After Christmas, the number of phone calls increases at my office. Most of the callers have the same questions: Can I file my taxes with my last paycheck? Can I get an advance tax refund loan? These cash-strapped callers know that the answer is “No” but they try anyway. Why? Because these callers over-spent on holiday shopping and festivities, now they are counting on their tax refund to save the day.
Willie Mae Williams, my late grandmother taught me important lessons about saving for the holiday season. She told me to open a Christmas Club savings account at a local bank and deposit a portion of my paycheck throughout the year for Christmas spending money. Grandma had several rules for the Christmas Club account: 1) Don’t withdraw your money until Thanksgiving. 2) Don’t spend more on shopping than what you saved. 3) Make sure you have enough money to put into your Christmas Club account for the next year.
In addition to sharing financial advice, Grandma would pass down our family’s oral history. She told me that savings was very important to her, because her grandmother told her the stories of how slaves saved to purchase their freedom and to purchase land after slavery ended. After run-away slaves settled in the North, they would save to buy their relatives out of slavery. When American Slavery ended, the slaves who saved were able to purchase land.
According to the United States Commerce Department, before the economic crisis of 2008, the average American savings rate was 1.3%. During this time, experts estimated that the savings rate for African-Americans was negative. Since the recent economic crisis, the average American savings rate increased to 3.6% but no recent report reflects a significant increase in savings for African-Americans. Based on my “real world” interactions with clients, these percentages are accurate.
This year marks the 150th anniversary of the Emancipation Proclamation (the end of legal slavery in America). Now is the time for African-Americans to reflect on the following questions: How did the African-American community’s values shift from saving for freedom to spending for pleasure? Do you think your enslaved ancestors would be proud of your financial decisions? Did slaves and newly freed former slaves manage their money better than you? What financial and savings advice can you pass on to your next generation? Do you think that your great-grandchildren will thank you for making them financially smarter or richer? Will you leave your family a financial legacy or a financial burden?
Rashad Phillips is a Certified Financial Coach and a Tax Accountant. For additional information about this article contact Phillips at firstname.lastname@example.org.