Now That You Know, What Are You Going To Do?

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Happy New Year Keepers! I won’t inundate you with all of the “New Year, New You” crowd pumping catch phrases. But, I will take a moment to remind you that the beginning of a new year is an opportunity to reset our intentions and reflect on what went wrong and right in the previous year (not for long though – dwelling on the past gets us absolutely nowhere).

In 2018 we covered a broad spectrum of topics within our Money Issues blog series and in 2019 it is my intention to offer even more thought provoking, comfort zone shifting, action encouraged content. Some concepts may be new to you, sometimes you may feel like I’m preaching to the choir, and occasionally it may get downright uncomfortable. Nevertheless, we will collectively arrive to a place where we are more informed and knowledgeable than from when we started.

So, without further ado let’s jump right in to a topic that we should consider when discerning our personal financial status and what our children will inherit: the state of Black wealth.

In 2016 the Institute of Policy Studies published a report on the growing racial wealth divide for Black and Latino families. The following key findings may not be surprising to some, but for me – even working in the wealth management industry- I find myself consistently startled by the following statistical evidence:

  • 1) Over the past 30 years, the average wealth of White families has grown by 84%—1.2 times the rate of growth for the Latino population and three times the rate of growth for the Black population. If the past 30 years were to repeat, the next three decades would see the average wealth of White households increase by over $18,000 per year, while Latino and Black households would see their respective wealth increase by about $2,250 and $750 per year.
  • 2) Over the past 30 years, the wealth of the Forbes 400 richest Americans has grown by an average of 736%—10 times the rate of growth for the Latino population and 27 times the rate of growth for the Black population. Today, the wealthiest 100 members of the Forbes list alone own about as much wealth as the entire African-American population combined, while the wealthiest 186 members of the Forbes 400 own as much wealth as the entire Latino population combined. If average Black households had enjoyed the same growth rate as the Forbes 400 over the past 30 years, they would have an extra $475,000 in wealth today. Latino households would have an extra $386,000.
  • 3) By 2043—the year in which it is projected that people of color will make up a majority of the U.S. population—the wealth divide between White families and Latino and Black families will have doubled, on average, from about $500,000 in 2013 to over $1 million.
  • 4) If average Black family wealth continues to grow at the same pace it has over the past three decades, it would take Black families 228 years to amass the same amount of wealth White families have today. That’s just 17 years shorter than the 245-year span of slavery in this country. For the average Latino family, it would take 84 years to amass the same amount of wealth White families have today—that’s the year 2097.

What should we do with this information? It would be easy to take a look at this and instantly feel defeat. No doubt public policy plays a huge role in eradicating much of this – and unless you’ve been living under a rock with this government shutdown and obscene focus on “the wall” none of the above is getting scratched off the list any time soon if left purely in the hands of politicians.

What we do have control over are our personal financial habits and decisions. We also have worldwide access to information – thanks to the internet.

Financial literacy serves as a huge tactic in eroding certain barriers that continue to plague our communities and over the next few months I will offer a deeper dive into the nuances behind the following:

-Homeownership

-Retirement

-Savings and Investments

-Higher Education

-Legacy and Estate planning

I will share stories – some personal, factual evidence, data, and practical solutions all with the mindset to defy those four key findings above.  “When something is important enough, you do it even if the odds are not in your favor.” – Elon Musk

My hope is that you will spread the word.

Let’s keep doing the work.

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