E-mail a friendMatthew Scott
original airdate August 27, 2004
Matthew Scott is the Personal Finance Editor for Black Enterprise magazine. He's responsible for 'Moneywise,' the magazine's section devoted to personal finance and investment-related topics. The Brooklyn native has a journalism degree from Rutgers and is the recipient of several business journalism awards. Scott previously served as Editor-in-Chief at NV - New Vision in Business, a magazine for urban professionals and entrepreneurs, which he helped launch.
Matthew Scott
Tavis: We continue our 'Road To Wealth' series tonight with Matthew Scott, the personal finance editor for 'Black Enterprise' Magazine. Prior to his career in journalism, he served as the Director of Communications for the National Bar Association, the nation's largest organization of minority lawyers. Matthew Scott joins us tonight from the Big Apple. Matthew, nice to have you on the program.
Matthew Scott: Thanks for having me, Tavis.
Tavis: Glad to have you here. This Wealth Initiative Kit that 'Black Enterprise' Magazine has put together--before I get too deep into what you guys are advising people to do with the kit, tell me how the kit came into existence, what the need for the kit was, and what's in the kit.
Matthew: Sure. In the year 2000, our publisher Earl Graves decided that financial empowerment was the next biggest hurdle for African Americans, and we decided to come up with 10 principles that African Americans could adopt to their everyday lives that would help them toward financial empowerment, and that's how we came up with our Black Wealth Initiative, and this is a kit that we offer on-line. You can go to our web site: www.blackenterprise.com. And inside the kit we have a group of information that you can take and deal with each of the 10 principles and help you move toward financial empowerment.
Tavis: Let me ask you what the primary difference is--I know your publisher well. Earl Graves. I'm glad he did this, came up with this idea. What makes--what makes it challenging, what are the difference between advising black folk about how to build wealth versus white folk? Now, I ask that because I know the principles are basically the same, but what are the challenges you encounter in trying to get that message across to African Americans, who are obviously much more economically disenfranchised proportionately than are white Americans?
Matthew: Well, one of the challenges is that African Americans don't have these conversations about money on a regular basis, so by using the magazine and our Black Wealth Initiative, we wanted to start the conversation and give people tools that they could actually take away and use on a regular basis. It's about giving people information in a way that they can relate to. That's why we use, when we talk about the Black Wealth Initiative in the magazine, we use African Americans who are actually doing some of the things that we talk about in terms of our 10 principles for building wealth.
Tavis: And I always enjoy seeing that every month. Every month in the magazine, there's a spotlight story, a feature story on a particular family, an average, ordinary, everyday Black American family that's using the principles in the kit and are making progress. Let me walk through some of these principles if I might. I know we don't have time in our conversation tonight for all 10 of the principles, but let me start and move through as many of them as we can cover tonight. As I mentioned in the open to our show tonight, the first issue on your list of these top 10 principles is to use home ownership to build wealth. Now, that assumes you have a home, but to use home ownership to build wealth. Why is that number one?
Matthew: It's number one because if you don't have a home, you need to get a home, because there's no--they're not going to be making any more land in America, and so long as you have to live somewhere, the best thing to do is to get a home, then use the money that you place into that home to leverage so that you can then build other things like a business, like saving for your retirement, and to also put money away so that you can leave a legacy and pass that land on to your relatives, your children.
Tavis: How do you respond to folk who are watching right now who say, 'Matthew, great advice. I'm glad that it's number one on your list, but you might have--you and your friends at ‘Black Enterprise' might well have started with the most impossible and difficult thing for black folk to do, specifically for people of color, for that matter: to own a house.'
Earlier on my radio show on NPR this week, we had a conversation about home ownership and specifically what the Bush administration has done or not done, as it were, over the last 3 1/2 years on this issue of home ownership for people of color. As I recall, 59% of white Americans own their home. As I recall, 58% of Asian Americans own their home. I know this number's right. Only 38% of black folk own their home, and that number is less for Native Americans and less for Hispanics. So you put it at the top of your list, home ownership, but isn't that like putting the cart before the horse? Most black folk--38% of them only own their homes.
Matthew: Well, again, this is not going to be solved overnight. We want people to start adopting these principles so that then they can change their lives, and it's important for people to understand that now there are so many new programs, in terms of mortgage programs, that are out there for first-time home buyers, that it mainly costs you 2%, 3% of the actual cost of the home to actually get a home, but you have to start saving something now and clean up your credit now in order to be eligible for these programs.
Tavis: Your second principle, speaking of saving and investing, is just that: saving and investing.
Matthew: That's right. Save and invest up to 10 to 15% of your after-tax income, and the reason for that is because if you don't save anything, there's no money to invest. You have to be able to save so that you have something for your retirement, something also to pass along to the next generations.
Tavis: What advice does the magazine offer, do the editors offer for people who, again, understand that principle, believe in that principle ostensibly, theoretically that saving is a good thing, but you gotta have a methodology for how to steal a little something away and put it in that tin cup?
Matthew: Well, we say that you need to at least pay yourself first. You're gonna pay bills anyway, so make sure that you take a few dollars, no matter whether it's $5.00 or $25 each month and put it into a savings account for yourself. Remember, you are the person that's in charge of your own financial future. If you don't feel like you can save for yourself, who's going to help you towards your retirement? So that's one of the most important principles that we have.
Tavis: Third principle: commit to a program to plan for your retirement.
Matthew: Correct. And when we talk about committing, we're talking about setting up things that will automatically help you to actually save for your retirement, like enrolling in your company's 401k plan, taking money after you've actually enrolled in your 401k plan, and then putting some more money into an I.R.A. account if you can. Also taking the time to set up an automatic deduction from your account to have it placed in another type of account for investment purposes.
Tavis: African Americans, as you know--and I know this ‘cause I read 'Black Enterprise' every month...'Black Enterprise' told me some months ago that black folk are still lagging behind in every single leading economic indicator category. I read in 'Black Enterprise' that black folk are still the last hired and the first fired, and I raise those issues because I'm trying to figure out how it is that you get people who are trying to make ends meet on a daily basis, still economically disenfranchised as we speak, to think futuristically about planning for retirement juxtaposed against just trying to make it every day?
Matthew: Well, what we try to do is, again, we show in the magazine everyday people, people with salaries ranging from $30,000 to $75,000 and above. We show them going through the motions of actually doing some of these things: saving on a regular basis, making sure that they go to a financial advisor on a regular basis, making sure that they're taking the time to set up a plan for their retirement.
You can't get anywhere without a plan. You have to have something in place that says, 'If I do a certain number--a certain amount of saving, if I make sure that I don't spend my money on frivolous things, if I make sure that I'm looking for bargains when I'm out there shopping,' that at some point, that is going to turn into a windfall for you in terms of your retirement savings.
Tavis: Principle number 4: to engage in sound budget, credit, and a tax plan.
Matthew: Right. This is very important, because as you know, African Americans are also challenged when it comes to our credit ratings, and your credit rating is important, because you can't get a house if you have a bad credit rating. We want to show people in the magazine how to use credit properly.
We also want to show people that one of the best ways of saving is to use your tax advisor so he can show you ways to take advantage of the tax laws so that you don't pay out as much to the government. The more you keep, the more you can save, the more you can invest. So these are strategies, again, if you don't take the time to set them up in advance, it's very difficult for you to then reap the benefits, the long-term benefits of saving and investing.
Tavis: Course, you're talking about legal ways to keep your money.
Matthew: Ha! Of course legal ways. But again, you have to realize we have to come up with more than one stream of income to make sure that we're safeguarded for our future, because prices are always going up, our costs are always going up, so you have to be really creative, and sometimes you just can't come up with all of the answers, so you need to reach out to a financial advisor or a tax advisor for help.
Tavis: Let me jump to the last principle on this list, and I understand why it's last: to ensure that your wealth is passed on to future generations.
Matthew: That's right, and this is the most important thing, because if you could become as wealthy as you want to, you could become a multimillionaire, but if you don't have a will and you don't have a plan in terms of how that money is then going to be distributed to your relatives, then it's all a waste. We haven't taken the time to help the next generation start off in a better position than we started off, and that's the whole goal of the black wealth imitative, to make sure that our--the people that come after us have the wealth that we're able to develop.
And I encourage people to go to our web site. That's www.blackenterprise.com. Download the kit tonight and then start looking at it, read up. There's plenty of information. There are books. There are organizations that you can call and Web sites that you can go to, to help you learn about investing so it's not so scary, and then it's easier for you to do on a regular basis and incorporate into your everyday life.
Tavis: Matthew Scott is the personal finance editor for 'Black Enterprise' Magazine. Matthew, thanks for the advice. Thanks for the series you guys are doing in the magazine. All the best to you and the good people at 'Black Enterprise.'
Matthew: Thanks for having me, Tavis.
Tavis: Nice to have you on, Matthew Scott. Up next on this program, actress Sanaa Lathan from 'Alien vs. Predator.' Talk about a shift of gears. We'll talk to Sanaa Lathan in just a moment. Stay with us.
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