What are the most common perceptions of men in our community when it comes to finances? If you’re one of a lucky few, you’ve seen numerous examples of men starting businesses, securing their family’s future, or teaching their children the importance of investing. Unfortunately, the more common viewpoint of men in urban America tends to be very far from this reality. More often, what gets communicated about us is some combination of joblessness, poor credit, and a backseat approach to handling money. While stereotypes are always frustrating, there are some critical ways men can become more accountable in our finances for the benefit of all. Here are just a few examples:
#1) Budgeting: everyone in the home is essential to a budget
While this may overstate the obvious, males generally make up a sizable chunk of a household budget. So without properly accounting for the income we bring in or the fixed and discretionary spending on our behalf, having an effective savings plan becomes almost impossible. Besides this point there’s an even more important reason men need to develop a stronger capacity for managing money. According to CDC.gov, women tend to outlive men by by a total of roughly 5 years with an average life expectancy around 81 years. So in the event that those odds become a reality, there’s a very strong likelihood of a man passing on large financial obligations to his loved ones. Having a solid emergency fund in place as well as adequate life insurance are without question, necessary safeguards for men to have in place. However, everything has to begin with an in-depth understanding of our budget including the dynamics of the household finances.
#2.) Debt: excessive debt becomes a man’s legacy when it’s passed on
Although debt has become a crippling problem across the board in America, the numbers appear to be much more problematic for men. According to survey results from gobankingrates.com, men carry nearly three times more debt on average than women. In fact, the average man has a total of $95,057 in debt compared to just $31,037 for the average woman. This issue of excessive debt however, is not just rooted in the amounts, but in the type we carry as well. Often we find ourselves overextended by borrowing for homes, cars, and other installment loans we simply cannot afford to make payment on. When this occurs it can not only damage our own personal credit; it can potentially result in inherited liabilities for those we leave behind (i.e. children and spouses). The best way to avoid passing on this debt snowball to our loved ones is having a solid debt elimination strategy that minimizes both payment term and interest expense.
#3.) Credit: establishing good credit positively influences our children
Understanding your FICO credit score is probably the single biggest area of opportunity for men in our community. While there are numerous credit myths that circulate, the key point to understand is that our credit score is invariably determined by our credit history. Or said differently, establishing a pattern of poor credit decisions like maxed out credit cards and delinquent debts, produces a drastically low credit score. Conversely, when we practice good decision-making with our credit, this habit gets actually passed on to our sons and daughters. And since most of how we manage money relates to what we observe growing up, we have ample opportunity to set them on the best financial path going forward. For our sons especially, it’s important that we teach them financial leadership by showing them an actual credit report and practical situations of when and when not to use credit. This will ultimately pay huge dividends over their lifetime.
While all of this emphasizes the importance of men and our finances, in no way does it diminish the role women that play. Often in our community women are forced to carry the financial load of both parents with little to no help at all. But that simply reinforces the fact that we all have a vested interest in men becoming more knowledgeable and successful in managing money.