Bridging the Divide: How Can African Americans Combat Wealth Disparity

This article is brought to you by Your Money Line financial guide, Stacy Livingstone-Hoyte

The wealth divide has been persistent and entrenched throughout American history. According to​ the Census Bureau’s ​Survey of Income and Participation (SIPP) data, the median household wealth for Black households is $24,520 as opposed to white households who had a median wealth of $250,400. The generational wealth gap for African Americans has deep historical roots, dating back to times of slavery and is influenced by discriminatory policies and systemic racism. Slavery deprived African Americans of the opportunity to accumulate wealth, as they were considered property rather than individuals with economic agency. The long-lasting effects of slavery are evident in the continued struggles faced by Black communities in building and transferring wealth. Additionally, discriminatory practices such as redlining, which denied loans or insurance to residents of certain neighborhoods based on race, further restricted access to homeownership and the accumulation of property. These policies systematically excluded African Americans from participating in wealth-building activities that were readily available to their white counterparts.

Overcoming the challenges of saving requires reformatting many systems and processes (beyond the force of the free market) that have been at work. It’s a formidable series of tasks: addressing unemployment, insufficient/low wages, unaffordable housing and childcare, medical care and higher education costs, and criminal justice reform - to name a few. Nonetheless, on a personal and community level, Black households can wield their individual and collective strengths to continue the creation of lasting change and prosperity in several ways:

• Awareness: Awareness of what we lack can be uncomfortable and painful. However, when framed correctly, awareness can be a driving force of action and perseverance. Communities of color can work towards enhancing their individual and collective wealth by embracing introspection to gain insight into how our inner psychological dynamics influence our financial choices. These realizations can reshape our patterns with money. Additionally, understanding how other external influences, such as culture, expectations, trauma, and childhood experiences, contribute to our financial behaviors can also foster growth. This approach of introspection and awareness means creating a healthy mindset about finances from the inside out.
• Financial Education: Proper financial education is crucial to combating this historic wealth disparity. This education includes:
  • Understanding the building blocks of financial capability and well-being.
  • Knowing how to keep debts low, set up automated savings, leverage workplace benefits such as employer-sponsored retirement accounts like Pension Fund’s Pension Plan and TDRA 403(b)/Roth 403(b), keep a good credit history, and learn the basics of investing, among other skills.
  • Knowing how to identify reliable sources for financial information and performing due diligence.
  • Remaining open to pursuing lifelong learning through mentorship, internships, externships, and personal and professional development opportunities.

• Personal Wellness: Building wealth is deeply intertwined with our overall well-being, as money touches every aspect of our lives. Focusing on our overall wellness, including mental health, nutrition, and relationships, can sharpen and sustain our efforts to become financially well.
• Participation: To effect positive change, we can engage in active citizenship by participating in public policy, voting, and advocacy.
• Income growth and preservation: We can explore opportunities for income growth outside traditional employment opportunities. Additionally, creating strategies for building your savings, by setting aside even a small portion of your paycheck into a savings account such as Pension Fund’s high-yield savings Benefit Accumulation Account will help build wealth and provides for an emergency fund should an unexpected event arise.
• Workplace benefits: We should maximize employer-sponsored fringe benefits such as life insurance, disability income insurance, and all components of employer assistance programs.
• Risk management: We must address insurance and estate planning issues. Assets and property that will pass to another generation of individuals must be titled accordingly if the goal is to build generational wealth.
• Supportive Communities, Resources, and Strong Families: We can volunteer and give back to address community needs. Service to the community can help ensure that growing families feel (and are) supported, educated, and looked out for.

No short-term remedies will erase the legacy of inequality lived out by households of color for generations. Nonetheless, households of color can take small steps in building generational wealth to combat the wealth divide.

If you need help getting started with your financial wellness, the financial guides at Your Money Line are always ready and willing to help. Get started by visiting our Your Money Line page.

Gifts by generous donors to Ministerial Relief and Assistance (MRA) make programs like Your Money Line possible. Learn more about MRA here.