Black Is Beautiful - by Valerie Coleman Morris

Black is beautiful but being in the black is necessary.

That's the sentiment—loud and clear—in Prudential's 2013 "African American Financial Experience" study.

Nearly half of those surveyed (49%) say their financial situation is better than it was five years ago, and a full 50% say there has been improvement, especially in the past year—a sentiment that's significantly more positive than that of the general population (33%).

What's driving this confidence?

When it comes to having a more positive financial outlook, African Americans are driven—not by a single fact—but a wider range of considerations than the general public. Among those surveyed, assets tell only part of the story. African Americans place less emphasis on assets and more emphasis on life insurance protection, debt, household expenses, and healthcare costs.

In the general population, one single item—total household assets—accounts for nearly half (47%) of the financial outlook. Among African Americans, household assets account for only 17% of the confidence score while the level of life insurance protection is 22%. Liabilities (including healthcare costs, household expenses, debt, and their children's or grandchildren's financial future) account for 31% of African Americans' financial outlook. That's fully six times more than among the general population.

According to Prudential's 2013 African American Financial Experience study, there is a growing economic power among African Americans with an increasingly affluent middle class. Thirty-nine percent of those interviewed have an annual household income of $75,000 or more; have a mid-range, optimistic outlook for the future; and feel "very well prepared" (46%) to make financial decisions.

Other key findings include:

Those with a college education (and an income greater than $75,000) have greater financial confidence

  • Nearly half have a workplace retirement plan (8 in 10 who are eligible contribute)
  • Women remain significantly more likely to be the decision-makers and/or primary breadwinners in their households
  • Men and women have roughly equal confidence, with the highest confidence score among Generation Y
  • Those who attend church regularly feel more confident in their finances than those who do not

Despite respondents' overall optimism, 9 in 10 of them feel that the country's economic downturn is still ongoing (largely due to high unemployment) and that significant challenges remain when it comes to prioritizing and focusing on competing, short-term money needs (such as paying down debt, building an emergency fund, and paying for children's needs).

The top three financial priorities—each chosen by more than half of respondents—are reducing debt, saving for retirement, and building an emergency savings fund. But given that more than half of African Americans surveyed (57%) provide financial support to unemployed family and friends at a rate nearly double the general population, debt (the gap between assets and liabilities) may be the greater challenge for this group.

Black is beautiful but being in the black is necessary.

Valerie Coleman Morris - @hermoneytalks

Author, It's Your Money So Take It Personally®, financial literacy advocate and former CNN business anchor

Emmy award winning journalist Valerie Coleman Morris is the former Business Anchor for CNN domestic and international.

In March of 2007, Morris made the conscious decision to focus exclusively on financial literacy as an aspect of business and social economics. Her core interest and passion is financial literacy for women, young adults and other emerging markets, which represent the most disenfranchised segments of the population concerning money issues.

Morris continues to write and narrate the nationally syndicated radio column which she created in 1986 called With the Family in Mind that focuses on family and sandwich generation issues and their money implications. These segments air on CBS Network Radio three times a week.

A popular lecturer on financial literacy, Morris also works as a facilitator, keynote speaker and Mistress of Ceremonies for senior executive conferences and corporate staff and employee special events. Morris' broadcast career spans more than 40 years and includes both coasts.

She has received a roster of awards including three California Emmy awards for both breaking news events and special reports. Morris earned a bachelor's degree in journalism from San Jose State University in California and a Master's Degree in Broadcast Journalism from Columbia University Graduate School of Journalism in New York City.

Morris, a product of an Air Force family, was raised in England, France, Scotland and Japan. She has two adult daughters, is the very proud grandmother of two "grand littles" and lives in the San Francisco Bay area with her husband, Robert L. Morris, Jr., an emerging markets strategist on inclusive leadership, who is Vice President of Business Development and Investor Relations for Living PlanIT, a multi-national company.

Follow Valerie on Twitter @hermoneytalks and on Facebook @Valerie Coleman Morris.

The Prudential Insurance Company of America, Newark, NJ