WASHINGTON -- "Learn thou the worth of a dollar and how to keep it from damning thee," Joseph Seamon Cotter Sr. advised back in the 19th century.
Cotter was an African-American poet whose best-known work was about the Civil War. My 17-year-old son happens to be a poetry buff, but I don't know if he's heard of Cotter. I almost mentioned Cotter's maxim while accompanying my son to the bank to help him set up his first checking account. He's newly converted to the wonders of work, a transformation made possible by a gratifying flush of wealth. His new job, his third since June, appears to be a keeper. Suddenly earning more money than the consumption of pizza and CDs can dissipate, he's putting some away.
To be fair, he's been spending only a portion of cash earned from tips while holding on to his paychecks. I watched as he handed over a neat little stack of them to make his first deposit. While he filled out forms and chatted with the bank representative, Cotter's wise words buzzed in my thoughts, competing with the piped-in Christmas carols filling the air above our heads.
Most experts agree that children learn how to handle -- or mishandle -- their money by observing their parents. I've never been one to spend freely but my relative frugality most likely stems from seldom having much cash, rather than an abundance of financial smarts. If my genes turn out to be dominant, there's little chance my son will someday be chairman of the Federal Reserve.
But I do want him to be prudent and prepare for the future. I know enough to realize, as I quoted sociologist Thomas Shapiro in an earlier column, that "black and white professionals in the same occupation earning the same salary typically move through life with significantly unequal housing, residential and educational prospects."
There are more prosperous African-Americans than ever before. But in a risky, challenging economic climate, they tend to fall faster and farther. When wealth is defined as home equity plus savings accounts, stocks and bonds, 45 percent of all black households are "wealth poor," compared to only 25 percent of all American households. That leads to fewer resources in a crisis, and drastic solutions such as bankruptcy. Elizabeth Warren, a Harvard Law School professor and expert on the economics of American families, estimates that black families are more than six times likely to resort to that option.
A demonstrable appetite for material things doesn't help. A weakness for "stuff" is an all-American malady, and black consumers are among our nation's most enthusiastic shoppers. "The Buying Power of Black America" is a reliable annual study conducted by Target Market News, a Chicago-based research firm. Among the conclusions of its 2003 report: "Black consumers are still out-spending all other (ethnic) groups in apparel, food, beverages, cars, and trucks, home furnishings, telephone service and travel." This is not to suggest that all such purchases are questionable. African-Americans in 2002 spent $303 million on books, for example. On the other hand, we spent $22.9 billion on "apparel products and services." Think about how much stock or real estate could be bought with just a fraction of that.
Where's there more spending, there's less saving. A 1998 federal survey of consumer finances showed that black American households are more likely to have a shorter financial planning horizon; spend more rather than less of their incomes; not save or not save regularly; and be less willing to take financial risks when saving/investing.
Stephen Brobeck, executive director of the Consumer Federation of America, has suggested that blacks have not taken full advantage of investment and savings opportunities in part because their families have little historical experience with financial planning. Interested parties can gain valuable ground through campaigns such as "Black America Saves," a nationwide program that helps African-American wage earners pursue savings and investment plans by offering free advice and information.
For someone like my high-school senior, financial planning tutelage needn't be sophisticated to begin with. It can start with a few simple words of advice such as Joseph Seamon Cotter's.
Or by taking note of a comment from Joe Louis. The Brown Bomber was a tragically inept financial planner, but he was nearly as eloquent as a poet when it came to talking about it. "I don't like money, actually," he once said, "but it quiets my nerves."