be the helping hand your heirs need, so that they don’t have to go to extremes like selling real estate or a business to cover the taxes.

Giving a life insurance policy as a gift to a charity can also reduce the taxable amount of the estate, as gifts to charity are an estate tax deduction. This can work well for upper income individuals.

As for the type of life insurance that works best with your estate plans, you need to consult a financial professional, and someone who is familiar with the federal and state estate planning laws that apply to you.

“Collectively, blacks have to adopt a mind-set in which we make legacy planning and maximizing generational wealth a priority, and part of our conversations,” says Roberts.

Conversations that can keep families together and wealth moving from one generation to the next.

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Retiring Your Debt Before You Retire

3 tips that can lighten your debt load

Ah, retirement…Doing what we want, when we want without having to try to achieve the never ending quest for balance between our careers and the rest of our lives. Oh no, retirement…How can I even think about stress free living in my golden years when I’m staring at a mountain of debt. Unfortunately, the latter scenario feels more like a reality for far too many of us.

[Related: Expecting to Work After Retirement? Don’t Count On It]

According to the Employee Benefit Research Institute, families with heads of household aged 55-64 have an average debt level of about $107,000. This also weighs heavily on their psychological and emotional well-being. The study also found that nearly half of workers with a major debt problem are not at all confident that they have enough money for a financially secure retirement.

For African Americans, a debt-burdened retirement may feel inevitable. A study by Demos finds that 42% of our households are relying on credit cards for basic living expenses, making it difficult to even think about things like investing for retirement and financial security.

“If you’re entering your 50s and 60s, your debt should be low in all categories, credit card, mortgage, auto, student loans, you name it,” says Bruce McClary of the National Foundation for Credit Counseling.

“A tell-tale sign that you’re in trouble is if you’re approaching or at 50, and your credit card balances are at or above 50% of your credit limits across the board. If that’s the case, and you’re just making minimum payments, it’s time to wake up and smell the coffee. This is a good opportunity to pull back and reassess what you’re doing,” McClary adds.

McClary shares three tips for reducing your debt burden as you prepare for retirement.

1. Power Pay: Take any extra money that you can find and apply it toward the debt that is charging you the highest rate of interest. Once that’s paid off, put extra cash with the debt that has the next highest rate, and so on. It’s been proven to save the most money over time, because you’re getting the highest interest obligation out of the way first.

2. Debt Snowball: Instead of arranging your debt from highest interest rate to lowest, you’re paying off the lowest balance first. While you may not save as much money over time when you do this versus the ‘power pay,’ you see faster results which can keep you motivated to get to the finish line.

3. Consolidate into a lower interest rate loan: If your interest rates are high and you think you can do better, you can get a consolidation loan. Make sure the interest rate and terms are better than what you’re currently paying on your debt. You can look at online lenders, brick and mortar banks, credit unions, there are a lot of options. It’s a good idea to pull a copy of your credit report and know where you stand before you look.

(You can get a free copy of your credit report each year at www.annualcredit report.com.)

“Don’t assume you won’t qualify for a loan because you think you have bad credit. If you’re looking for the best rates from a prime lender, you need a credit score in the upper 700s or above. If you’re in the lower 700s or 600s, the loan may not be as competitive, but it may still be better than the rate you’re currently getting on your debt,” says McClary.

McClary and other advisers say that regardless of which option you choose, the most important things are to create a debt reduction plan you can stick to, and not to add to your debt levels as you’re paying them off.

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[VIDEO] “Being Mary Jane” Producer Mara Brock Akil Gets Real About Passion and Money

Akil shares her secrets for creating financial security at every stage of her career

(Image: Mara Brock Akil)

When you think of Mara Brock Akil, some of the first things that come to mind are some of the megahits she’s had as a writer and producer on shows like The Jamie Foxx Show, Moesha, and Cougar Town. Then there are the shows she’s created like Girlfriends, and the BET hit Being Mary Jane, which premiered in 2013.

When you talk to Akil, however, you are struck by her humility and the fact that this is someone who has walked through life with her feet firmly planted on the ground. It becomes obvious when you hear her discuss the ways in which her mother and grandmother’s early lessons have molded her, where the deep sense of being well-grounded she radiates comes from.

[Related: Mara and Salim Akil, Chris Spencer and Janine Sherman Barrois Talk Life of a Showrunner]

In addition to teaching Akil ‘right from wrong,’ her mother and grandmother also stressed that if she did not create a stable financial life, and live beneath her means, nothing else was really going to be possible.

Akil took their lesson to heart and is not only on her way to iconic status in the entertainment industry, but she and husband, award-winning director, Salim Akil, have also gone on to create entrepreneurial success as co-founders of Akil Productions, which started as Happy Camper productions in 2000.

Akil sat down with BE Senior Editor Stacey Tisdale and shared how she sustained herself financially before hitting the big leagues and why those early choices about money paved the way for her success.

[Below: Watch Video]

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Financial ‘Musts’ for Gen X Black Women

A girlfriend’s guide to building wealth

(Image: Jacquette Timmons)

Black women who are members of Generation X get a double-whammy. In addition to dealing with the financial challenges that all black women face – having a harder time than others getting loans and paying bills, making 64 cents for every dollar white men make and, often, raising children on their own – they also have the burden of belonging to what’s being called ‘the forgotten generation.”

Generation X, a demographic group (born between 1961 and 1981), is overshadowed in discussions, marketing efforts, and just about everything else, by baby boomers and millennials. There are more than 75 million baby boomers in the U.S., according to Census data, and even more millennials. The Census Bureau expects Gen X to peak at 65.8 million in 2018.

Statistics aside, Gen X black women are feeling pinched, often balancing childcare, eldercare, and career.  BlackEnterprise.com spoke with Jacquette Timmons, financial behaviorist and author of Financial Intimacy: How to Create a Healthy Relationship with Your Money and Your Mate, about the financial moves Gen X women should be making.

[Related: Generation X, Not Generation Y Is Still Most Entrepreneurial Group]

BlackEnterprise.com: Gen X women are in their mid-30’s to early-50’s. What are the biggest financial challenges to women in this age group?

​Timmons: Given the swiftly changing employment landscape, one of the biggest financial challenges for Gen X women is maintaining positive cash-flow and sticking with a savings and investment plan as their income fluctuates. Currently 1/3 of adult workers identify as freelancers. By 2020 that number is expected to increase to 50%. As such, Gen X women will have to be far more engaged and proactive about their money management…and flexible.

What’s happening financially with women of color in this age group?

​They are feeling stressed about having enough money and not becoming a ‘bag lady,’ especially if they are single, whether due to divorce, death of a spouse/partner or having never been married. Gen X women who reside in single-income households tend to experience less financial stability, and this fragility is frequently amplified when they extend themselves by helping out family and friends that don’t pay back the loans given.  ​

What should people in this group be focusing on, when it comes to creating financial well-being?

​Managing and expanding your network. There is a saying and a book that says, ‘your network is your net worth.’ ​ ​Creating financial well-being and security is becoming more and more tied to how well you manage your professional relationships. You never achieve success, financial or otherwise, on your own. But it is becoming ever more imperative that you have a relationship-management strategy if you want to maintain and grow your wealth.​

This group is really sandwiched between childcare and eldercare. How should they manage that financially?

​This may sound very selfish, but the truth is that you can’t take care of your children and parents if your financial situation isn’t stable and thriving. So focus on that first. Make choices that put you in a position to help and support from a place of strength, not financial weakness. That may look like your child/children taking out student loans to go the college. For parents, it may [mean] helping them downsize from a house to an apartment, or moving closer to you to help minimize transportation and shorten how long it takes to get to them or for them to get to you. ​

What’s a healthy investment mix for retirement savings for this group?

​There really isn’t a standard, one-size-fits-all investment mix that will work equally well across the board. It truly does depend on the particular circumstances of each woman. That said, it’s probably best to have more stocks/equity than you may feel comfortable having, simply to increase the appreciation potential for your portfolio.

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Whatever Happened to Generation X?

The 'forgotten generation' is dealing with debt, declining marketability, and other financial challenges

Anyone who is sandwiched between older and younger siblings knows what it feels like to be the “forgotten” middle child. That’s kind of what it feels like to be a member of Generation X, a demographic group (born between 1961 and 1981, respectively) that is often drowned out of the generation conversation by the older baby boomers and the media darling Millennials.

[Related: Generation X, Not Generation Y Is Still Most Entrepreneurial Group]

Part of the reason is raw size. There are more than 75 million baby boomers in the U.S., according to Census data, and even more Millennials. The Census Bureau expects Gen X to peak at 65.8 million in 2018.

Unfortunately, one area where Gen X leads the generational pack is debt levels. Data by Pew Research finds that about 75% of Gen have higher family incomes than their parents did at the same ages, but only about 30% have higher wealth.

This is due in part to the fact that the average Gen Xer has 6 times more debt than their parents did and lost nearly half of their wealth between 2007 and 2010 due to the ‘housing bubble burst.’

Add to that high student loan debt, and it’s no surprise that Pew also found that members of the often called “MTV Generation” are less optimistic about their ability to save for retirement that other groups. 53% said they are either “not too” or “not at all” confident that their income and assets will last through retirement. In contrast, 34% of baby boomers express similar concerns, and 27% of the Millennials surveyed.

“What I’m finding in my clients, is that they are really thinking outside of the box when it comes to things like saving for their own retirement and paying for their kid’s education,” says ShirleyAnn Robertson, a financial professional based in Schaumburg, IL with Prudential Advisors. “They’re also doing the balancing act between being parents and having aging parents,” she adds.

Financial experts caution that considering longer lifespans and the economic challenges Gen Xers faced during their financial coming of age, retirement saving has to be the priority, even when it comes to things like education costs for their children.

“Retirement savings must take priority,” says Greg McBride, chief financial analyst at Bankrate.com. “Balancing debt and retirement savings is not an either-or proposition. You can – and should – pursue both at the same time. But retirement savings should be the higher priority, especially relative to low cost, often tax deductible debt such as mortgages and federal student loans” he adds.

 

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3 Steps That Take The Stress Out of Student Loan Debt

The power of the plan

 

 

 

 

 

 

Maddie Brooks, Prudential Advisors (Image: Brooks)

 

 

 

 

 

 

A survey by psychologist and author Dr. Robert Epstein found that 25% of our happiness is determined by how we manage stress. Epstein also found that one of the magic bullets in reducing stress is planning.

Tell that to the 40 million Americans who are struggling with student loan debt and consider it a leading cause of anxiety.

Financial planners, like Dr. Epstein, say it’s in those anxious moments, however, that good planning will see you through.

“It may seem like there’s no light at the end of the tunnel,” says Maddie Brooks, a financial professional with Prudential Advisors. “The key is to keep a level head, come up with a plan and stick to it.  Student loan debt is a very emotional area.  Spending all of that time and effort on your education and ending up in debt is frustrating. You have to first change your mindset and keep it in perspective.  Having a plan helps that happen,” she adds.

Brooks says there are 3 things to consider when creating a plan.

1. Look at your total financial picture: Figure out everything you have coming in and your monthly expenses. When you see what’s coming out and going in, it’s an eye opener. A lot of people don’t know where their money is going. When those numbers are known, you can develop a course of action.  You can see what adjustments need to be made in your financial choices and lifestyle.  It’s about mind-set.  It’s changing a value system, it’s all of that.  It’s changing the way you think about money.  If you don’t get to the root of the problem, you won’t change your behavior. Knowing your numbers help you see what you’re really doing.

2. Know your retirement number: When you know that number, you can back into a plan.  Many of us get so caught up in paying the loan back that we short change that saving.  As far as figuring out how much to save, that is going to be determined by where you want to live.  If you plan to live in the Northeast for example, you need a plan to save at least 80% of what your income is.   You’ll need 60% if you plan to live in Texas.  Also consider how much you can expect from things like social security and 401 (k)’s. When it comes to paying off student loan debt and saving for retirement, you must do them at the same time. One is not more important than the other.

“A side note on that, many parents don’t want to hear this. They want their kids to have the best education and don’t want to think about the debt on the back end. They need to be willing to think outside of the box.  For example, they might want to send their kid to a junior college for 2 years and then transfer to their child’s school of choice.  It doesn’t matter if you start at a junior college and end up at a more prestigious school, because the credits are the same. Parents must remember that their time horizon for retirement is shorter than their child’s. If they’re going to take away from their retirement assets, they should look at other options. The child may resist, but parents must act like parents.” says Brooks.

3. A stress-free side hustle: The reality of the world we live in today is that for many people, the numbers don’t add up, even when they’re doing all of the ‘right’ things. They are going to have to find ways to supplement their income in order to keep their finances in balance. Picking the right side hustle is important because you’re adding work and stress to your life when you’re already stressed out about student loan debt. That can affect your health. It’s important to find something you’re passionate about. I have a client who’s a teacher, for example, and she tutors on the side. It doesn’t feel so much like work since she loves teaching kids.

Brooks says the most important thing to remember is that student loan debt is like any other challenge in life. If we stay focused and stay on course, we overcome the struggle.

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Passing on Financial Values: Father to Sons

Meet the Bivens boys

It’s Friday afternoon and 6-year-old Maxwell runs into the house after school. He can’t wait to tell his dad that he was “thumbs up” all week. That means he demonstrated excellent behavior at school. So at home, this means he gets a “ticket.”

Maxwell’s dad, Alan Bivens, gathers Maxwell and the rest of the family – his other son Jackson, who is three, and his wife Kimberley – into the living room where a large poster board hangs on the wall. They go over Maxwell’s achievements, then present him with a “Thumbs Up Week” ticket. Beaming with pride, Maxwell places the ticket on the board next to the other ones he has accumulated over time. “Just six more!” he exclaims. Maxwell has 14 tickets. Once he reaches his goal of 20 tickets, he will have earned his prize: a new Optimus Prime toy.

[RELATED: Teach Your Kids About Financial Literacy]

Alan and Kimberley Bivens created this ticket system when Maxwell was four years old. “The system is set up to get him started with a few important habits: goal setting, saving, personal responsibility, and accountability,” Alan explains.

They start by working with Maxwell to set a goal for something he wants, then establish how many tickets it is worth. There are various ways Maxwell can earn tickets. “We have a communication with his teachers. If they give him a “thumbs up” for good behavior for the entire week, he earns one ticket. Sometimes the teacher or I will give him a ticket for going above and beyond a task he has been asked to do or when he helps others. One time, his teacher felt the need to call Kimberley at work to tell her about Maxwell’s extraordinary achievements that day. We celebrated with a reward of five tickets.”

For 3-year-old Jackson, Alan has simplified the idea but is laying the same foundation of principles. “He doesn’t have the patience for such a process yet, but we’re working toward it,” says Alan. “Right now, he’s rewarded in smaller, more frequent ways for his “thumbs up” days.” Those rewards include special dinners, a chance to pick a movie, “and his favorite – a call to grandma and aunties to tell them about him receiving a thumbs up that day.”

Alan says the child needs to be old enough to have the patience for a complex reward structure, and suggests age four or five as a good time to start implementing a system like this. As the Bivens boys mature, Alan will start teaching everyday skills like balancing a checkbook to long-term planning for retirement. But at this point there’s no monetary value attached to the tickets. The current objective is just to establish three main principles:

Goal Setting

Alan says his ticket system teaches Maxwell and Jackson that they can set any goal with hard work, patience, and a plan. “Effective goal setting forces you to really think about where you want to go. Only then can you create an action plan.”  He says this directly relates to financial literacy because many of the goals we set in life require a financial investment. “A 6-year-old’s attention is drawn to all types of stimuli, which he could use his limited financial resources to get. Having a goal and seeing how he must – and can – save to get it will begin his journey into understanding delayed gratification.”

(Continued on next page)

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AAF Preview: Black Enterprise and Prudential Want You to Get Out of Debt

AAF panel set to help Blacks find their financial footing

(Image: Baltimore Comptroller Joan Pratt)

Prudential and Black Enterprise are joining forces to bring attendees at this year’s African American Festival perspective, planning, and best practices when it comes to taking control of their debt levels.

[Related: 2015 African American Festival to Take Place in Baltimore]

BlackEnterprise’s Senior Personal Finance Editor Stacey Tisdale will moderate a panel titled “The Impact of Debt on the African American Community,” Saturday, June 20 from 3:00pm  – 3:45pm.  The panel features,  The Hon. Joan M. Pratt, Baltimore City Comptroller; Dr. Deforest Soaries Jr., author of dfree: Breaking Free from Financial Slavery; and Khalilah Harris, Deputy Director at the White House Initiative on Educational Excellence for African Americans.

The panel will take place at the Black Enterprise Empowerment Zone tent.

Among the topics discussed …

Ways to reduce student loan debt:  This is an issue of significant importance to the black community considering that more than 40% of African American families have student loan debt.  African American families also carry more student loan debt than other groups: $10,295 on average compared with $8,020 for white families, according to the Urban Institute.

How to turn our improving economics into “debt-free” wealth: According to Nielsen research, blacks earning more than $75,000 a year are the fastest growing income group in the country, yet demos finds that more than 40% of black households are borrowing to make ends meet.

How to improve economic circumstances for those in urban communities: Research shows that urban economic circumstances are directly correlated to rioting and violence in those communities.

Please join us for this thought provoking, insightful, and empowering discussion so you can get your financial house in order.

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All Blacks Are Not the Same–Even When it Comes to Money

Battling stereotypes that ignore our cultural differences

I was once teaching a class of high school boys how race plays out in our financial experience.  To make the point,  I had a White Jewish boy, a black Haitian boy, and an African American boy come to the front of the room.

I asked the class who they thought would get a better deal if they walked into a car dealership.  Immediately, the class echoed that the Jewish boy would get the best deal.  When I asked why, they said because ‘he’s smart about money.’  A car dealer would not try to “get over” on him.

As I was about to use their comments to launch into a discussion about how blacks get higher rates for cars, loans, etc. because of the stereotype the class just described, another boy said he would also give a good deal to the Haitian boy because he probably had more savings than the African American boy. “‘Those people’ come to this country, get good jobs and save their money,” he said.

This launched the class into a lively debate about the financial characteristics of ‘the different flavors of black’ people in our society.   It was fascinating to hear the young men discuss the different behaviors,  patterns, and practices woven into the colorful tapestry of black in this country, a discussion that gets lost in the background due to the ways in which Americans like to simplify race by making it a matter of black and white.

According to a study by Pew Research, there are 3.8 million black immigrants living in the United States, and their share of the black population is projected to rise from 9% to 16% by 2060.  In addition, black immigrants are doing better economically than blacks born in the U.S.  Household incomes for foreign-born blacks are, on average, $10,000 higher than U.S.-born blacks. And black immigrants are less likely to live in poverty (20% vs. 28%).

The ‘different flavors of black in the U.S.’ are largely ignored by many who provide financial services and products. It’s unlikely that the car dealer I used in my example and that the students imagined so vividly would differentiate much between the Haitian young man and the African American young man when they came looking for a car.

Blackenterprise.com spoke with Dr. Tracey Laszloffy, a licensed marriage and family therapist and an expert in race relations about this issue.

BlackEnterprise.com: What are some of the dangers of ignoring the different cultures within black America from a social standpoint, and what are the dangers to individuals?

Race is a social construction, but because we have all socially conspired to treat it as if it is a biological reality, a very real social structure exists that creates very different realities and access to resources and power,

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The Price of Growing Up ‘The Only’ Black

Tips that help you and your children manage racial isolation

(Image: André Robert Lee)

When award-winning director, André Robert Lee, was 14-years-old, he received a full scholarship to attend one of the most elite prep schools in the country in Philadelphia. His mother, who struggled to support Lee and his sister on a factory worker’s salary, thought the scholarship was her son’s ticket out of the ghettos of Philadelphia into a world that would lead to career and financial success.

While Lee thrived academically and went onto critical acclaim in the film world, his journey, which he chronicles in the award-winning documentary The Prep School Negro, shows how growing up as ‘the only’ – in a world of racial isolation – often comes at a price.

[Related: [WATCH] Giving Loved Ones a Hand Up vs a Handout]

Experts are now seeing how children who grow up in these situations are forced to develop ‘coping strategies’ in order to ‘fit in,’ that can impact everything from their relationships to their financial behavior as adults.

“One would think that it leads to success,” says Wendy Van Amson, co-founder of the Independent Schools Diversity Network.  “But you also have to think about what’s really happening to your child…You have to find out what they’re thinking and pay attention to whether they’re being demoralized,” she adds.

Paying the Price

“If I saw someone who was successful, or a family or a person who had money, I never,  imagined I could really have it,” said Lee. “I didn’t honestly believe that I could reach the same level that they did, you know, in terms of my classmates and people in my school because I would go home and we were struggling,” he adds.

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[WATCH] Giving Loved Ones a Hand Up vs a Handout

Tips on lending a hand without breaking your bank or enabling bad behavior

Many of us have heard the advice “Never lend money to family or friends.” But it’s one of those truisms that’s difficult to put into practice. That’s because many of us also know what it’s like to be in a financial bind, and we want nothing more than to lend a helping hand to people we love.

[Related: Helping Domestic Violence Victims Create Financial Security]

Research shows that blacks face this challenge more than other groups.  A survey by Prudential Research finds that African Americans provide financial support to extended family at a higher rate than the overall population.

Black Enterprise Senior Editor Stacey Tisdale provides tips that will help you if you’re struggling with the pressure to lend.

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Why Black Money Matters to Financial Service Companies

How the numbers are working in our favor

(Image: Mamen Verghis, Prudential)

According to the Census Bureau, by 2060, the current minority population is expected to become the majority, comprising 56% of the total U.S. population. The black population alone is expected to increase from 41.2 million to 61.8 million during this period.

[Related: 3 Easy Money Management Tips for Millennials]

Not only are blacks one of the fastest growing segments of the population but Nielsen finds that African American households earning $75,000 or more far outpace income growth in the overall population.

None of this has been lost on the financial services community. More and more companies are beefing up efforts to target black consumers. This is no easy task. Blacks and the financial world have a very troubled history to say the least, dating as far back as the dissolution of the Freedman’s Bank in 1874. The bank had been established to help newly emancipated slaves create financial security.  When it failed, a majority of its depositors lost most of their money.

Pay that forward to the still challenging socioeconomic financial climate and factors like the predatory lending practices that were brought to light during the housing crisis, and it’s not surprising that Prudential’s African American Financial Experience survey finds that only a quarter of African Americans feel any financial services company has effectively reached out to the community.

BlackEnterprise.com spoke with Mammen Verghis, vice president of Multicultural Marketing at Prudential Financial about the ways in which the financial community is trying to reach out to the black community.

BlackEnterprise.com: Prudential has always emphasized the importance of the black community as evidenced by research like your annual African American Financial Experience survey. There seems to be a growing effort by financial service companies to reach blacks. What do you think is driving that?

Verghis: This is linked to changing demographics in the U.S. and the fact that black customers are growing in numbers and wealth. We’ve also seen increased optimism in the black community, which bodes well for financial service companies. We have to try even harder in terms of outreach and solutions.

Can you elaborate on what you mean by “increased optimism?”

There is a growth in income and a much greater recognition of the need to invest.  We’ve noticed that the black community is being more proactive when it comes to reaching out.  From an historical perspective, the black customer is very resilient and has rebounded from more hardships than the overall population. The industry is also doing better at understanding this consumer.

Describe some of the ways in which Prudential is reaching out to the black community?

Prudential is partnering with major influencers, such as T.D. Jakes, to make sure that we are engaged. We are also developing longer-term strategic relationships with major organizations. We are also working hard to talk to individuals to make sure they understand their risk, needs, and that retirement is a priority. Whether it’s life insurance, investment products–anything that helps create a secure financial future–we are making sure that black consumers are educated.  ur outreach is led by that. We’re also working hard when it comes to recruitment, so that our people represent the communities they operate in.

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Mind Over Money: Mental Help is Money Help: Part 2

An interview with Terrie Williams and Mary Pender Greene

Few things work as simply as money. Don’t spend more than you have. Don’t borrow more than you can pay back, and don’t invest more than you can afford to lose. Few things also create the complex psychological and emotional abyss that often comes with economic distress.

[Related: Mind Over Money: The 5 Keys To Building Good Financial Habits: Part 1]

“The reason people have such strong emotions around money is because it signifies value.  You are valued by how much you have and what you own,” says psychotherapist and executive coach Mary Pender Green.

“It’s painful to think about what you don’t have and what you can’t do,” adds Terrie Williams,” award-winning mental health advocate, and author of Black Pain:  It Just Looks Like We’re Not Hurting.

I had a conversation with Green and Williams about the link between our psychological well-being and our finances. Both expressed concern about the stigma around mental health in the Black community, and how psychological challenges, if left unchecked, can actually play out in the form of destructive financial behavior.

BlackEnterprise: Money is one of the leading causes of depression, substance abuse, and domestic abuse. Why do you think people have such a difficult time coping with the strong emotions around money?

Williams: It’s painful to think about what you don’t have and what you can’t do. When it comes to money, just like everything else, we’ll do anything not to feel the pain and suffering that we go through on a day to day basis.

Greene: If you don’t have enough money. You are going to experience conflicts. If you have too much money, you are going to experience conflicts. That’s because money is so deeply associated with power and control. It can be related to race, culture, and economics.

When sociologists and economists weigh in on the tensions coming forth in race relations in the United States right now, and how it has erupted into things like violent protests, many are quick to point out that the frustration level in the Black community is largely the result of economics.

Williams: We don’t know how to deal with the frustration that is the result of economics poor treatment. Take Black men, for example. If you’re a Black man, you’re intimidating to everybody. That hurts and there is a need to banish those feelings. You don’t see an opportunity to really get your foot in the door and thrive economically. The outlet becomes violence. Economics are at the root, but we don’t deal with the feelings that were the cause.

Greene: Economics are an issue all of the time. Rioting is the result of many issues bubbling over at the same time: Unemployment, poor housing, being over-policed, poor treatment.  What happens when you have a whole community of people feeling structural frustration?  Violence. We have to deal with the social issues, but we also have to deal with the frustration and the psychological impact or that fact that a bad mental state leads to poor financial choices.

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Mind Over Money: The 5 Keys To Building Good Financial Habits: Part 1

An interview with a leader in the science of Behavior Change

(Image: Dr. Sara Johnson)

How many times has January 1 come and you vow that this will be the year you get your finances in order? That this will be the year you get out of debt, boost your savings, or start investing?  Our intentions are pure, our will is strong, yet by the time the next January 1 rolls around, we find that our financial situation does not reflect the change we vowed to make.

“That’s because we don’t understand change,” says Sara Johnson, senior vice president of Research and Product Development at Pro-Change Behavior Systems, Inc. “Change is a process. The key to successfully changing behavior is knowing where you are in the change process and applying the right technique at the right time. We often get anxious and jump to action long before the environment is in place that will allow us to sustain the change,” she adds.

[Related: Becoming the Financial Role Model Your Child Needs]

Johnson works with James Prochaska, named as one of the five most influential authors in Psychology by the American Psychological Society. He mapped the ways in which behavior is changed. He helped identify the six stages people go through when we actually change a behavior, and the techniques we use to move them through. His work is used by countless organizations, academic institutions, and governments around the world. He is also author of the book Changing for Good.

Johnson shared with BlackEnterprise.com the mechanics of change and how we can apply them to financial behavior.

BlackEnterprise.com: What is the key to successful change when it comes to financial goals and financial behavior?

Johnson: People need to figure out how ready they are to achieve a goal and begin by identifying one objective and one outcome. When it comes to things like changing spending behavior, are they willing to set aside a certain amount of money each day? How ready are they to take action to make sure they are adequately insured or maxing out their 401(k). The key is in knowing what you are ready to do and doing just that. Let the change process happen, it’s natural. It’s important not to jump to action before you’re ready.

Can you take us through the six stages of behavioral change?

When you’re ‘not yet ready’ to change, you’re in a stage called Precontemplation. You’re not intending to change any time soon. You may not be aware that there is a behavior that needs to be changed.  You also may just feel like you’ve tried to change and failed.  You also don’t see the change as worth it relative to what you have to give up.

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The Price We’ll Pay for Our Children’s Education: Are There Better Options?

Part 2: How Race Plays Out in Our Financial Experience

A friend of mine is a White, male hedge fund manager. He makes a 7 figure salary and had a beautiful home in one of the most expensive parts of Connecticut.

The city he lives in is home to some of the best private schools in the country. Tuition costs in the area are about $30,000 a year. Still, private school tuition for his 2 children would be well within his budget if he believed it was their best option.

I was surprised to find out a few months ago that my friend and his family were selling their beautiful home and moving to another part of town. When I asked why, he told me it was because they were moving to a district that had better public schools. It also came up in our conversation that he would never spend what’s asked of parents and caregivers to spend on private elementary school education. He pointed out how he and his wife could hire tutors if they felt their children needed ‘more’ than they were getting at the public school at a fraction of the costs.

[Related: How Race Plays Out in Our Financial Lives: Part 1]

I thought about this deeply. My parents worked hard to send me to a good private school.  I’m doing the same with my child. As I take an honest look at the impact education costs have on total financial well-being, however, I can’t help but see the conditioning in myself and many in the Black community that a ‘good’ education is worth a big financial sacrifice. Many people also believe that private and independent schools are the only real option when it comes to a ‘good’ education, and that by sending their kids to expensive schools they are planting the seeds that will bring their children career success and financial well-being.

“African Americans tend to focus on their children’s education when they get money,” says Alfred Edmond Jr., BE’s Senior Vice President and Executive Editor-at-Large.

“It may have been necessary in our cultural history, and to some degree some people say it may still be necessary, but we often neglect our own retirement savings. That can leave us unable to sustain ourselves in retirement and we become burdens to our children and grandchildren because we haven’t saved. Our good intentions boomerang,” he adds.

In addition, in my 20 plus years as a financial journalist I have seen countless cases where ‘good’ schools as children did not translate into positive financial outcomes in adulthood.   Most of the people I’ve seen create healthy financial lives had someone, at some point in their lives, teach them fiscal responsibility by making choices and setting examples in their own behavior that represented this ideal.

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