Lesson 7. Money really doesn’t grow on trees. Nine out of 10 reported that the recession affected them by causing them to have a greater awareness of financial hardship.

Lesson 6. Don’t relax during the good times. Teens are also learning that when times are good, jobs are plenty, and paychecks are coming, that doesn’t mean you should abandon your budget. Out of the group polled, 59% agree it’s easy to get carried away and spend too much when times are good.

Lesson 5. It’s important to take care of what I have. Teens are doing away with a common young-adult sentiment: “I don’t care if my (insert name of expensive item here) breaks, gets dirty, or goes out of style, I’ll just buy another one.” Close to two-thirds of the respondents (64%) say they are more grateful for what they have.

Lesson 4. I shouldn’t spend my entire paycheck in one shot. Teens have learned the importance of saving their cash. Seventy-seven percent describe themselves as “super savers,” in contrast to 23% who describe themselves as “big spenders.” The study found that teens have an average of $1,000 saved. About 76% say their primary reason for saving is for college expenses.

Lesson 3. There’s a difference between wants and needs. That all-too-familiar sense of teen entitlement is also going to the wayside. Of the teens polled, 58% say they are less likely to ask for things they want.  

Lesson 2. My parents aren’t substitutes for an ATM (or a job). More than half of the respondents (58%) say they have a greater appreciation for their parents’ hard work.

Lesson 1. I need to be cautious when taking on a loan. Teens are realizing that a loan isn’t free money. This is an especially important lesson to learn before the college years. About half of the respondents (51%) say it’s important to understand the consequences of borrowing money.

I have a few retirement accounts set up. Can you provide me with a list of financial planners to help me with my retirement questions and concerns?

—M. Jones
New York

First, you need to determine whether you’re at a stage in your life where you need a financial planner. Not everyone requires one. A lot of investors don’t realize that virtually all of the reputable investment firms that administer retirement savings accounts have well-informed customer assistance representatives who can answer basic questions about your accounts, investing strategy, and even suggest investment products to suit your needs.

I’ve had a Roth IRA with Fidelity for more than a decade, and at least twice a year, I’ve called on the company’s account representatives to answer specific questions regarding asset allocation and diversification in my portfolio. When I got married, they gave my wife and me advice on combining our retirement accounts—all for free. Charles Schwab, ING, and other firms have similarly helpful reps.

You don’t want to discuss your money worries, goals, hopes, and dreams with just anyone. (See “How to Choose a Financial Planner,” Moneywise, December 2009). If you’ve determined that you really need a financial adviser, you can go to the Certified Financial Planner Board of Standards’ search page (www.cfp.net/search) to find a planner in your area. The directory can tell you whether your planner is certified and whether he or she has had any disciplinary actions taken against them. But remember, this Website only gives you a list of names, addresses, and phone numbers. A financial planner is like a doctor or dentist. You’ll have the best luck locating an adviser you like through personal recommendations.

This article originally appeared in the April 2010 issue of Black Enterprise magazine.

The 11th annual Ariel/Schwab Black Investor Survey, sponsored by Ariel Investments L.L.C. and the Charles Schwab Corp., found that saving for retirement does not resonate in the same way for blacks as it does among whites.

“Everything we’ve seen from the report shows that our interest is high, but our actions are not comparable,” says Lisa Toppin, vice president of employee development and inclusion at Charles Schwab & Co.
The purpose of the report was to identify the similarities and differences between whites and blacks with regard to saving and investing, and assess shifts in attitudes and behavior over time.

The median monthly amount that blacks contribute to their 401(k) plan is $169, compared with whites, who contribute about 50% more, or $249 each month. As a result of the differing contribution amounts, the median total household savings for retirement reported by black respondents is $53,000, in contrast to whites at $114,000.

Also, this year’s survey, in which 503 blacks and 506 whites were queried, found that for many younger blacks, saving for retirement is not a high priority. When asked about their most important goal for saving and investing, 41% of blacks said retirement, compared with 55% of whites. In 2007, the survey asked a slightly different version of the question, querying respondents about their biggest worry. Fifty-nine percent of blacks cited retirement, compared with 71% of whites.

“If you don’t grow up in a home where stocks are discussed then you are learning while doing,” says Mellody Hobson, president of Ariel Investments L.L.C. . “We must teach the history of the market and that despite crashes the stock market has outperformed all investments even real estate and bonds.”
About 45% of blacks under the age of 50 (compared with 26% of whites) say they want to retire by age 60. Among those older than 50, however, reality has set in: a far smaller group, 24%, of blacks and 9% of whites still plan to retire by age 60.

“Many blacks place a high value on sending the children to college but don’t plan for retirement,” says Toppin. “They have an idea about when they would like to retire, but they don’t take the steps they need. It is a competition between intention and reality.”

“The problem is that people don’t start saving for retirement early enough,” says Mellody Hobson, president of Ariel Investments L.L.C. “This is lifelong task, not something you start in middle age. The earlier people understand this, the better their chances of achieving their dreams.”

One area where both blacks and whites had a similar response was in reference to cashing out all or part of assets from a defined contribution plan, such as 401(k), permanently and with a penalty. Thirty percent of blacks said they had, while 28% of whites said they had.

About two-thirds of African Americans (compared with about half of whites) say they would increase contributions to their retirement plan if employers provided access to financial advisers, seminars about retirement investing, and/or education about the features of the plan.

“Employees want and need help with retirement investing, and employers have an opportunity to make a real difference,” said Toppin. “For employers who want to make a real difference in the financial futures of their employees, today’s turbulent market environment is a time to provide the information that many Americans so desperately need in order to finance their retirements.”

In 2007, blacks were investing in the stock market at the same level as they were 10 years ago at the inception of the survey, at a low of 57% (compared with a high of 74% in 2002). Investing by whites was at 76% last year. This year, blacks were participating in the stock market at 62%, compared with 82% for whites.

While overall stock ownership among blacks continues to lag, the historical preference for real estate among blacks is at historic lows. This year, just 39% of blacks said real estate was the “best investment overall” compared with 37% of blacks who picked stocks or mutual funds, according to the survey. Among whites, just 28% chose real estate compared with 55% who chose stocks and mutual funds. In 2004, at the height of the real estate bubble, 61% of blacks and 51% of whites said it was the best investment overall.

To download the 2008 Ariel/Schwab Black Investor Survey and to see highlights from previous surveys, visit www.arielinvestments.com or www.aboutschwab.com.