Often overlooked, there are serious disparities in the African-American community when it comes to amassing wealth. While this may be a topic that people want to sweep under the rug, it is a topic that needs attention. Why is there such a vast gap between African-Americans and other ethnicities when it comes to amassing wealth? Wealth is defined as being the value of homes, automobiles, personal valuables, businesses, savings, money, and investments.
According to the Survey of Income and Program Participation (SIPP) in 2011 the average Caucasian household had $114,000 wealth holdings, compared to $8348 average for Latino households and just $7113 average for African American households.
The study also found that 73% of Caucasians own their own home compared to 47% of Latinos and 43% of African Americans. Furthermore, African Americans saw less of a return in wealth on their investment of homeownership than Caucasians.
Historically, wealth that African-Americans have managed to amass, has been taken from us by way of force. Don’t believe me? Take, for instance, Seneca VIllage. Seneca Village once stood where part of the famous Central Park stands today.
For those of you who don’t know about or never heard of Seneca Village read on. It was a settlement of mostly African-American landowners in the borough of Manhatten in New York City. It was founded in 1825 by free African-American people and was the first such community of its kind in the city. African-Americans were not the only minorities there, others included Irish and German immigrants and quite possibly some Native Americans.
This community, comprised of about five acres stood where 82nd and 89th Streets and Seventh and Eighth Avenues would be now if Central Park had not been built. It was home to at least 350 people, three churches, two schools, and two cemeteries. It existed until 1857 when due to eminent domain, it was torn down to build Central Park. Basically, it was taken by the government.
That wasn’t enough for you, how about Greenwood a neighborhood in Tulsa, OK also known as Black Wall Street. It was one of the most prominent concentrations of African-American businesses in the United States in the 20th century. Popularly known as “Black Wall Street”, until the Tulsa riot of 1921. During this riot, instituted by the Oklahoma state government and Caucasian residents, hundreds of African-Americans were slaughtered and the community burned and pillaged in hours. Once again, our enterprise was taken.
While those are two instances, I am sure if time permitted I could give you more. My question is what happened to us as a people after these two instances? Did we just give up on creating our own enterprises? Why has there been such a disparity in African-Americans creating wealth since the 1930’s? Have we become complacent in that we are used to our land and our ideas being taken from us that we just don’t even try to build wealth anymore? While I can’t answer those questions for anyone but myself, I would like to offer some suggestions that we as African-Americans can do to close this wealth gap.
- Begin to save. Find way’s to boost your savings for things such as what some experts call an emergency fund, which I like to call a capability fund. I know many are living paycheck to paycheck. However, finding a way to save 10% of your take-home pay each payday will make you more prepared in case a situation arises that needs financial attention. Boost your retirement savings. If you need help or ideas to boost retirement read 10 Tip’s To Boost Your Retirement Savings.
- Become financially literate. In the information age, financial literacy materials are not hard to find. For example, this blog has a wealth of information to aid you in increasing your financial literacy. Your local library has a wealth of materials (no pun intended) to help you along on your financial journey. Commit to learning something new each month that will improve your financial situation.
- Pursue Entrepreneurship. Take that hobby or craft that you are passionate about and turn it into a business. This will help you earn extra income to pay off debt, put in your savings account or invest in your retirement account. Extra income is always a plus and can be used in many way’s to aid you in creating wealth.
- Invest windfalls. I have heard tax time referred to as “black folks Christmas” because African-Americans tend to use their income tax to afford items otherwise unaffordable throughout the year. I know, because I have been there. When I learned better I began to do better. Take windfalls and fund your IRA, your mutual funds, or invest in stock options. Let that money work for you over time.
- Live within your means. I know this may be easier said than done for some as it was for me at one point. However, once I learned the difference between a need versus a want it became a way of life. While my husband and I make a considerable salary at our jobs, we still live off the money we made at our last lowest paying jobs. Mine was $12.88 an hour and his was $16.00 an hour for a total of $28.88 an hour. We have learned to keep our expenses low and our income high. This has afforded us to pay off debt, purchase income producing properties, and live a life designed by our core values. We value quality over quantity. Yes, we have nice things, but we learned how to save and pay cash for them rather than creating debt to obtain them. We practice delayed gratification in this microwave society.
Financial literacy and wealth creation don’t happen overnight. With determination, the right mindset, discipline and the development of a spending plan, it can be done. It may not be easy. It may take trial and error to find the right balance, but it sure will be worth it all in the long run.
*Part of Financially Savvy Saturdays on brokeGIRLrich.*