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Love the beats or hate them, there’s no music more money-conscious than hip-hop.But between the rhymes, rap stars actually have some legitimate financial advice, say the experts.
These tips, gleaned from hip-hop lyrics and interviews with rap moguls, can add Benjamins to your bank account.
This story was originally published by Bankrate.
Lesson from: Common, Chapter 13 (Rich Man vs. Poor Man)'
While his peers brag about the G's they're stacking up, this rapper tells audiences on his 1994 album, 'Resurrection,' 'Call me doberman 'cause I'm a pincher of pennies.'
According to Richard E. Reyes, a CFP professional and president of Wealth and Business Planning Group LLC in Maitland, Fla., the way to escape the cycle of living paycheck to paycheck is keep your bills minimal, and, 'Try always to pay yourself first.' To do that, Reyes recommends saving 10 per cent of your income in an emergency account until you have at least three to six months' of living expenses stockpiled, preferably more. If you can't save 10 per cent at first, that's OK.
'Slowly but surely, we'll work our way up, but just start at something,' he says. 'Get used to having to do without that money.'
Lesson from: Busta Rhymes, 'Dangerous'
Ignore the rest of the NSFW, or not safe for work, lyrics on this 1997 track, and Rhymes has some sound advice if you choose your investments wisely, says Sean M. Dowling, CFP professional and president of The Dowling Group Wealth Management in Stamford, Conn.
'I think the best place to start is what the actual objective of that mutual fund is, and does it fall in line with what you're trying to accomplish in your investment program,' he says. 'I think consideration should be given to the company, what their philosophies (are) ... their successes and failures, (and) how they've handled those.'
Future investors should also research the cost. To avoid having your funds eaten up by fees, Dowling advises investors to seek mutual funds that keep costs around 1 per cent for actively managed funds and around 0.5 per cent for indexed or passively managed investments.
Lesson from: Yung Joc, in an interview with HollywoodHeavy.com
After being named one of Forbes' 20 richest hip-hop artists in 2006, Joc warned new artists to avoid spending sprees and to 'Be smarter than that with your money,' in an interview with HollywoodHeavy.com.
Philip Lee, a CFP professional and wealth manager with Modera Wealth Management LLC in Boston, says that Joc's advice to save for lean times is especially relevant to those with fluctuating incomes. While an emergency fund of three to six months' savings may be sufficient for employees with a steady paycheck, business owners, freelance or contract workers, and those who rely on tips or commissions will need six to nine months' of living expenses.
Lee also recommends examining your yearly expenses and budgeting out how much you'll need to save per month to meet them.
'You want to try ... the best you can to even out your expenses, and match that to the savings that you might have,' Lee says.
Lesson from: Jay-Z in Kanye West's 'Diamonds from Sierra Leone (Remix)'
Jay-Z's iconic lyric can be interpreted in multiple ways, but Dowling says that treating yourself as a business is a great way to cover your financial bases. On top of setting aside money for the future of your 'business,' Dowling says to 'get Quicken or get Mint.com. You've got to know where your money is going. No business is successful without proper accounting.'
Future money moguls should also form a cabinet of trusted advisers who can help manage money, provide legal advice and keep their business growing.
'Find people who can be a sounding board,' he says. 'No big businesses survive without having a board of directors and people who advise them.'
Lesson from: 50 Cent in an interview with the Daily Mail
Rapper 50 Cent advised fans 'to not move, ever, in a business meeting. Don't move, don't speak, don't nod. People will fear you and respect you.' The Grammy Award-winner also told the Daily Mail that money can't buy happiness.
When it comes to spending your money on things, Elliot Herman, a CPA and CFP professional with PRW Wealth Management LLC in Quincy, Mass., agrees with 'Fiddy.' Before investing in assets such as cars that will depreciate, Herman recommends first looking at investments that can increase your worth.
After investing some of your funds for future growth, Herman says you should think about where you can get the biggest happiness bang for your buck.
'The more you spend on other people, the more your happiness goes up,' Herman says. 'If they have enough for themselves, they should be spending it on those less fortunate, on others who can benefit from it.'
Lesson from: Kelly Price in Notorious B.I.G.'s 'Mo Money Mo Problems' featuring Mase and Puff Daddy
More money means more places you can stash your cash, more people who want it and more ways to blow it fast. But even those with modest incomes often encounter more problems as their money grows, says Lee, frequently because they forget to streamline their accounts.
'I can't tell you the number of times I've had clients who have switched jobs -- they have multiple 401(k)s, and they never consolidate them to one (individual retirement account), or (they) have multiple checking and savings accounts,' Lee says. 'Why create more complication than you need to? Stick to administratively making it simple for yourself.'
That includes coordinating your assets.
'If you've got multiple homes or multiple cars, deal with one insurance agent,' Lee says. 'That way, they know everything about what you have, and they can insure it properly.'
Lesson from: Slim Thug's book, 'How to Survive in a Recession'
In an effort to make himself the 'black Suze Orman,' Thug's 2012 e-book is packed with advice such as, 'Don't take care of anyone over 18' and more than a few reminders on the importance of saving.
Herman says Thug's rule of thumb about only buying what you can afford three times over is 'a bit overboard,' but his advice to live within your means is valid and frequently hard to follow.
According to the Bureau of Economic Analysis, as of December, the current personal savings rate in the U.S. is 6.5 per cent, meaning the amount we're saving is barely keeping up with the rate of inflation. To reduce debt, Herman asks clients to sit down with their spouse and write down everything the household has spent money on in the past few months.
'It might create some marital displeasure,' he says. 'But it's working toward a solution to help rein in that spending.'
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