There was a statistic that came out not too long ago about the wealth gap in America. Fox Business revealed that the average net worth of a black family is $17,150 and the average net-worth of a white family is $171,000. When I saw this statistic, my heart sunk. Not only is the current net worth of a black family $17,150 but in the year 2053 another statistic showed the net-worth of a black family will reduce to $0. I believe that my generation has the ability to change that statistic. Will it be easy? No, but can it be done? Yes, it can be done! Here are 9 ways Black America can close the wealth gap in America.
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1. Get life insurance while we are young and in good health.
One way that we can close the wealth gap is by making sure that when we pass, we have a policy in place to take care of our families. When we pass, we should want to make sure that our families don’t have to worry about the expenses we leave behind. Not having to worry about expenses gives them the peace of mind they need while they grieve. In the black community when someone passes one of the fist questions is “Did he/she have life insurance?” If the deceased family member does not have life insurance, it creates a financial burden that can hold down the family for years depending on the liabilities the deceased family member owed.
2. Create a plan for college
There’s nothing wrong with education, but there is something wrong with going to college blindly and taking on debt you know you cannot pay back. Some students go to college and do well but have huge student loan debt when they graduate. Most families struggle with student loan payments and it inhibits their ability to invest and save. One of the best things that our generation can do is make a financial plan for college or a business startup for our children. There are strategies we can use to lower the cost of college and create a plan so that our children can avoid student loan debt. For single parent households, there are some college savings/grants that are available to help assist with college. Parents need to do their research and financially prepare for their child to go to college before they send them off blindly. The earlier we start the preparing, the better prepared our children will be financially.
3. Have multiple streams of income
Some of us have one or two streams of income that’s paying for 11-17 bills each month. Having extra streams of income gives us more flexibility. With increased flexibility we can invest, start a business, create an education fund for our children or even accelerate paying off the principal on our homes. I’m sure we have all seen the meme that says, “Having one stream of income is reckless.” Well…Yes, it is, because if the one stream of income goes away, it can cause financial ruin and depending on the liabilities owed it can create a major financial setback. Multiple streams of income allow us to build wealth and have money work for us instead of us working for money.
Investing is a great way to close the wealth gap. Investing in real estate, stocks, bonds, index funds, mutual funds, annuities, and assets can help us to build wealth over time. One thing that I learned from Warren Buffett is building wealth should be a long-term goal not a short-term goal. Learning how to invest the correct way is very important. If you are unsure about how to start investing, reach out to a certified financial advisor to help assist.
5. Control the craves to consume
Consuming has been one of the biggest problems in our community. One of the biggest reasons is because most of the things we buy depreciate over time and don’t hold value. As a community we have 1 trillion dollars pass through our hands yearly. If we were to cut that our spending in half and save or invest the other half, we could see a change in the wealth gap over time. There’s nothing wrong with rewarding yourself, but not at the expense of having negative bank statements.
6. Pass things of value down to children
We cannot pass down our 9-5 jobs to our children. We have to pass down something tangible. Starting a business and side hustle that can generate passive income can help not just parents but our children as well. Something we can also pass down is financial literacy. Teaching our children about credit, assets, and showing them how they can attain those things are very valuable and important. Remember wealth is a long-term investment and if our children inherit it and know how to continue building it, we would have passed on something that can help their families and future generations.
7. If someone is giving you advice, it’s okay to ask for “the receipts”.
Sometimes we take bad advice and get burned as a result of it. When someone advises you on a way to build wealth it’s okay to ask them for proof that the strategy they are advising actually worked. We live in a world now where information is everywhere. It’s literally at our fingertips. When a “self-proclaimed” guru tells you to make certain investments, ask them for their “receipts.” If they aren’t willing to provide those “receipts” don’t take their advice and make sure to consult with someone who has valid certifications in the area of which you are seeking advice. Listening to the wrong person can cause you to make a bad investment and have you think it was the broker that scammed you when all along it was the “guru” giving incorrect information.
8. The harder you work = more money…That’s not entirely true.
One thing I have learned over the years is that the wealthy have their money work for them. Some of us have been told to work hard, keep our head down, and don’t ask for much. Learning to save money and invest/compound it is a strategy that many wealthy people have been doing for years. Working hard does not always mean you will get paid more money.
9. Relationship with financial institutions matter!
Having a relationship with the bank is very important. If you have a relationship with your bank, they can help you achieve your financial goals especially if you are looking to build business credit or invest. One of the features that come with brokers like fidelity, e-trade and TD Ameritrade is your ability to call and ask questions…for free. Many of us can use these relationships to help us continue to make progress in building wealth. Also, the same can be said about building relationships with real estate investors, real estate agents, bankers, investors, accountants etc.
Thank you for reading my post “What can Black America do to close the wealth gap?” I hope that this post can help us to make investments that bring us wealth and prosperity. I was watching an interview with a rapper Lil Yachty, and he mentioned that he spent over 4 million dollars on jewelry. He explained that jewelry was a waste of money and that jewelry is something that we don’t need. He also mentioned that investing is a better use for our money. For years, a portion of our community bought jewelry and expensive cars and homes only to end up having financial problems down the line. One thing that I have taken an interest in lately is researching the net worth of various celebrities. I saw a boxer on one particular site that made over $750 million in his career boxing, but today only has a net worth of 3 million. A lot of that boxer’s money went into bad investments and lawsuits. Consuming things that don’t bring value is not a great investment or way to build wealth. If we plan to close the wealth gap, we will need to have discipline to do so. What are some things that we could add on this list? Please feel free to share below. Also, if this post can help someone please feel free to share and if you are new to Millennial Oaks please subscribe 😊!