Black Generational Wealth

What is black generational wealth?

Table of contents

1. What does black generational wealth mean to you?
2. How to create black generational wealth
3. Modern day slavery
4. Why black Americans must work harder to build wealth
5. Ways black Americans can start building generational wealth today
6. Dependency is the tool
7. It’s time to buy our freedom back
8. Ways to close the racial wealth gap
9. So what can I do about it?

What does black generational wealth mean to you?

To me black generational wealth means not having a car wash to fund an unprepared for funeral. It means not leaving behind debts when I die.  Also it means that our children graduate from high school and immediately set themselves to the task of innovating and leaving their mark on this world. It does not mean that they graduate from high school and immediately throw themselves into the job market to work for companies that don’t value them. 

How to create black generational wealth

Investments

You need to have ability to turn your long term investments into black generational wealth. Understand that you mustn’t be Warren Buffett to pass along stock market returns, either. You need to designate beneficiaries on any assets you might already have, no matter how small it is.

Education

You should understand that knowledge in itself is wealth. When you understand what something means and how the thing works. You will be able to take the actions necessary to implement your knowledge. So, you need to help your children with their homework when they’re young. For instance, might turn into helping them apply for scholarships when they about to go to college.

You might equally pass along skills that will make your children’s lives very easy and more affordable. Like the ability to cook, plan meals in advance and grocery shop on a budget. If you have a side hustle or small business, you should teach your children how you earn income. Because they might use what they learn from you to start their own businesses in the future. Be sure that they don’t only understand the tools of the trade but equally the skills involved.

Values

Many parents really want to pass certain family values down to their children, such as kindness, generosity or compassion. If you’re really thinking about building black generational wealth. You must consider passing down financial goals and values as well. Simply seeing the way you budget, pay down debt and save might be incredibly impactful to their financial decision making in the future. Teach your children how to save, and they will be very wealthy relative to their needs.

Homeownership

Homeownership is the major way to build wealth in this country. The average American who owns a house, have a leg up in many ways. Not only will being a homeowner help to get federal tax breaks which won’t unavailable to you if you had no home. But having your own home gives you equity that you can tap into that equity to start your business. As well as ride out tough financial times and help fund your children’s college education.

Homeownership might be a way to transition wealth transfer from one generation to another. As a homeowner you must ensure that your home appreciates in value over time. Equally ensure you keep your home long enough to pass its value down to your children.

Small business ownership

A home isn’t the only asset you can leave for your children. If you own a small business, you have the ability not only to earn your own money and but to be your own boss. You must ensure to pass the business along to your children as they get older. As a small business owner, you’ll be able to provide your children with the opportunity to grow the family’s generational wealth.

Well, your small business might not turn you into a millionaire. But it will still give you the opportunity to be in control of your career and support your family. And who knows? Probably your children will be the ones to take the family business to the million dollar level.

Life insurance

Life insurance is one of the easiest and no brainer ways to help pass along wealth to the next generation. An affordable life insurance policy might help protect your family from unnecessary financial strain. And the value of your life insurance policy might end up becoming part of your children’s inheritance.

Why do you think that life insurance is one of the key components of black generational wealth? Because it will allow you to set aside funds for your beneficiaries without you having to save the money yourself. Understand that a good life insurance plan might help reduce the racial wealth gap. I believe that life insurance is one of the easier ways in which Black people can start to build wealth.

Annual gifts

You must not wait until your death to pass along black generational wealth to your children. If you have the money to spare, give it to your children while you’re still alive might help them buy their first home. Pay off their debt and position them for a strong financial future. That said, it’s a very good idea to hold off making annual gifts to your children. Until you must have saved enough money for your own retirement and end of life needs. You’re either on the path to a comfortable retirement or you are not.

Modern Day Slavery

During slavery, we worked from sunup to sundown. Our pay? Room and board, and whatever trinkets the master might give, if he gave any at all. Now ask yourself, what are we working for today? From the fast food server to the bank teller, to the CEO. Room, board, and whatever trinkets our paper compensation (master) will allow. The two difference are: there is no race immune to this ( though we still are the ones most affected) and most people don’t know they are slaves.

Rianka R .Dorsainvil from Cnn says “Despite gains in income and wealth for black families in America, white families often have a net worth up to 10 times higher”. She discusses how black people need to put on their oxygen mask and save themselves in order to create black generational wealth. You can check it out here.

Why black Americans must work harder to build wealth

Why must black Americans work harder to build wealth?

Because of black tax!

In United States, it is described as the racial dimensions that perpetuates a cycle of inequality. Such as lower pay and as well as lower standard of education.

This means a few opportunities to be able to save for the future, reach financial goals like buy a house and create black generational wealth. For many black Americans, this tax starts in childhood.

Career

It is impossible to be black in United States and not recognize the role skin color plays in getting one hired. The nonprofit Center for American Progress reports that black workers always deal with systematically higher unemployment rates. When they end up getting a job, not only are the jobs less stable, they equally receive lower pay and less generous benefits.

In addition to this outright discrimination that might be either explicit or implicit. Black people equally face what is known as occupational segregation, or an expectation that they are a better fit for lower-paying jobs than the whites.

The same black tax comes into sharp focus as black people need to work harder to get the education they deserve. As well as land jobs worthy of their talents, and start to invest in their futures. It is still possible to save money even on low incomes. But it might not seem that way for those that lives paycheck to paycheck or even struggling to pay off their debt.

Education

Obviously, no child has control over the neighborhood in which their family stays. And yet, that neighborhood will dictate the public school they will attend. And that might be the child’s first introduction to the black tax. The fact that children of color are frequently given less educational opportunities.

Even when a black child has access to the best education and finds their way through college. They will graduate into a world that might judge them unfairly.

Family obligations

To invest leads to wealth, and wealth makes it much easier to move to a safe neighborhood. Send your children to a good school, and also provide the next generation with the foundation they will need to succeed. Conversely, a lack of black generational wealth will put pressure on families to support themselves. This means that those who earn more often will spend it on their extended families.

It will means to provide for the parents who supported you as you went to college or built your career. This might mean to help a sibling pay rent, send a nephew to summer camp, or otherwise to see to the financial needs of the people you love. It’s very beautiful and equally tragic at the same time. The desire to look after others is frequently the major reason why successful black adults often have trouble to save money. As well as build wealth that would make a difference to the next generation.

Ways black Americans can start building generational wealth today

Prioritize your health

Many people fail to realize the connection between their health and wealth. Both close term and future health care needs might result in expensive expenses. But there are simple ways you can mitigate potential health care costs both today and tomorrow by prioritizing your wellbeing first. After some diagnosis, people were be able to positively address the course of their personal health by adjusting some of their personal habits. Such as eating, exercising, and strictly focusing on preventive care.

Live within your means

Ask yourself some critical questions; like if your spending habits puts you in a difficult position financially. Living within your means might be achieved by you creating and sticking to a budget. As well as being able to understand how debt can impact you.

Black parents, including my dad, wants to give their children the best opportunities possible. However, it’s very important you consider how any financial decision you take will affect your long term financial trajectory.

Start saving and investing now

Start to track how much you can save yearly and target to save 10% to 15% of your income as an investment in yourself. You will just be amazed how quickly it will add up.

Ability to make a long term plan for your loved ones

As people live more longer, long term care will be very much needed more and within the Black community. Family members are not only willing but expected to pitch in often.

Probably at your next family dinner, try and have a conversation about long term care. Ask your family members where they want to receive care and start to critical think about what that means financially. By just creating a plan now, you would be able to ensure you have options and financial resources for the future caregiver support.

Consider life and long term disability insurance

Traditionally the Black community has relied on family networks as our financial safety net. We have this believe that our money is our family’s money and vice versa.

However, I will encourage you to consider traditional insurance products as a help in protecting against life’s what ifs. Long term disability insurance will be able to protect your biggest asset your income when an illness or injury keeps you away from work. Similarly, life insurance will ensure your family members have financial stability should any death occur in the family.

Financial professionals are a helpful resource for Black Americans who wants to take these steps and develop a good financial plan. By doing so, Black Americans will develop financial goals that will meet up with their unique needs in the near. As well as long term and help to build wealth in their own lives.

Talk about money

We often think that to discuss about money is a taboo, off-limits topic, but not to talk about it is actually hurting us.

Don’t shy away from discussing financial planning with your family. Go beyond just talk about how to pay off your credit card or saving every month. Discuss how you will be able to accumulate wealth, invest your savings (like website investment) and how to create a long term financial plan.

Dependency is the tool

Someone once told me that I would never be free, even if I thought I was. I knew what he meant. With inflation, taxes, forced insurances, and building codes that all but outlaw self sufficiency, the idea of being 100% free is almost laughable.  But that doesn’t mean that we have to approach the game the way we are expected to. What is the game? Keeping us dependent of course.  After all, most of us get our water from their pipes, our food from their stores, our utilities from their monopolized suppliers, and more. It’s illegal in some places in the land of the free to harvest rainwater. That should tell you everything.

It’s Time to Buy our Freedom Back

There was no greater sense of defeat for me, than the day after I received the acceptance letter to Spelman University. I had planned my entire high school life around going to the prestigious HBCU. 

And then…I found out it cost $32,000  a year to attend. That was in the year 2000, it’s considerably higher now. Yes, I had some scholarships, and yes I might have been able to get a job and cover most of that and get loans, but it was a choice between certain debt and a free ride with an in state college. I was a 17 year old foster child living in fear of the future. You can guess what I chose. And since then, I’ve wanted more for the people whose circumstances seem to steal their opportunities.

Ways to close the racial wealth gap

One major way to close the gap is to increase economic mobility. Despite the American dream promise, the United States still has lower levels of economic mobility than other developed countries.

To boost minimum income

To increase income at the low end of the salary scale will give those workers the chance to save and equally build wealth. Between 1979 and 2017, there are some certain groups who have seen their average household income increase. That’s after transfers and taxes, though income inequality still continue to exist. If the public policy could equalized income between blacks and whites, black wealth would grow $11,488 per household. That’s shrinking the wealth gap by 11%. Similarly, the median Latino wealth would grow $8,765, equally shrinking the wealth gap by 9%. One way to be able to do this is to raise the minimum wage. It is believed that cities that have done so were able to reduce poverty and reliance on welfare.

Selling bonds for babies

This would pay for a trust fund for the 4 million babies born in America each year. It would cost around $100 billion or 2% of the federal budget. Children from poor background would receive more, while those from wealthy background would receive less. Beneficiaries are expected to use it for education, home equity, or other investments when they turned 18. They could be able to plan their lives knowing this fund are available. The program would be able to generate more revenue for the government via higher income taxes. They would equally generate more revenue for the communities through higher property taxes.

Changing taxation

Progressive taxation will help to close the inequality in United States income. Poor families spend bigger share of their income on the cost of living. They need all the money they earn to provide the basics like shelter, food, and transportation. A tax cut will go a long way to allow them afford a decent standard of living. It will equally allow them to save and increase their wealth.

Improving educational access

Equity in education would go a long way to bring everyone up to a minimum standard. It is understood that the greatest single correlation of high income is the education level of one’s parents. Equity will allow minority children to be more competitive with those who live in higher income school areas. It would also give them stronger skills in the job market and to manage their finances. To invest in human capital is the best solution than to increase welfare benefits or provide a universal basic income.

So What can I do about it?

Choose not to play, or play the game to win. Luckily, there are still markets we aren’t excluded from, even though the barriers of entry may still be high. What I can do, is show you, tell you, give you what I’ve learned and found out over the years. I can do that, and encourage you to do the same for others. Lower your expenses, invest your profits, group up and get organized.

I figure, we live black, we die black, we might as well buy black and buy back our futures!

What does black generational wealth mean to you?