Monthly Newsletter: Wrapping Up Financial Literacy Month With A Discussion About Closing The Racial Wealth Gap

Grow Your Wealth Newsletter

Wealth is the difference between what you own and what you owe.? When we think about wealth accumulation in America it is no surprise that White people's are ahead of blacks because of the structural and institutional barriers that span decades.

There have been many articles and research papers published about the racial wealth gap. The 2021 Fed Notes highlights a survey of overall wealth inequality in America summarizing that? “the average Black and Hispanic or Latino households earn about half as much as the average White household and own only about 15 to 20 percent as much net wealth.”

This past month I participated on a panel where we discussed the state of Black wealth in America and what we can do, knowing that it will take centuries to close this gap. My purpose here is not to debate what has already been well researched and documented - change is needed at the highest levels of government. As stated in this article by the Brookings Institute -? “only a transformative national agenda can address the racial wealth gap, because the disparity is the product of societal racism, compounded over generations.”

As a group, when we think about the magnitude of what it would take to close this gap, it may feel like an unreachable goal. This leads to the question – if it will take 228 years to close the wealth gap, what can I as an individual do to make changes so that I am creating a different financial path for my family, without waiting for the government to play catchup??

I am proposing three things that we can begin doing today to start making changes, so that we can build a foundation for our children.

???Improve financial knowledge - According to a study by Teachers Insurance and Annuity Association of America (TIAA), Black women trail Latino and White women in financial security.? We have higher debt, lower assets and more expensive spending behavior.? By taking some time to become more aware of our current financial situation and identify a financial coach to help us set and implement goals, we can begin to shift our mindset about money and start increasing our assets and net worth. A one-size-fits-all approach to financial literacy may still create gaps, and reduce the length of time it takes to start seeing tangible results.

???Start Investing - One of the biggest wealth generators over the past few decades has been stock market investing, yet research has shown that Black people are not active investors in the stock market, compared to white people. In fact, Black people's investment in equities is less than half that of White people. Most often the hesitation to invest is due to fear of the stock market crashing. Here is the truth – the stock market continues to make millionaires and billionaires, with the wealthiest 10% of American households owning 89% of all U.S. stocks in 2021. In 2023 I was featured in a Business Insider Article where I shared how I build a million dollar retirement portfolio before age 48. How was I able to do that?? I used stocks as part of my investing strategy which accelerated my portfolio growth.? Similarly, I knew I would not be able to save for my children’s college tuition, and therefore I used the stock market as a tool to build their portfolio as well. This relieved so much of the anxiety during the college application process.? You can invest and build wealth without taking unnecessary risk.?

???Engage in long term tax and estate planning - Most people think day to day.?They only speak to your tax professional at the end of the year. They may also believe that if they do not have a material amount of assets, they do not need an estate plan.? The fact is that you need to do both tax and estate planning, regardless of your current financial situation. Estate plans instruct your family about your wishes, and removes anxiety around asset distribution, as well as protect you from the IRS.? If you have not done any estate planning, this article discusses some of the basic estate planning documents that everyone should have.? Tax planning goes hand in hand with estate planning. Having someone to advise about the tax benefits or consequences of making certain choices will help you to preserve any wealth that you have begun to accumulate.

While we may not see the wealth gap close in our lifetime, perhaps we can start to shape the conversations in our families around money and spending in a different way. Black people spending power is projected to reach $1.8 trillion by 2024, yet our net worth is expected to fall to zero by 2053 if the trend continues.

Let us become more proactive about building wealth for future generations. This will require us to be? more deliberate about managing spending, investing and leaving a financial legacy.

Live Trainings

We had two live training sessions centered around wealth building. If you missed them, you can catch them here.

??What Can We Do About The Racial Wealth Gap? - In this video I discuss how wealth is dispersed across five categories among White people and Black people, and what we can do to begin to make changes that impact our family.?

??Can You Really Make Money In The Stock Market -? if you are afraid of investing because you worry that the stock market may crash and you lose your money, in this video I walk through the Dow Jones Industrial average and how it has performed over the past five years.?

I work with organizations like yours

Many employees are desperate for independent financial knowledge as part of their employment benefits. Schedule a call with me to discuss how I can work with your organization to provide financial wellness training.

Spotlighting Small Business Owners

A big part of my mission is to help small business owners manage their finances and save on taxes. This has been a passion of mine for a couple of decades.? With that in mind, we have launched the DIY No Hassle Bookkeeper to help service based businesses get a handle on their finances in just 15 minutes a week.

Are you a small business and want to learn more? Schedule a complimentary consult here.

Are there any topics that you would like to see addressed in the GYW community? Hit REPLY to this mail or send us an email at [email protected]