The ‘Color of Money’ 25 years later. This is what I have learned.

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I learned how to manage my money from my grandmother Big Mama.

He was extremely frugal. I like to joke that she was so tight on money that if she had a dime, Lincoln would scream.

My grandmother is the reason I became a homeowner in my 20s. I only rented for a year before purchasing a two bedroom, one bath condo in Baltimore.

During the time I rented an apartment, every phone call with Big Mama began with this question: “Are you still giving your money to the white man?”

Everyone. Single. Telephone. Call. For a year.

Financial Lessons from Big Mama

In the 25 years that I have been writing the Color of Money column, it has largely been Big Mama’s wisdom on personal finance principles that I have passed on to readers.

My first column was published on March 30, 1997. The headline was: My Grandma’s Saving Grace.

So I wrote: “My grandmother was an example of the basic financial principles of the previous generation of African Americans. These tough-minded, conservative practices helped get my generation of middle-class black people to where we are today.”

My grandmother wasn’t always right: it’s okay to rent, and you actually get something for your money: a roof over your head.

Sometimes it’s better to rent your roof than own it

Big Mama didn’t teach me how to invest because I was too scared of the stock market. The only bond he had was the bonding adhesive for his dentures. I’m ready for retirement because I didn’t listen to my grandmother’s advice and consulted a financial advisor, who pushed me to invest in stock mutual funds.

Over the years, people have wondered about the origin of the column title. I’ve been asked if I intended to write a column just for black households.

From the beginning, I wanted to explore the financial planning issues facing African Americans, and have done so over the years, including in my award-winning 2020 “Sincerely, Michelle” series. But, as I said in that inaugural column, the color of money is for “anyone else who realizes that no matter who you are, the color of money is always the same.”

Washington Post personal finance columnist Michelle Singletary outlines what to look for when hiring a financial advisor and when to use one. (Video: Amber Ferguson/The Washington Post)

I was a bit naive when I started writing the column, not fully realizing that not everyone had the benefit of a Big Mama. I didn’t understand how people with enough money could so easily mismanage it or make monumentally bad financial decisions.

Netflix series asks couples with up to $35,000 saved: ‘Marriage or Mortgage’? You know where I stand.

Sometimes he was too harsh, too critical. However, the more he talked to people, he spent time not only reviewing their budgets and bank accounts, but learning about their financial history, the better he understood their motivations for the money movements they made. With the benefit of experience, I understood the depth of his financial fears. This money thing can be intimidating.

I’ve also found that money mistakes are often rooted in childhood trauma or, in many cases, overindulgence.

I studied behavioral economics, which made my advice more practical and reasonable. Because people are human, what works on paper doesn’t always work in practice. When it comes to money, many people are prone to irrational behavior.

Okay, you make money mistakes. This is why.

Sure, it may make more mathematical sense to pay off the debts with the highest interest rate. But behaviorally, when people pay off the smallest debts first, they experience an immediate win, and that can encourage them to become aggressive in getting rid of the rest of their debts.

I no longer underestimate the power of marketing, conditioning Americans to be consumers. Masterful marketing campaigns encourage overspending and debt accumulation.

“Saturday Night Live” had a hilarious skit in 2020 about sentimental car commercials. You know the ones where a spouse is surprised with a new car.

The SNL skit opens with a father, mother, and teenage son sitting around a Christmas tree.

“Hey Matt, I think there might be one more gift for your mom right there,” Dad says.

Then the voiceover says, “It hasn’t been a normal year. So this Christmas, get her something extraordinary during the Lexus ‘December to Remember’ sales event.”

They all get out and see a white Lexus with a red bow in the driveway.

“Did you really buy a car without asking me?” says the incredulous wife.

I love that skit because if you buy a new car without discussing it with your partner, that’s not a gift. That’s a 60-month financial obligation. Such a large purchase should be a joint decision.

My hatred of debt has been a recurring theme in my column because too many people don’t consider the long-term consequences of taking on debt. However, I often get pushback from people who think there is “good debt” and “bad debt.”

A column headlined, “Yes, all debt is bad debt,” led to a discussion with Jared Bernstein, who is now a member of the White House Council of Economic Advisers.

Debt: Hit him or hug him? My debate with Michelle Singletary.

“I bet there aren’t many more devoted followers of this paper’s personal finance writer, Michelle Singletary, than hers,” Bernstein wrote in a 2017 column. watch out, although, to be clear, it doesn’t set you free either. I don’t just read it. She read it to my children. But there is one thing we disagree on, and that is debt.”

Bernstein and I had a debate within your column. He argued that there is a big debt, a good debt and a bad debt.

“She thinks it sucks. She wants to slap the debt. If the debt was across the street, she’d run it over. I disagree,” she wrote. “A large debt increases her purchasing power so that she can pay it off and then she has money left over to safely take on a good debt.”

I replied: “In theory, certain loans make sense. Without mortgages, most Americans couldn’t afford to buy a home, which for many households ends up being their biggest asset. I recognize that business loans have helped people follow their passions and start small businesses. But what we need in America is not more debt support, but more caution.”

Are you plagued by the mess of getting out of serial debt?

I learned my hatred of debt from my grandmother. She despised debt.

Big Mama passed away at 82, two years after my first column. I still hear his voice in my head, lecturing about avoiding as much debt as possible, saving more, and spending less. She was and is my muse for writing, and I miss her so much.

As I celebrate 25 years of the privilege of writing a personal finance column for The Washington Post, my grandmother continues to be the inspiration for my advice and my mission to do what she did for me: model and encourage good money management, keep a healthy dose skepticism, and help less fortunate people.

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