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Five Money Lessons Mama Didn't Know
By Sanyika Calloway Boyce When I received my first credit card in college, I thought someone had just given me $1,000. Little did I realize that I would have to repay the money. To make matters worse, I was charged interest. I could have easily avoided getting myself into financial trouble had my parents taught me how to use credit in a responsible manner. But in fact, they didn't know either. Like too many college students, I never had a firm foundation when it came to money and credit. When I became independent, I blew it -- literally -- by racking up $15,000 in unsecured debt. Now my mess is my message, which I share in my book Crack 'Da Code: What Every College Student Needs to Know About Money, Love and the Dream Job (Smart Concept Books). Fortunately, you don't have to make the same mistakes I did. Here are five lessons I learned about money that my momma didn't teach me and you probably missed out on too. LESSON 1: Money Does Matter. Most of our lives we are sent mixed messages about money. Everywhere you turn, you see the value put on money and the messages saying, "Money will make you happy," "Money means choices" and "If you're broke, you're a joke." Then we are told that it doesn't matter. That money isn't that important in life. But money does matter -- it matters because it can do positive things for you if you understand its true power, and negative things if you do not. LESSON 2: The Power of Do vs. Tell. "Do as I say and not as I do." I heard it all the time. But what neither I nor the person saying it realized is that this goes against human nature, and we often end up making the same mistakes as the people around us. When I was a child, we didn't have a lot of money. Money was rarely discussed, and when it was, it seemed as if someone was always "short," "broke" or "had too much month at the end of the money." I was always told to save a little, but I never saw the practice carried out. Every time someone around me got money, it was spent. It took me a long time to realize that many of my money habits came from following the examples I saw, rather than doing what I was told. So here are your options: either listen to what your parents were actually saying or find a mentor who is willing to guide you through the process. LESSON 3: How to Make a Dollar Out of 15 Cents. Learning the importance of saving a little of everything you get is a powerful lesson. Unfortunately, many people realize this too late. One of the advantages of being young is that you have time. The span between 18- and 30-years-old could mean hundreds of thousands of earned interest dollars in your pocket. Time is a precious commodity that can't be bought, sold or given away, and it's on your side. The name of the game is compound interest. It's not how much you have but how soon you start saving (even a little) and the amount of time you commit to leaving the money alone. The longer it's there, the longer it has to work for you and the bigger it will grow. Time has the ability to make a dollar out of 15 cents, if you understand the power of compounding. Don't wait until you're "gettin' paid" to start saving. There is no such thing as catch-up. Time is the best thing you've got going. LESSON 4: What the Poor and Middle Class Buy on Payday. Believe it or not, most of the ice wearin', Benz drivin', highballers aren't rich. Not convinced? Ask yourself this: Whatever happened to multi-platinum recording artist Kris Kross? Or Vanilla Ice? In fact, many entertainers have filed for bankruptcy. Lavish lifestyles that outpaced their income was the reason MC Hammer, Gary Coleman, Redd Foxx, Toni Braxton and Sherman Hemsley filed for bankruptcy. The casualties outnumber the ones who made it and kept it. LESSON 5: Credit Isn't Evil. Upon graduating from college and after amassing outrageous debt, I quickly experienced the power that credit has in the world. I learned that credit isn't evil. In fact, it's necessary. If you want to know how necessary it is, just try renting a car or booking a hotel room without it. And don't even attempt to get an apartment much less rent a video without credit. The advice I got about money and credit was scant, and through trial and error I found out some of the advice wasn't wholly accurate. Besides, human nature tells young adults that they know more than adults. Even if you mess up half the time, you've got to be doing a better job than they did. Right? Not necessarily true. Now that I'm a little older, what I have learned is this: Money does matter. It's your understanding of this truth that will make or break you. And credit isn't evil, but it can be dangerous if used without proper and specific instruction. Visit Sanyika Calloway Boyce on the Web: www.4dacode.comThis article is new this week in The Business Journal's small business how-to section. To see what else is new, click here or click on the "how-to" tab at the top of The Daily Business Journal Online home page."