Mistakes Black women make

Black women can't afford NOT to clean up their finances and build for the future, financial experts say. Chances are that African-American women will live an average of seven years longer than their spouses. But today's spending sprees, financial mistakes and lack of financial planning may tarnish those golden years. A frightening possibility is that some Black women may find themselves among nearly half of the nation's African-American women age 65 or older living in poverty today, according to a study by the American Association of Retired Persons.

Sisters have their own set of issues about money and financial challenges unlike any other group, says Gary Harris, a financial advisor and owner of GH Asset Management, LLC, in Chicago. "Black women need a 12-step financial program to remove the scars of slavery," says Juliette Fairley, author of Cash in the City: Affording Martinis, Manolos and Manicures on a Working Girl's Salary. "We try to compensate for our feelings of inferiority or need to keep up with the 'Joneses' by purchasing things we can't afford that drive us further into debt."

Financial experts identified some of the top money mistakes Black women make:

* Addiction to shoes and handbags. Most Black women love to dress and wouldn't be caught dead without expensive shoes, purses and accessories. These items also are depreciating assets that lose value when you walk out the store.

* Putting their financial lives on hold. Too many Black women wait to get married before gaining control of their finances. They rent rather than purchase their own home and tend not to save while looking forward to a future life with "Prince Charming."

* No financial plan. What are your goals for the future? How will you get there? Many women don't think specifically about their financial priorities long-term. It's always wise to pay yourself first; start making small investments and start saving for retirement early.

But for some women who are just trying to make ends meet, financial planning may be difficult, Fairley says. She recommends getting a part-time job, using your talents to make money in a home-based business or freelancing.

* Getting divorced. After a divorce, a woman's household income usually decreases by as much as 45 percent, according to the Institute for Divorce Financial Analysts. Harris adds that most state laws require that a woman must be married a minimum of 10 years to be entitled to her ex-husband's social security benefits.

* Too much credit card debt. Paying for everything with plastic and making only minimum credit card payments mean you're paying more for everything you buy. In fact, you'll pay an average of 112 percent more for every purchase? Pay off those credit cards!

* Lack of asset protection. Losing a job. Death of a spouse. A major illness or accident. Divorce. These life-altering events can affect you financially, but many Black women are not prepared. Financial experts advise women to acquire adequate life insurance, disability insurance and long-term insurance for themselves and their spouses. A three- to six-month emergency fund is also a must.

In summary, financial experts recommend that women take the following steps: Stop getting deeper in debt; develop a financial plan and get help from a reputable financial planner; pay yourself first; protect your home and self with adequate insurance plans; purchase used rather than new cars; calculate how much income you need after retirement, devise a plan and stick to it.

"Listen to the billionaires," says Fairley. "They all didn't start out rich, but they made the financial sacrifice to live their dreams."

COPYRIGHT 2006 Johnson Publishing Co.
COPYRIGHT 2008 Gale, Cengage Learning