Groundbreaking ING Foundation Survey Funds: Financial Confidence and Empowerment High Among Black Women but Investment Experience, Accumulated Savings LAG
- 47% of Black Women Say It is Difficult to Have Desired Lifestyle Because of Financial Obligations to Their Immediate Family
- More Than a Third Have Loaned Over $1,000 to Friends or Family in Last Year
- 71% Say It’s “Very Important” to Give Money to Their Place of Worship
...And Spending Doesn’t Help Matters:
- 68% of Black Women Buy What Thy Want in Good or Bad Economy
- 41% Feel Guilty About How Much They Spend on Expensive Brands
Two in Five Report Total Savings of Less than $10,000
But Growing Interest i Saving and Investing Combined with Interest in Influencing Others and Learning New Things Augur Well for the Future
ING Foundation President Says Financial Services Industry Has ”An Opportunity and Obligation” to Help
- Most Black Women Manage the Investments for Their Households
- Black Women Worry More About Their Finances Than Their Health, Appearance, Job or Relationships – But Nearly 70% Don’t Have a Professional Financial Advisor
- Most Are Willing to Pay for Financial Advice
- Nearly Nine in 10 Say Race Doesn’t Matter When Selecting an Advisor
Most Black women are confident in their ability to achieve their financial goals, but obligations to others combined with a tendency to spend are complicating their saving and investing efforts, according to the results of a nationwide survey released today by the ING Foundation.
Nearly half (47%) of the 1,000 Black women surveyed said it is difficult to have their desired lifestyle because of financial obligations to their immediate family, and 68% say that they buy what they want — in a good or bad economy.
Among the Black women surveyed who said they were not saving as much as they like, spending too much/too much debt and financial obligations to their families were the leading reasons why they were not saving more.
“What we have here is a financial perfect storm. An inclination to spend combined with an extraordinary desire to help others financially has left many Black women behind the curve in terms of savings,” said Rhonda Mims, president of the ING Foundation and senior vice president of ING’s Office of Corporate Citizenship & Responsibility. “The good news is that Black women care deeply about their financial future, have a strong desire to learn more, and manifest many of the qualities critical to investment success."
“The research points to a ‘Preparedness Paradox,’” Mims said. “Black women have high confidence in their ability to achieve their financial goals, and consider themselves knowledgeable about investing, yet they are behind where they thought they’d be financially.”
Sponsored by the ING Foundation and developed in conjunction with the editors of Essence, the largest circulation magazine for women of color, the national telephone survey of 1,000 pre-retired Black women and 454 non-Black women was conducted between May 1 and May 18, 2008, by the firm of Clark Martire & Bartolomeo (CM&B). Respondents were at least 18 years of age and had annual household income of at least $25,000. The country was stratified geographically, targeting the desired sample to increase the likelihood of finding eligible respondents. They were then called on a Random Digit Dial basis within the state. The results for the 1,000 Black women surveyed have a margin of error of +/- 3.5% at the 95th percentile of confidence; the results for the other 454 women surveyed have a margin of error of +/- 4.6% at the 95th percentile of confidence.
The Big Give
The survey evidenced an extraordinary commitment among Black women to helping others.
More than half of the Black women surveyed have loaned $500 or more to friends or family in the last year and one-third have loaned in excess of $1,000.
Nearly half (47%) of the Black women surveyed said that financial obligations to their immediate family have made it difficult to have the lifestyle they desire. Moreover, better than eight in 10 say that leaving money to their children is an important financial goal, indicating that striking a balance between their personal needs and those of others may be a lifelong challenge for many Black women.
And the obligation to others does not stop with family and friends. Better than seven out of 10 say that giving money to their place of worship is very important; that compares with 42% of all other women.
“Black women’s sense of obligation to community and family is both extraordinary and commendable,” Mims said. “But when you are pulled in so many directions financially, something or someone has to pay the price. For many Black women, it appears their financial well-being suffers. Black women need to make their own financial security a higher priority.”
To Buy or Not to Buy? That Is the Question
At the same time, the orientation to helping others is combined with a strong disposition to consumption — some of it conspicuous.
Almost seven in 10 (68%) Black women say that they buy what they really want — in good times or bad. And many Black women face the temptation of unplanned spending when they are feeling stressed — nearly 40% report that they shop to cheer themselves up.
Two in five Black women feel guilty about how much they spend on expensive brands.
“For some Black women, excessive spending makes the road to long-term financial security even longer,” Mims said. “To an extraordinary degree, Black women consider themselves trendsetters and centers of influence. Opinion-leading has its price.”
Black women with credit cards are more likely than other women to carry a balance on their cards. That said, credit card usage was less prevalent among the Black women surveyed than it was among other women, and 93% of Black women who consider paying off their debts to be an important goal said they were confident in their ability to do so.
Giving, Spending Patterns Depress Saving and Investing
The survey found that financial support of others in combination with spending patterns and lower income levels result in depressed savings for many Black women.
One quarter of those Black women surveyed say they are not saving any of their household income on a monthly basis and 43% report total savings of less than $10,000. Over half of Black women say that they live “paycheck to paycheck.”
Not surprisingly, therefore, Black women’s ownership of financial products lags that of other women.
Two-thirds of the Black women surveyed said they own a retirement account like a 401(k), 403(b) or IRA (compared with 79% of all other women) and 28% said they own individual stocks or bonds (compared with 52% of all other women), and 23% own mutual funds (compared with 39% of other women).
One of the reasons Black women may under-own investment products is relatively late exposure to investing. Seventy-two percent of the Black women surveyed strongly agreed with the statement, “I wish I had learned more about money and investing growing up;” that compares with 49% of the other women surveyed.
Among Black women who don’t own core, building-block investments such as stocks and mutual funds, the number one reason cited was the sense that they don’t know enough to pick the best investment option. The second most-cited reason was the belief that they don’t have enough money to warrant owning them.
“Too many Black women are missing out on the opportunity to own crucial wealth-building vehicles because they have not had adequate exposure to them,” said Valerie Brown, president, ING Retail Annuities Market Segment, ING U.S. Wealth Management. “That’s why we conducted this survey — to elevate and enhance the discussion around saving and investing for Black women and in Black households generally.”
Growing Interest: Black Women Eager to Save
While Black women may lack savings, they possess basic confidence in their ability to invest and a strong desire to learn more.
Seventy-one percent of the Black women surveyed said they are at least fairly knowledgeable about investing, and 76% said they were confident in their ability to choose the right investments for retirement. Nearly nine in 10 say they are more interested in saving their money now than they were five years ago; 73% say the same of investing.
Asked about financial products that they don’t currently own, over a third (34%) said they would like to learn more about retirement products such as 401(k) or 403(b) plans or IRAs and more than a quarter (29%) wanted to know more about stocks or bonds.
“An expressed interest in investing coupled with a high level of confidence point to the potential for an upsurge in saving and investing among Black women,” said Brown. “Now we must translate this confidence into opportunity and action. The ability is there as is the self-confidence. The challenge is moving financial security up Black women’s to-do list, and letting them know there are places to go for help.”
Money and Relationships
Money matters appear to be a source of contention in the relationships of many Black women, but are much less of a factor in their dissolution.
Forty-three percent of the married or cohabiting Black women surveyed said they argued about money with their spouse/partners at least occasionally — that compares with 29% of all other women who are married or cohabiting.
Reflecting that propensity for conflict — or perhaps precipitating it — 37% of the Black women surveyed said that they had “a secret stash of money” and 39% said they occasionally or regularly under-reported the cost of an actual purchase to their spouse.
Of the married or cohabiting Black women surveyed, 35% said they would rather do a month’s worth of laundry than discuss their finances with their partner and 15% would rather have a root canal.
But when divorced women were asked about the role money matters played in the dissolution of their relationships, only 9% of Black women said it was the major consideration — compared with 18% of all other women.
“Money is an unavoidable, day-to-day issue in many Black households,” Mims said. “At the same time, the survey suggests that as a household priority, money takes a backseat to faith and family.”
The poll revealed that the more money a household has, the less money is an issue in the relationship. Black women with household incomes in excess of $75,000 were one-third less likely than average to argue with their spouse or partner about money matters.
When asked what qualities they are looking for in an ideal partner, 79% of single Black women said a prospective spouse’s ability to manage money was very important — 47% of all other women responded that way. Forty-five percent of single Black women said a potential partner’s credit score was very important; 19% of all other women said so.
Interestingly, 60% of Black women said religious background was a very important factor in an ideal partner; only 16% of other women felt that way.
The Road to Financial Security Starts with a Financial Plan
Analysis of the survey results done by CM&B showed that the act of financial planning has a strong impact on feelings of financial security and savings behaviors, even after controlling for income and assets, particularly among Black women.
“There is no question that there are powerful benefits to financial planning — and not just to one’s portfolio,” said Doug Parent, who directed the study for CM&B. “The mere act of planning leads to greater knowledge and empowerment, which gives women the confidence they need to take action.”
Black women are less likely than other women to have a financial plan (56% vs. 66%), but Black women are more likely to have a will (43% vs. 32%).
When asked why they don’t have a financial plan, 73% of the Black women without a plan said they just hadn’t gotten around to it. Other reasons cited by at least half the respondents included they didn’t think they had enough money to warrant it (55%), didn’t know how to go about it (53%) and were reluctant to disclose all their financial information (51%). Only 23% didn’t think it was important to have a financial plan.
“The journey to financial security begins with a road map,” said Brown. “Creating a financial plan focuses you on where you want to go and, just as importantly, what you need to do to get there.”
Financial Services Industry Has Opportunity and Obligation to Help
Survey data point to a large opportunity for the investment management industry, financial advisors in particular.
For starters, financial security is top of mind for many Black women. In fact, Black women worry more about their finances than their health, appearance, job or personal relationships.
And while this concern combined with a desire to learn more make Black women logical consumers of financial advice, nearly 70% don’t have a financial advisor. That said, most are willing to pay for financial advice. Even more encouragingly, when it comes to selecting an advisor, 80% of Black women say gender is not a consideration and 88% say race does not matter.
“We think there is a tailor-made opportunity for financial advisors to step in and to help women to take their first steps down the path to financial security,” Brown said.
“At the end of the day, the financial goal for most Black women is a secure financial future,” said Brown. “As our data indicate, Black women don’t want special treatment; they want respectful treatment. A competent, caring, communicative financial advisor has all the qualities required to win business in this market.”
“Black women are goal-oriented, smart, motivated, and influential, and they have made extraordinary contributions to their families and to their communities,” Brown said. “This is also a market with growing financial resources. It’s been estimated that within five years, Black households will control in excess of $1 trillion in annual spending. We think it’s time that the investment management industry realizes both the obligation and opportunity to help them with their finances.”
Audria (Aud) Belton Benn, ING, 770-980-5715 or 404-934-8743, or email@example.com
Arielle Densen, Tiller, LLC, 212.358.8515, ext. 7, or firstname.lastname@example.org
Heather Emerson, Tiller LLC, 212.358.8515, ext. 4, or email@example.com
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About the ING Foundation
The ING Foundation's mission is to improve the quality of life in the communities where ING operates and its employees and customers live. Through charitable giving and employee volunteerism, the foundation focuses on sustainable programs in the areas of financial literacy, children's education and diversity.
For more information, visit www.ing-usafoundation.com