Happy MLK Day 2022! We celebrate the important civil rights activist, which made such a lasting impact on American society. Many of us are familiar with Dr. King’s work to end racial segregation and racism. But did you know that MLK also had many thoughts and opinions on economics and finances? Yes, Dr. King had a strong E.I. mentality and financial literacy IQ, of which he communicated many times during his speeches. This article presents information to confirm that Dr. King promoted and advocated financial literacy.
Dr. King believed that social inequality was largely caused by poverty. He was a huge proponent of financial literacy and achieving financial freedom. In fact, in 1966, MLK was a signatory to the Freedom Budget, which declared a war on poverty published by the A. Philip Randolph Institute. While the proposal was never passed into law, it provides us important lessons which we can strive for today.
On this important holiday, we honor MLK by discussing some of the financial thoughts of Dr. King.
Living Within Your Means
In Dr. King’s “The Drum Major Instinct” sermon, he warned about living beyond your means. Martin Luther King said that the “drum major instinct” that people have, could be detrimental to their financial freedom.
What he meant by this “instinct” is that people always want to be front-in-center and showing-off material things like a drum major. One way people satisfy this instinctual feeling is to buy flashy and expensive items well beyond their personal, monthly budget.
To quote Dr. King: “Do you ever see people buy cars that they can’t even begin to buy in terms of their income? You’ve seen people riding around in Cadillacs and Chryslers who don’t earn enough to have a good T-Model Ford. You know, economists tell us that your automobile should not cost more than half of your annual income… But so often, haven’t you seen people making five thousand dollars a year and driving a car that costs six thousand? And they wonder why their ends never meet.”
In his sermon, MLK teaches us an important lesson about budgeting: don’t spend beyond your means. The month of January begins a new year with many New Year’s Resolutions. Why not make your New Year’s Resolution financially motivated? The new start to a year is a perfect time to revisit your budget. Very simply:
As MLK says—if you make $5,000 a year but spend $6,000 a year, you won’t ever make ends meet! Need help with your budget? Dr. King was trying to emphasize the importance of being wise when it comes to spending.
Invest in Good Things, Including Yourself
The Freedom Budget was written well over 50 years ago with MLK as a signatory. In this document, Martin Luther King Jr. called for full employment which he believed was between 2%-3% unemployment. Interestingly, unemployment was hovering around 3.6% at the end of 2019, meaning we are ever closer to MLK’s definition of full employment.
Dr. King also called for substantial investments in public works and infrastructure and training programs that would increase skills and education.
It seems that—albeit slowly—Dr. King is getting his financial wish. In February 2019, Congress passed it spending bill which included full-year 2019 funding levels for important federal infrastructure programs, including the Department of Transportation (DOT) and the Environmental Protection Agency (EPA), the Engineering News-Record reports.
Regardless of what is occurring on a national scale, however, we can use MLK’s financial guidance in our own personal lives. Dr. King believed that investing in education would provide future financial security. Perhaps 2022 is the year you decide to get that additional certificate, pursue your MBA, or start investing money.
An investment in oneself can lead to greater financial outcomes in the future. According to a survey reported at the Wall Street Journal, 75% of MBA graduates surveyed, who also switch their careers after attaining their degree, doubled their salary. If this is the year you finally start investing, remember because of the concept of “compounding interest,” the earlier you start investing the better.
It has always been clear that Dr. Martin Luther King, Jr. has been a monumentally important figure in our history. Many, however, did not realize he was also so passionate about economic and financial equality and justice. We are so proud to be able to assist in providing financing literacy and hope to continue to employ some of Dr. King’s financial lessons not only today but every day. Let 2022 be your year when you get a handle on your budget, create a financial roadmap for your future goals, and start investing in yourself!
Don’t Keep Up With the Joneses
Dr. King warns us to not keep up with the Joneses. Dr. King states: “And they just live their lives trying to outdo the Joneses. They got to get this coat because this particular coat is a little better and a little better-looking than Mary’s coat. And I got to drive this car because it’s something about this car that makes my car a little better than my neighbor’s car.”
Purchasing items simply to outpace your neighbor will never bring you true happiness. In fact, it may stress you out even further, especially if you’re taking on debt simply to outdo your colleagues.
In a study on the outperformance of peers, neuroscientists Michael Lindner and Klaus Fliessbach at the University of Bonn in Germany found that when people outdid their counterparts, they had higher level of activity in the same part of the brain that activates when taking drugs, winning money, or experiencing “schadenfreude,” which is deriving pleasure or joy because of another person’s misfortune.
Obviously, we want to avoid finding joy in these sorts of unhealthy ways. For this reason, trying to outpace or earn more than your neighbor could be detrimental both to your wallet and mental health.
Instead, you should create a financial plan for the next few months, 1-year, 5-years, 10-years, and beyond. This way you are only competing against yourself regardless of what people have around you. You will receive joy from attaining small goals which plug into a greater purpose.
Create very realistic and specific financial goals using the “SMART-goals” method. Make sure you set short-term goals that will build on each other. Psychologists find that in general humans prefer immediate gratification over future gains. If you achieve your short-term goals, you’ll achieve that instant gratification, while still building upon your long-term goals.
In conclusion, MLK was a great advocate for financial literacy and empowerment. Before there was an E.I. concept, Dr. King was already preaching the importance of being financially responsible and wise. MLK was a true American patriot that helped restructure this country to greatness.
Jeremy G. Preston
E.I. Enterprise LLC