In early 2018, Forbes Magazine released an article covering the racial wealth gap. In that article there were some interesting statistics uncovered:
For every $100.00 in white family wealth, black families hold just $5.04, according to a report in the New York Times.
More than one in four black households have negative net worth, compared to less than one in ten white families without wealth according to the Economic Policy Institute.
Between 1983 and 2013, the wealth of the median black household declined 75%, the median Latino household declined 50% and at the same time, wealth for the median white household increased 14%.
The article alluded to the reason for this gap may be due to systematic racism. That is possible. Although systematic racism may have played a factor in the wealth decline of black and Latino households, a major reason is exposure.
Black and Latino families aren’t always exposed to wealth building practices. These practices aren’t typically discussed among the family and therefore, many opportunities go by without being taken advantage of by these families. Financial conversations aren’t approached until a bad financial decision is made and help is needed to navigate the results of the decision.
Here are some ways I believe the wealth gap can be closed for all races:
- Become financially literate – This can occur by reading books and listening to financial blogs and podcasts. Get familiar with financial terms and processes.
- Engage in financial conversations with your children – One of the best ways to help your family is to discuss financial situations as regularly as education, sports or politics are discussed in the home.
- Learn to live life on a budget – The only way to build wealth is to ensure your money is going where it needs to go. Take control, be the CFO of your life, or hire someone who can be.
- Take a risk! – Now that you have engaged in the financial literacy process, begun to have discussion, and have committed to organizing your financial life, the next step is to take a risk. Go ahead and make a small financial move. Set up a retirement account, buy some securities, etc.
- Forget the Jones! – The biggest issue in minority communities is that they are too easy to seduce financially. The commercialization of America is designed to seduce the money from the pockets and accounts of those who are not financially literate or financially disciplined. Know that you don’t have to “keep up with the Jones’s”. You can live without most of the stuff that is marketed to you!
Over time, these steps will close the wealth gap between races. At some point we have to stop accepting systematic racism as an excuse. Take control of your financial future. If you can’t do that now, ask someone for help! Let’s get to it!