In Black America; Smart Money Moves For African Americans

Thank you. From the Longhorn Radio Network, the University of Texas at Austin, this is in Black America. I think the most important thing when you get your first job is to understand that you have 30, 40 years to work. And so you don't have to go out and furnish the apartment, the whole house of that first paycheck.

You have to buy the best car the first time you go out. And really to start saving and investing as soon as they possibly can. When you get your first job, have your employer just start taking money aside and putting it into those investment programs. You get your first job, go ahead, definitely want to go ahead and have a financial plan. So now when somebody talk about what you're going to be doing next three to five years, more than likely a young person getting out of college today will not have the same job five years from now. And so it's important for them to keep in mind, hey, I may not be here. What am I going to do? And if I'm going to be out of work for a year or two years, I may be going back to college to get an advanced degree. What resources will I have to fall back on? Kevin Boston, author of the new book entitled Smart Money Moves for African Americans, published by GP Putnam's Sons. In today's society, many African Americans still struggle to achieve the American dream. They fantasize about owning their home, a new car, their own business,

and yet often lack the resources to pursue and obtain these goals. In his new book, Kevin Boston focuses on increasing net worth rather than increasing income. And for the first time, open up discussion of how African Americans can invest and save wisely to protect and build their financial resources. While Smart Money Moves or African Americans will not solve all of your financial problems, this money management manual represents part of the answer to the major problems facing African Americans today. The need to develop a systematic way of increasing the collective wealth of African American families. I'm John L. Hanson Jr. and welcome to another edition of In Black America. This week, Smart Money Moves were African Americans with author Kevin E. Boston and Black America. I think this is one of the most exciting areas that's happening right now

is African Americans are really eager to find out more about investing in a stock market. Many of us are investing in mutual funds. I think more of us want to become invested in the stock market overall. I'm seeing more African American women start their own investment clubs. I'm seeing more African American men talking about not only having a company but having a publicly traded company. Somebody else is very excited. I'm very excited about it. So you'll see more of us get involved now. Right now, not enough, really. On average, we have about $111 invested in the stock market for African American in this country, and that's just too little. Author and financial guru Kevin Boston is dedicated to reducing poverty in African American communities and teaching African Americans how to manage their money. Boston, who grew up in the housing projects in Wilmington, Delaware, experienced poverty firsthand. For him, he has made the battle against financial literacy his life work. Increasing the wealth of all African Americans is a sociological imperative. It is the only way to reduce the great economic and social divide

that now separates them from the rest of America. In 1988, realizing the lack of financial information outlets designed for the needs of African Americans, he left IDS American expressed and moved to Detroit to create the nation's first Black Financial Television Series financial insights. The program was soon nationally syndicated as the color of money. In addition, Boston is CEO of Boston Media Inc. He also publishes the color of money journal and owns a major interest in corporate Detroit magazine. I recently spoke with Mr. Boston regarding his new book. I think when I began to understand that in our society, everything is really based around the American dollar. We talk a lot about the American dream, but you can't enjoy the dream unless you have the American dollar. But somehow, somewhere in our educational system that's been lost, no one really explained that to me, nor are we really explaining that to our children today. You can go through an economics class and you would have an idea about the importance of particular money markets.

But you may not really understand that unless you have the American dollar, you cannot enjoy the American dream. Once you received that BA degree in English literature, you returned home to the South Wilmington Housing Counseling Service in 1977. Why was that important to you? Well, I always wanted to give something back to my community. As I told you earlier, I grew up with my mother. Basically, I knew my father. I think a chance to really spend a lot of time with him until after I graduated from college. So my role model, when I was growing up, was Frederick Douglass, about him in junior high school and high school. And here was a man who was of service to his community. And so when I graduated from Lincoln University in Pennsylvania, I wanted to go back home and do something. I didn't know exactly what it was going to be, but I ended up working at the local neighborhood house, which is a community organization. And we started a housing counseling service. And through that, the assistance to the individuals that used that service?

Yeah, in addition to that, basically, our focus was home ownership. We thought we'd improve a community by increasing the number of homeowners. Because basically, we had a lot of renters in the neighborhood. And now I'm happy to say after almost 15 years, that organization is still going strong in South Wilmington. Now they're building homes and they're helping families get their first home. And they're doing housing counseling throughout the state of Delaware. So it's amazing that one idea can do and how it can uplift people. You moved to Delito, Ohio, and became a financial planner with IDS American Express. Yeah. Give us an overview of what does a financial planner do? Well, basically, a financial planner is someone who works for a major financial planning company. They've been trained in the areas of financial planning. But what I like, basically, is that they look at your total financial picture. And they help you design a personal business plan for your home or your household.

This is very important. And in the book we talk about financial planning being the best investment a person can make, having a written financial plan. And it is because in this planning, look at your taxes. You can look at your investments. You can look at your short-term and long-term goals. And that's what you want a written financial plan to do. Financial planners are the people who design and help implement such plans. I think it's something that we forget about. I think a lot of times when we first get started, we get the first job. We know we want a new car, maybe a new apartment, eventually a new home, some new clothes. But we forget about all the other things in life that helps a person in our family become wealthy. And to me, this is very important because in America it's not about what you earn. It's about what you own. And the reason I think that right now, African Americans have a net worth of only $10,000. Compared to $51,000. Yeah, white counterparts have a net worth of over $51,000. It's because we have not been concentrating on owning the right type of investments.

We've been concentrating on owning clothes and jewelry and stuff. They don't appreciate. You should be thinking about his own investments and homes and businesses. And so to get back to your question, basically I think what we have forgotten is, when we get that first job, we'll get the whole picture to the long term picture. And what do I need to invest to become a wealthy American? In 1988, you realized the lack of financial information out less, particularly designed to African Americans. And you came up with a local cable program. Why did you feel that that particular juncture and time that financial insight was a necessary program? Well, basically I had been a financial planner for eight years at that time working for American Express Financial Advisors. Back in the day, it's called IDS Financial Services. But anyway, after working in the industry for a while, we had to watch all the TV programs. So we watched Wall Street Week.

This was before they had CNBC, by the way. And there were very few television programs that dealt with personal money issues addressing the black America, or even middle-income America for that part. And so at the time, it was very advantageous for us to have a television program that spoke the language that we could understand. And it's still important. I mean, one of the sad things today is that even though we do have more money programs, very few of them feature people of color, very few of them feature middle-income people, and many very few of them even feature females. So even though we do have CNN and CNN and CNBC along with the public television TV programs, we still have very few minorities represented on those shows that deal with personal finance. Before we get into your newest book, as an African-American, what obstacles did you encounter while working your way up the ladder in the financial industry?

Well, I think in the financial area, at first, it was probably people misunderstanding. Did they take you serious? Did they take you serious when... Yeah, a lot of people, in fact, it was interesting. Sometimes my white customers took me more serious than my blackouts. Oh, okay, okay. But they were used to deal with money. This is what I'm trying to get at. A lot of times, I spend most of my time as a financial planner teaching. And that's what I knew we had to do a serious job of giving people information about how one accumulate wealth in America. I spend so much time teaching my clients about what a mutual fund is, what an insurance policy is, how does it operate, how does it work, how does a certificate of positive work. It began to take away from my business, and that's why we had to change. I think that's probably my serious obstacle.

I was fortunate. When you work for a financial planning company or an investment company, I just like working for a franchise, so you don't have a whole lot of, I would say, blanket racism inside that industry. I think it was painful when I was going through, I was one of the first African-Americans to go through the process. Is that at that time we didn't have a lot of other brothers and sisters to talk to to help you along the way. That's changed somewhat, but there's still not enough. Once you've decided to go out on your own, what things do you wish you had known before starting your own business? Oh, probably good accountant. A good accountant. Good banker. I think what I've made, John, a lot of mistakes as an entrepreneur. And a lot of those mistakes come because I did what entrepreneurs do. We get excited about a project and we go gun hole in trying to make that business a reality. But we don't do some basic homework.

We don't sit down with somebody and have a five to ten-year business plan. Like I was talking about a personal financial plan. Any one of those plans for your businesses as well. But it's okay. I mean, I'm fortunate. Worktart kept my eye on, tried to stay focused on what my goal was. Like many business people do and overcame the learning curve. But normally we talk about businesses failing in that first three to five years is that learning curve kicking their butts. Because they're doing some things that they don't know anything about. And they didn't realize that they should went out and hired someone who didn't know to save them. So I'm going to do that process. Your latest book, Smart Money Moves for African Americans. How did you come up with that title? He's always moving. I understand. Basically, the title came from, again, looking at basically seven steps that Americans have been using for years to accumulate wealth. And what are those steps?

Those steps are having a written financial plan, investing in a stock market, paying yourself first, something I call a bound or dream, buying the right type of insurance, which is basically term, owning your own home and owning your own business. And last one is investing in yourself in terms of your human capital. But what I found in doing research is that many African Americans were not taking advantage of these opportunities. And that's why we entitled the book Smart Money Moves for African Americans. Was it difficult in finding a publisher? We were very blessed. I think, again, the timing was right, maybe because of the TV show and some other things that I was doing. We had seven publishers bid for the right to publish the book. My agent is Denise Stinson in Detroit. And I wrote a book proposal when we submitted it. And on a day, it was exciting. I mean, they're calling me on a phone and calling Denise with these different offers. And she's calling me and saying, you want this one? You want that one? So we were blessed.

And putting them, I think, is done a wonderful job and has really gotten a book out there. And John, I should say, this is the first hard-covered book of its type. Written especially for African Americans. So it's a collector's item within itself. How has the public in general in the African American community in particular received this publication? Again, I think we've been very blessed. The reviews of the book have been very good. And right now, it's the number two best seller and nonfiction in the African American community. I think that says a lot forward right there. I'm hoping that we will become number one before the month's out. But it shows that African Americans have a definite interest in increasing their wealth. Let's go with chapter one from bondage to abundance. What are you trying to, the essence of that particular chapter to the reader? The essence from bondage to abundance is really helping set the stage for where, remembering where we came from, African Americans we had to endure slavery. But if we take the resources that we have now and the opportunities that we have now.

But the children and great-grandchildren and great-great-grandchildren of former African American slaves can enjoy a space of abundance. And that's what we're talking about. I was particularly struck by a phrase increasing your net worth without increasing income. How do you go about that? Well, basically what we're talking about is using the resources that you already have. And a lot of times you don't have to find any additional money. You need to look at how you're spending your money now. John, I'm not one for a lot of budgets. I think strict budgets sometimes get in a way. I am concerned about finding out where I'm using my money and where other people are using their money. And what we find is that there's a lot of waste. And I wish I could find a better term, but there's a lot of waste. And all of our monthly allocations. I mean, John, maybe we don't have to play the lottery every day. Maybe we don't have to eat out every day. Maybe we don't have to have two or three packs of cigarettes every week.

Maybe we don't need a new dress every Sunday. We need to start looking at where money is going. And making some decisions about what's non-essential. And spending that we can take a few dollars a side, put these dollars a side, and let them grow and compound. And that's what we're talking about. How can the average American black or white obtain some bit of wealth and security in this country? We're worrying about today-to-day obligations of meeting the obligations of bringing up a family. Yeah, I think that's where it's important to have a written financial plan, again, to see what you're spending your resources now. That's number one. Number two that I think is most important is make every payday another day to save a dollar in the dream. And John, we have to pay ourselves first. In America, there is no such thing as a guarantee, John. And I believe that savings comes first before rent, before taxes, even before food for the children.

And I know some people say that sounds kind of harsh. But reality is that if we're laid off tomorrow, we need some money to fall back on. And we won't have any unless we put it aside. If we have another problem tomorrow, we can't go back to Sears and say, give me that money back to that just gave you. It's important for us to make savings first, to think about buying a home. And just using our money again in some smarter ways than we had in the past. There's no good, rich, quick scheme. This is something that we can do, that we can increase our wealth over five, ten, fifteen years. We can do it slowly, but we'll get it done. And that's the approach to that I think we just want to take. One financial instrument that has probably been a staple within the Black community is life insurance. Are we as African-Americans and I guess Americans in general understanding the different instruments of life insurance? Now for a long time, this insurance has bogled us.

We didn't know. We knew something was wrong with the basic insurance. And the problem was something they called cash value. And we have to be informed consumers when it comes to buying insurance. Basically most African-American families only need a good term insurance policy. What term? Term because it's an expensive term insurance because it provides the level of protection we need. Most African-American families need at least a hundred to two hundred thousand dollars worth of insurance on anyone who's bringing an income into that house. It is very hard to buy that type of protection when you talk about a whole life because it's just too expensive. But with term, you can afford to buy that type of protection. So we need that type of protection. We need something we can understand. We need something that's going to take care of us if we have, if someone passes away. But the day of having a couple thousand dollar whole life policy is not doing us any good at all. The other thing real quickly is that we're finding African-Americans buy burial protection for the most part.

And our white counterparts buy income protection. It's one of those cultural things that we discuss in a book all the time. We got to get away from just buying enough life insurance to cover the funeral expense. That's not what it's designed for. It will help. But what we want to do is protect incomes of people who we now depend on to take care of our lifestyles and our families. Are African-Americans becoming more student investing in the stock market? I think this is one of the most exciting areas that's happening right now. As African-Americans are really eager to find out more about investing in the stock market. Many of us are investing in mutual funds. I think more of us want to become invested in the stock market overall. I'm seeing more African-American women start their own investment clubs. I'm seeing more African-American men talking about. Not only having a company, but having a publicly traded company. Somebody else is very excited. I'm very excited about it. So you'll see more of us getting involved now.

Right now, not enough, really. On average, we have about $111 invested in the stock market for African-American in this country. That's just too little. Could you give us an ideal or an example of mutual funds? There are different mutual fund companies and different instruments of mutual funds. What we suggest in the book is that you have a balanced mutual fund account. If you only have one, let it be a mutual fund where a professional money manager is going to select the stocks and bonds for every month. They're going to watch them on a regular basis. They're going to send you your statements so you have to worry about clipping coupons and those types of things. All you have to do is send them $20 to $50 a month to let them get started and invest in for you. In the book, we list 80 mutual funds that begin with investments that small. One of the myths is that you need a whole lot of money to invest in the stock market. That's just not true. You can start with as little as $20 to $50 a month. How long did it take you to put this book together or all this is an outgrow of the television program?

It was a little bit above. Again, when I go back to my career as a financial planner, look at what I've been doing on television in the last six years in terms of working with other financially successful people. Looking at my own lives, the positive steps I made and the not-so-positive steps I made with my own money, I try to put all this in the book so people can get a realistic understanding. I would say about 15 years really, but it actually told me about a year and a half to write it all down. One of the American dreams that all Americans have is owning a home. Are there any inside tips that one should look at in anticipating and owning a home? I think a couple of things. Number one, you want to go ahead and have your credit report checked a hit of time before you got looking for a home. Make sure there's no mistakes on it.

The next thing you want to do is maybe go to your financial planner or even a credit counselor to get everything in line. So you can know how much mortgage you can afford and begin small and work your way up. I would look at some federal programs like Fannie Mae, which is great across the country, which allow people to buy homes with the down payment as small as 3% down. This is a wonderful opportunity to get your first home or maybe even your second home, but that's why I would get started. You mentioned credit. How important is it for you to know the different types of credit and how creditors grant? Yeah, I think it's very important for you to understand the whole process. But more importantly, I think two things come to mind. One is to understand that a credit report cannot define you as a human being. Most Americans have made some mistakes when it comes to dealing with the credit. The reality is that you can overcome those mistakes, but again, it's going to take time. And not something you can give someone $100 and they're going to take care of immediately. It doesn't work that way. The second thing is to understand that your credit is another source of capital that you have.

And you want to try to save this capital for things like owning a home or owning a car or owning a business or even making an investment. And stop abusing it or misusing it by making short-term purchases like unclothing and restaurants and travel. That when you get into trouble you don't have this resource to fall back on. And I think that's what we, those are the type of areas that we need to give more consideration to. Chapter 8, I found very intriguing and interesting, smart tax moves. Yeah, with Deffin taxes. Deffin taxes. Two things are always going to be with us. Right. How important is it for us to really understand our tax liabilities and burdens and tax laws? Yeah, I think that what's important to understand here is that anywhere we can save money that we can pay ourselves. Again, we're looking for an extra $25, $50, $100 a month.

A lot of us are giving these dollars away on a monthly basis to Uncle Sam, who really doesn't want to. He just says, you take care of your own taxes. I only want the taxes that are due. You don't have to overpay me. But we're overpaying. And we're overpaying because we refuse to have something like a 401k, our tax sheltered annuity, our IRA, our home. Those investments right there can take here most African-Americans tax problems, not all of them, but most African-Americans can manage their income tax liabilities and find extra money that they're now giving Uncle Sam that they can invest in their own portfolios by using those types of investments. That's the most important thing. You look for ways to save money on your income taxes so you have more dream capital to invest in your own dreams. Before we run out of time, Kevin, we're along in life for a young college graduate listening to this program. What advice would you give him or her in starting out in this financial world?

Well, I think the most important thing, when you get your first job is to understand that you have 30, 40 years to work. And so you don't have to go out and furnish the apartment, the whole house with that first paycheck, and you have to buy the best car the first time you go out. And really to start saving and investing as soon as they possibly can. You get the first job. Have your employer just start taking money aside and putting it into those investment programs. You get your first job. Go ahead. That's when you want to go ahead and have a financial plan. So now, when somebody talk about what you're going to be doing next three to five years, more likely a young person getting out of college today will not have the same job five years from now. And so it's important for them to keep in mind, hey, I may not be here. What am I going to do? And if I'm going to be out of work for a year or two years, I may have gone back to college to get an advanced degree. What resources will I have to fall back on? So I think the most important thing, John, is where them start as early as they can.

I'm quite sure the information changes daily or as we speak, are we looking at a volume two, three and four for smart money's moves for African Americans? That's a good question. Well, let's say we are looking at, we're working on a second book now. It's going to be dealt with the more the human capital. Hopefully this time next year and maybe about a year from now, we will have a volume to. Is this a book for an average American making anywhere between 15 to $25,000 a year? Yeah, basically, I wrote the book for the majority of African Americans who are earning about $25,000 a year. But we're finding, John, as I'm going around the country, people are making $10,000, $15,000 a year reading a book. We have some people making over $100,000 reading a book. And they're reading it because it has basic sound, financial information. That no one has had a chance to sit down and explain to them. And we're very happy about that.

Kevin E. Boston, author of the book, Smart Money Moves for African Americans, published by G.P. Puttum Sun, and hosts of the Centicated Television Series, The Color of Money, broadcast over PBS and Black Entertainment Television. If you have a question or comment or suggestions asked your future in Black America programs, write us. Also let us know what radio station you heard us over. The views and opinions expressed on this program are not necessarily those of this station or the University of Texas at Austin. Until we have the opportunity again for IBA technical producer Cliff Hargrove, I'm John L. Hansen, Jr. Thank you for joining us today and please join us again next week. Cassette copies of this program are available and may be purchased by writing in Black America cassettes, Communication Building B, U.T. Austin, Austin, Texas, 78712. That's in Black America cassettes, Communication Building B, U.T. Austin, Austin, Texas, 78712.

From the University of Texas at Austin, this is the Longhorn Radio Network. I'm John L. Hansen, Jr. Join me this week on in Black America. A lot of us are giving this these these out the way on a monthly basis to Uncle Sam, who really doesn't want to. He just says you take care of your own taxes. I only want the taxes that are due. Smart money moves for African-American with author Kevin E. Boston this week on in Black America.