African Americans’ Financial Beliefs Out-of-Sync with Actions

Though African Americans are more optimistic about their financial future than the general population, three-quarters don’t have a formal financial plan and nearly half have gone out of their way to avoid a financial conversation, according to a survey from the The Smiley Group and Nationwide  Insurance.

The survey (pdf) found that while the majority of African Americans (58%, vs. 30% of the general population) say they think their financial situation will improve in the next year, less than half are being proactive about their financial future.

Key survey findings:

• African Americans are more confident than their general population peers in their ability to make savings and investment decisions (52% vs. 43%), but are also more likely to indicate they are struggling with credit card debt (38 % vs. 32%).
• Paying monthly expenses and paying the rent/mortgage are the most important financial considerations for African Americans right now.

• Nearly half of all survey participants with children under 21 are very or extremely worried about being able to afford a college education for their children, but only about one in 20 say they actually have a college savings plan. Only three percent say saving for education is the most important goal.
• Nearly 90% of African Americans do not have a professional financial advisor because they don’t think they need one or think they can’t afford one.

Hungry for Information, Reluctant to Talk

Even though most don’t have a formal advisor or plan, African Americans express a greater interest than the general population in obtaining financial planning information from seminars, a financial advisor, an insurance agent, family/friends or television, the study found.

Despite this hunger for information, both African Americans and the general population have an overall tendency to avoid the topic of finances. They rank sex and not having enough money as the top two topics they are least comfortable discussing with family members, far outranking religion or politics.

However, a higher percentage of African Americans admit to having taken some type of action to avoid conversations about finances (45% vs. 39 percent of the general population). The actions most cited to avoid the conversation are screening telephone calls and cutting off a relationship.

Teaching Children About Money

Of those who aren’t actively avoiding the topic, most African Americans report  they are talking to their children about financial matters. Three out of four parents with children under 21 say they have discussed saving money with their children, and three-fifths have done so within the past month. One out of four have discussed saving money in the past six months. However, of those participants with children in school, eight out of 10 say they have not researched if their school teaches about saving money.

“It’s one thing to be positive, but it’s another to be practical, proactive and prepared to weather this difficult economic climate,” said Tavis Smiley, talk-show host and founder of The Smiley Group. “This survey reveals the critical need for an honest assessment of our financial status so that we can be sure that we are taking the steps necessary to safeguard the future for ourselves, our families and the next generation.”

About the survey: The national, online survey was conducted in January in the US by the Blackstone Group. A web panel was used to collect national data for a total of 1,200 respondents split into two sample groups. General Population, ages 18+ (n=600) and African American, ages 18+ (n=600).