David Banner’s 4 Money Management Lessons for Black America

The rapper/actor shares his perspective on the Black community's misuse of its spending power

The proper management of money has proven to be a difficult task for many in the Black community. According to recent data by the Pew Research Center, the typical Black household has about $5,600 in wealth (assets minus debts) compared to the typical White household, which has about $113,000 in wealth. This 20-to-1 wealth-gap is even more striking during periods of economic downturns.

There are several key factors that contribute to this vast disparity in wealth. The most prominent of factors is past (and on-going) discrimination that continues to plague our economic advancement. Two studies summarizing this fact show that up to 80% of an individual’s wealth can be accounted for by intergeneration material transfers, and that three-fourths of where a person winds up—in terms of wealth—is determined solely by the wealth status of their parents. The Black community—due to the long history of racism, employment discrimination, block busting, red lining, etc.—has not experienced the same economic opportunities that have allowed Whites to amass the substantial wealth that they transfer from generation to generation. But, while the history is clear, there are current obstacles that impede the economic growth of our community.

The culture of spending within the Black community has been one of our greatest economic Achilles heels. Simply put, money isn’t staying in our community. For example, the Asian, Jewish and White communities tend to spend money within their own communities first. These various cultures help and support themselves socioeconomically, in part, by spending money this way.

Another factor is that when members of our community achieve wealth, a dependency often develops between friends, family members and even our neighborhoods on the recipient. Here, the wealth of one is now expected to take care of the wishes, needs and desires of mothers, fathers, friends, cousins, nephews, community organizers and church leaders. This is, of course, in addition to the needs and desires of the one who originally achieved the economic success. As an entertainer, myself, I can personally tell you this phenomenon can reach astronomical levels.

But what is not realized is that in the entertainment industry, earning money is far less straightforward than in other industries. A rapper/producer such as myself may have a multi-platinum record or single out, but it can be months or even years before we see our share of the money. Managers, agents, attorneys, and other such professionals, can easily earn a combined 50% off the top, and that’s before we can even start to think about taxes. Since fewer and fewer musicians are working with major labels these days, we often have to pay for our own studio time, engineering, mixing, mastering and more before releasing our music. We have public relations people, producers, collaborators, and other such professionals, all of whom are depending on us to make their living. Beyond that, if every single number isn’t properly accounted for, an artist can end up in a tax situation with the government that can take years to clear up, despite his or her best intentions.

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  • Maurice

    WOW! what an impressive article from Mr. Banner, please you gotta do more of this kind of article, as a matter of fact you gotta speak more publicly on this particular subject. I never knew Mr. Banner got it like this, he needs to do more please, in terms of helping to educate the minds of younger people. What he wrote about in this article is very positive and very much needed in the community. Thanks BE for shinning the light, I also saw the spot Mr. Banner did on forbes, very nice.

    –Maurice Mbata, Founder/CEO, http://www.shopkolo.com “helping make e-commerce a reality in Nigeria”

  • Ken

    Thank you! Great article with excellent tax and overhead illustration. Plus four tips we can all relate to and follow…IF we want to be financially saavy with our money!
    - Kenneth Evans, Managing Partner, http://www.movementlv.com

  • Fredrick W. Lee

    Well written David Banner as you you made the valid points everyone should follow with regards to financial management. We need more individuals such as yourself who produce action and results and less of the antics certain entertainers and social organizers that have garnered the spotlight. Continue the good work.

    • Venkatesh

      Very tucohing! I wish that my parents had made money knowledge a priority when I was growing up, but I would like to think I am doing okay. Congratulations on your blue bundle of joy

    • Hari

      hay john will you be doing an iomnce report I’m still waiting and please do a deatiled version so some of us can learn where you get most of your traffic from thanks

  • Rachelle McMillan

    Mr. Banner, I tip my hat to you for writing such an informative and insightful article. I was already a fan, now I am a fan for life. Thank you for representing our generation so well.

  • Judith Stephens

    Thank you Mr. Banner for the lessons in your article. A special thank you for laying out the financials. It was illuminating to see what comes of the top of a $1 million deal. Wow. Money management and, as you said, financial education is vital for financial security and wealth building.

    You’re also right about the willingness of some to spend too much. We tend to focus more on consumption than investment, which is a bad money strategy.

    I so appreciate this article. Thank you!

    Regards,
    Judith Stephens

  • Alicia South

    Thank you Mr. Banner this was very helpful and informative. Me being a black female starting her own publishing company in Las Vegas has truly been a test of determination. Everything you said hit home so thank you for being you and God Bless you always!

    • Jenny

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    • Mohit

      Brilliant. This guy is not only spot on, but from what I see on his site is on his way to bicnmeog big in the industry he rails against. Nice post, Geoff.

    • Salvador

      whoah this blog is fiatastnc i love reading your posts.Keep up the good work! You know, a lot of people are searching around for this information, you could aid them greatly

  • MELLISHA GRANT

    outstanding article

  • Hollis Lewis

    While I like this article and feel that’s its very informative, why are these principles not reflected in hip hop music and culture. Hip Hop artist have come a long way in terms of being business men/women but the avg young hip hop head is not exposed to such fundamental financial principles. Often the lyrics and images in Hip Hop are a direct contradiction to the principles in this article. Many younger people don’t have the experience, knowledge, or parental guidance to make the distinction between music and “real” life. With that being said, I applaud Mr. Banner for this article. I only hope that articles like this will be in a forum in which young people can have a chance to interpret and absorb sound financial principles.

    • Sbongiseni

      ieednd.Merry Christmas!Image: luigi diamanti / FreeDigitalPhotos.netThis post was included in the Carnival of Personal Finance function drop(list){ var listElementStyle=document.getElementById(list).style; if

    • Mehar

      I have been in saimlir situations before. Its not as easy solution as you thought it is, its something that you’ll have to write out for yourself over a period of time.

  • Daniel Brown

    All your article that you write is very positive and informative and for me i am going to follow your advice thank you very much

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  • Brent Whitesides

    Excellent article! I only wish our people only act after they learn how to change the situation. Good stuff

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