The Right Kind Of Education?

The civil rights organization Operation Hope just released the results of a study, the third of its kind, about African American students and their personal finances. The results are intriguing.

According to the article, Third Study Shows African American Students Consume More, Save Less:

When contrasted with the financial literacy of whites with the same incomes, the
highest income African Americans (those with family incomes above $80,000) had
financial literacy scores that were just 71.9 percent of whites. In contrast,
the lowest income African Americans had financial literacy scores that were 95.6
percent that of whites in the same income group. The report also revealed that
African American students are better spenders than savers.

In contrast to young white adults, African American high school seniors of
the same age are more likely to use credit and debit cards, are less likely to
have a bank account, and are less likely to work part-time or summers while they
are still in high school. This orientation toward consumption and away from
saving may help explain higher relative scores of African Americans on spending
rather than saving questions.

Several things jumped out at me. While high income African Americans had only 72 percent of the financial literacy of their white counterparts, low income African Americans had 95 percent of the financial literacy, or should I say illiteracy, as their lower income white counterparts. And, many of the African American "high-schoolers" did not work. The conclusions one can draw from this are many: (a) African Americans with good incomes who know a little something about managing their money need to know more, (b) knowing how to use your money means you're probably going to have more of it because you're going to keep more of it in YOUR pocket, (c) not knowing how to use your money will keep you poor--regardless of race, and (d) by not making our children earn what they want, we (African Americans) are not preparing our kids for the real world or the responsibilities of handling money. We are setting them up to be poor.

All of us want our kids to have the best education possible. Perhaps we should teach our children that character is "who we are" on the inside that shows outwardly in our decisions and actions--you don't wear it on your back. Next, we need to teach them the difference between needs and wants. And clearly, as this study by Operation Hope shows, it is important for us as black parents to learn all we can about personal finance and then teach those skills to our kids. Remember, many of us created our own financial crisis by buying way more house, car, clothes, hair, jewelry, holiday gifts, etc. than we need.

A final note - "Don't spend money you don't have trying to impress people who don't feed you."