By: N. L. Preston
HOUSTON — We are nearing the end of a historic election year, in the middle of a pandemic and people are losing jobs left and right. African Americans have been among the hardest hit, many not having “nest eggs” or savings to get them through these critical times, and when things began to normalize again – or as close as we can get to it — smarter money management skills will be high on the priority list. We went to the banks to learn how to better prepare for the next financial crisis.
“Knowledge of what is happening in your community is so important especially during these challenging times and Comerica is committed to help in many ways,” said Vanessa Reed, Comerica Bank Regional External Affairs Manager. “One commitment I’d like to highlight is our partnership with Unity Bank and other Minority Depository Institutions across the nation.”
In August, Comerica Bank announced that it is moving $10 million in deposits to Minority Depository Institutions (MDIs) within its five-state footprint, as well as building mutual mentoring relationships with these institutions. This MDI partnership will help Comerica better assist minority and under-served communities and foster economic viability in the markets it serves. Of this $10 million in deposits, Comerica has allocated $7.5 million ($2.5 million each) to First Independence Bank in Detroit, Mich.; Broadway Federal Bank in Los Angeles, Calif.; and Houston’s Unity National Bank, the only African American owned banking institution in Texas.
“Unity National Bank appreciates the depository investment made by Comerica,” said Unity National Bank President and CEO Laurie Vignaud. “This allows Unity the ability to provide low cost funds to our borrowers who need it the most during these trying COVID-19 times. We are living through very unusual times, therefore having financial institutions like Comerica reach out to offer assistance, is very noteworthy and meaningful.”
African-American News&Issues asked Reed to provide readers with financial literacy tips for ourselves, and our children.
Q: What should we know about money management?
A: The primary key is understanding money and how to build and retain wealth. Wealth is tied to the ability to acquire assets that appreciate in value and reduce associated liabilities. For many African Americans, this begins with personal wealth, our home and if we are fortunate to own a business and/or to invest. Unless you were born into wealth or become an overnight success, it can take a lifetime to generate personal wealth, let alone generational wealth, without a plan and a team of trusted and knowledgeable advisors.
Once you outline your goals, advisors can make recommendations to help you safeguard your assets, i.e. setting up and maximizing the benefits of a retirement plan, insurance and the like. These are basic steps. All too often, I meet people who do not take advantage of employer-sponsored retirement savings plan match, and their family is not properly insured. Even if you do not have a retirement plan begin by developing a habit of establishing a simple savings plan. If 10% seems like too much, perhaps you can begin by putting aside $10 a week and by year-end, you will have saved $560, and then more than $5,600 in five years — if you factor in the power of compounding interest.
As you make consistent deposits your money will begin to grow over time, and, that’s when a trusted advisor can help you make decisions on how to maximize and protect your savings, reduce debt and retain wealth. More often than not, your first advisor will be your banker. Start building that relationship sooner rather than later. You want to know your banker before you need them. If you do not know your banker by name, schedule an appointment today.
Q: When do you suggest teaching your children about finances?
A: Statistics suggest that the earlier we begin teaching our children about financial wealth, specifically during their formative years (between 1 – 5 years of age) the better it will formulate how they will view it. Something as simple as picking up pennies or other coins and encouraging children to put it in their piggy bank can help to establish the habit of saving for the future
Q: When should youth move from the piggy banks to opening their first bank accounts?
A: A good rule of thumb to trigger the transition from a piggy bank to account opening is when your child demonstrates he/she understands the importance of saving; for example: setting and reaching a certain savings goal or milestone. This can be accomplished by creating teachable moments every time you visit the bank with your child or student. Discuss what is taking place during the banking experience. Encourage them on their financial journey by modeling sound financial practices. This should also include saving and budgeting, and involve them in financial implications for the household.
Q: What is the most common mistake you see people make in banking?
A: The most common mistakes I encounter are really rooted in not understanding how to manage and maximize resources. Take advantage of the free resources by tapping into information you need to grow personal wealth to the point where you do need a paid expert. Our Online Comerica Financial Education Center addresses issues that people and business encounter at every stage of life. The lessons are no more than 5 – 7 minutes and can be accessed via any mobile phone on the go.