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

For many, receiving a $1 million is a holy grail of sorts. In the music industry, however, that doesn’t go very far. Allow me to show you how, for an artist, seven-figure payday actually works out to be far less:

+$1,000,000 in income:
-$150,000 for talent managers (standard 15% fee)
-$100,000 for agents (standard 10% fee)
-$50,000 for business managers (standard 5% fee)
-$50,000 for entertainment attorneys (standard 5% fee)
-$200,000 for various production expenses (20% fee)

Once you total these basic deductions, you’re left with $450,000. Subtract taxes (running anywhere from 30-40%) from this and you quickly see the further erosion of that initial $1 million, which now nets you about $50-150,000. That’s still a decent sum of money, but nowhere near the amount we started with; virtually $850,000 evaporates off the top.

Over three-quarters of that $1 million is gone before we purchase the cars and homes for moms, the clothes for friends, our own personal items (luxury and otherwise) and even the “10%” tithe to the church. This example shows why it is so important to watch our spending and make every dollar count, no matter how much we’re earning. The question for many is how? Well, here are a few of my personal suggestions:

  • Be smart and live for yourself and your family. Don’t to live to show-off and live up to the expectations of what an artist is “supposed” to be. I’m a rapper, actor, and producer, and I like to lead a nice lifestyle, help my family, and enjoy myself, but you’re not going to see me buying a new car every time I have a hit single or movie. People are counting on me to stay on top now that I’ve been blessed enough to make it, and I’m never going to let them, or myself down.
  • Hire a top business manager. You need someone that makes sure every cent you earn actually finds its way into your account; and that every one of those cents is accounted for correctly. I know that doing things properly now—with the help of my business manager Adam Yorkshire—is what is going to ensure my financial independence for the rest of my life.
  • Educate yourself on your financial matters. Just as important as having a good business manager, is having the knowledge to stay on top of your financial matters. No one should care more about or know more about your finances than you.
  • Have a financial mentor. There’s nothing more empowering than being around those who are more experienced than you. Toward this goal, having a mentor—someone detached from your financial success—is crucial in order to “watch those who watch your money.”

In the end, I know who I am. I thank God for the ability to make an amazing living doing what I love, and I know myself enough to know that I need not fall into the common cycle of living beyond my means. Too many young artists—and people of color in general—get their shot, and feel they need to conform to the lifestyles they see portrayed in music videos and on TV. They spend their money on buying an image, instead of hiring the right people, and stashing some away for a rainy day. When you really think about, someone in the entertainment industry is really no different than anyone else working a regular 9-to-5 or running their own business aside from the numbers being be a bit bigger. It’s important for any business owner, or worker, to make smart decisions and spend their money in the right places and on the right people.

If you’re a fan of hip-hop be sure to check out the new coffee table book, Hip Hop, A Cultural Odyssey. To purchase your copy of Hip Hop, A Cultural Odyssey click here and every 10 books sold will result in a copy being donated to a HBCU library.

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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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