Wealth creation has always left clues. There are many people and organizations that have studied how people accumulate wealth. There are numerous books, movies, videos, blogs, podcasts and so on about how wealth is created. They talk about the things wealthy people do to accumulate wealth and the things they do not do.
This week, I am exploring the “One Activity” we do as Black people that is draining our bank accounts and decreasing our net worth. That one activity is “excessive shopping and spending as consumers.”
We love to “shop and spend money,” as a matter of fact, we spend almost $2 trillion dollars a year on goods and services. While our spending is going up, our net worth is going down.
The problem is a good percentage of the money we are spending is on items that do not increase our wealth.
We are a people who like to look good and be seen looking good, but in looking good, we spend an astronomical amount on clothes, shoes, hair, make-up, jewelry and cars, but none of these things increase our wealth, as a matter of fact, they empty our pockets and make others wealthy.
We are putting many of these items on high-interest credit cards that end up costing us a fortune in the long term.
According to the Consumer Expenditure Survey conducted by the Federal Bureau of Labor Statistics, Blacks and Hispanics spend up to 30% more than whites of comparable income on “visible goods” like clothing, cars and jewelry.
But what is really at the root of our spending? We conducted a survey and it revealed that the main reason we spend so much on the before mentioned items is that it makes us feel good, it makes us feel important, it makes us feel seen and heard when we pull up in a Mercedes with a $1,000 men’s suit with Tom Ford shoes (or the latest Air Jordans) or an expensive dress, Louie bag and red bottom shoes. The daily grind of being Black and constantly dealing with racism and discrimination makes many of us look for external things to make us feel good, feel important and worthy. When we buy these “visible items” we feel seen. So, we shop and spend!
Businesses know we love to shop and spend and they target us with enticing ads for all the things we love and offer us “buy now and pay later plans” or “get 3 months no interest plans,” knowing, we will more than likely go past the three months (or whatever interest-free period they are offering) and get massive interest tacked on.
So, am I suggesting we just stop shopping and spending, you may be asking? No, I know that is not going to happen. But, if we don’t make a change in our shopping habits, we are headed for a massive disaster!
So, what’s the solution? We must be more conscientious about how much we spend and what we spend it on.
Mark Zuckerburg (founder of Facebook), Warren Buffett (renowned stock investor), Jeff Bezos (founder of Amazon), Bill Gates (founder of Microsoft) and the list goes on and on of millionaires and billionaires who look like average people if you were to see them walking down the street and didn’t know who they were. They do not need validation from anyone; they shop and spend their money differently. They buy assets like stocks, real estate and businesses that generate money for them and then use that money to buy the “visible items” like “yachts and mansions” while their assets keep working for them and producing more wealth.
So, the next time you go shopping and pull your wallet or purse out, ask yourself if what you are buying is negatively affecting your wallet and wealth.
My company, FLip That Stock, has partnered with The Baltimore Times, to educate, empower and lift our people to new financial heights we need and deserve to live our best lives!
Join me on November 16, 2024, at The Inner Harbor for my LIVE Seminar “A FUN and EASY Way To Learn The Stock Market and Shop and Buy Stocks.” Visit https://www.flipthatstock.com/flip-that-stock-events for details and to purchase your ticket.
Tune in next Friday for my next article in the series, where I will reveal “How To Shop For Stocks and Increase Your Wealth.”
J.R. Fenwick is the CEO of FLipThatStock.com, a leading stock market education and technology company based in Maryland.
