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    Marco Sison
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    Shang Saavedra
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    John Li
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    Marco Sison
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    Shang Saavedra
  • John Li
    John Li
  • Marco Sison
    Marco Sison
  • Shang Saavedra
    Shang Saavedra
  • John Li
    John Li
  • Marco Sison
    Marco Sison
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    Shang Saavedra

As such a diverse group, the Asian American and Pacific Islander community encompasses many different nationalities and cultures. It’s no different when finances come into play. The community can be seen at both ends of the economic spectrum, earning more and less than other demographics.

The wealth gap among Asian Americans and Pacific Islanders shows “Asians in the top 10% of the income distribution earned 10.7 times as much as Asians in the bottom 10%,” according to Pew Research Center. Yet, this community still faces financial disparities in building wealth. Some Asian Americans and Pacific Islanders may have recently immigrated to the U.S., while others are second- or third-generation.

A few obstacles, such as high cost of living, education and income, may contribute to this divided wealth gap. It then creates further challenges Asian Americans and Pacific Islanders have to overcome, which they can. First, by addressing the challenges and then making moves to be more knowledgeable about money.

What Nationalities Are Represented in the Term, ‘Asian American’?

Asian Americans are a very diverse population and one of the fastest-growing racial categories in America. According to the U.S. Census Bureau, in 2017, 22.2 million of the U.S. population was of Asian descent. The National Resource Reinvestment Coalition also estimates that by 2065, the Asian population could reach 14% of the entire U.S. population. The Asian American population can also include those who immigrated and those whose families lived in the U.S. for generations.

The term “Asian Americans” could include descendants of China, India, Korea, Japan, Pakistan, Thailand, Vietnam, Hawaii, Burma, Samoa and the Philippines, among other nations. Asia is the largest continent in size and population with 48 countries.

‘Crazy Rich’ Asians and the Wealth Gap

Although the movie “Crazy Rich Asians” portrays a charming and wealthy Asian lifestyle, Asian Americans have become the most economically divided racial group in the U.S.

According to Pew Research Center, the Asian American and Pacific Islander community has the most significant income inequality, with the top 10% of Asian American earners making almost 11 times more than the bottom 10% of earners in a 2016 study.

Pew Research Center also showed a similar pattern in 1970. The top 10% of Asian Americans were earning about six times as much as those in the bottom 10%. It reports that from 1970–2016, there was a 77% increase in this wealth gap. Comparing the wealth gap among Asian Americans to other racial demographics, this is “a far greater increase than among whites (24%), Hispanics (15%) or blacks (7%)” from 1970–2016.

Even with 46 years between these two studies, those at the top continued to get wealthier, while those at the bottom experienced less growth. The income inequality among Asian Americans may keep getting wider over time.

Four factors — immigration, education, income and cost of living — may influence this income inequality.

1

Being an Immigrant in the US

As the Asian American population in the U.S. continues to grow rapidly each year, the National Resource Reinvestment Coalition reports a majority of Asian Americans are foreign-born.

Immigrants, including refugees and asylees, lawful permanent residents and people with temporary visas, can face language barriers that can prevent them from communicating their needs and obtaining jobs with higher wages.

“Those who speak only Asian languages differ from their English-speaking counterparts in several ways. Non-English-speaking Asian Americans tend to be less wealthy, more socially conservative and have less formal education than those who do speak English,” according to the Pew Research Center.

Not all immigrants will fall into that category. Some who are highly skilled can achieve careers with high incomes.

2

Education Level and Jobs

Asian Americans tend to achieve higher levels of education. The National Community Reinvestment Coalition records that 53% of Asian Americans hold a bachelor’s degree or higher than the national average at about 33% in 2017. But this statistic doesn’t address all Asian Americans. For example, 1 in 4 Burmese Americans have a bachelor’s degree or higher, whereas the rate shifts to 3 in 4 for Taiwanese and Indian Americans.


Although this demographic has high education levels, the wealth gap among Asians shows they face additional money challenges — such as obtaining certain jobs, wages and benefits. A substantial group of Asian Americans have low to middle income and have less wealth than similarly educated white Americans. Having a limited ability to speak, read or understand English could prevent Asian Americans from higher-income jobs.

3

Income and Net Worth

In 2018, just a little over 10% of Asian Americans live in poverty, compared to about 8% of white, non-Hispanic Americans, as stated by the National Community Reinvestment Coalition. Following up on this, a 2019 U.S. Census Bureau report shows the poverty rate for Asian Americans decreased by 2.8 percentage points from 2018 and is sitting at 7.3%. It is the largest decrease compared to other demographic groups, which also decreased from 2018–2019.

While Asian Americans are highly educated and generally have lower unemployment rates than the national average, the wealth gap and income inequality among the Asian American population is still wide. For instance, the Federal Reserve Bank’s “The Color of Wealth in Los Angeles” found that Asian American subgroups — Japanese ($592,000), Indians ($460,000) and Chinese ($408,200) — had a higher median net worth than the average white household of $355,000. In comparison, Filipinos ($243,000), Vietnamese ($61,500) and Koreans ($23,400) had much lower net worth.

This large discrepancy in wealth could reflect the lack of research and understanding of the overall financial state of Asian Americans, not just in the Los Angeles area but also in the nation. The belief in the “model minority” — a term used to describe Asian Americans as hard-working and successful despite obstacles compared to other demographics — overlooks the poverty and wealth gap, resulting in few resources for Asian Americans to overcome financial barriers.

4

Location and Cost of Living

Asian Americans are most likely to reside in urban cities such as Los Angeles, San Francisco and New York. According to the National Community Reinvestment Coalition, California has the highest population of Asian Americans at 6.8 million. New York has approximately 1.6 million Asian Americans, and about 37% of Hawaii’s population are Asian Americans. The cost of living in California, New York and Hawaii may be significantly higher than the rest of the nation.

5 Financial Challenges and How to Address Them

An illustration of different levels of wealth earning among Asian Americans.

While the income inequality is significant, Asian Americans still face a few money challenges — such as caregiving for multigenerational households, lack of opportunities for leadership roles and student loan debt. Addressing these challenges could help you develop a better plan to budget, save and invest your money.

1. Caregiving for Multigenerational Households

A 2018 Prudential research study reports that Asian Americans, both foreign-born and U.S.-born, are caregivers and provide financial support to another person in the household, such as a spouse, parent, child or another family member. Their financial goals consist of providing care to their family, leaving a significant inheritance to their family, purchasing a home, and helping their children or future children with college tuition and a down payment on a house. With these goals, some Asian Americans would need to work and earn more.

WHAT YOU CAN DO

When you’re providing for a multigenerational home, you may want to, first, plan for your own needs and then work on taking care of others. You may need different planning tools to achieve providing for more than yourself. Seek out advice on financial planning and look for a financial advisor who may specialize in planning for multigenerational households.

If you’re planning on purchasing a home or one for your child, consider Fannie Mae's HomeReady Mortgage. HomeReady Mortgage can help lower the down payment to as little as 3% for both first-time and repeat buyers. It can also allow for co-borrowers who are not living on the property to borrow loans and allow for additional income sources to help qualify you as a buyer. The mortgage program requires buyers to complete an online homeownership course through Framework.

To help you further with homebuying goals, you can also start estimating home insurance costs before you begin the purchasing process.

You can also find resources on starting a 529 college savings plan for your child, even before he or she is born. A 529 plan can help pay for education expenses. As long as you are using it to pay for qualified higher education expenses, the plan is tax-free.

2. Costly Housing Rates Compared to Income

Some Asian Americans can afford a home or more properties. For others, it may require more planning to build enough money for a down payment. Although the median household income for Asian Americans is higher than 39% of the national average, most of the population lives in costly urban cities — and for some, it will be in addition to taking care of another family member. Because of this, their income may not bring in a sufficient cash flow when they are ready to buy a house.

WHAT YOU CAN DO

Creating a budget can help you monitor your spending and pay off any debt you may have. Budgeting can also be essential for meeting your future financial goals, especially if you plan to purchase a house or provide for your parents and future family.

Along with a budget plan, you can use a cost of living calculator to help you estimate expenses based on your current annual income and estimate what yearly income you will need if you decide to move to another city.

3. Being Overlooked for Leadership Roles

With labels such as the “model minority," Asian Americans may not be present in the glass ceiling conversation for management or executive roles. However, a Harvard article discovered that Asian Americans were less likely to be promoted into Silicon Valley’s senior positions, but they were very likely to get hired in technical roles.

Although Asian men and women hold qualified credentials, they are highly underrepresented in executive roles. This invisible barrier is termed the "bamboo ceiling" and can be an additional challenge connected to the wealth gap among Asian Americans as they work to increase their income.

WHAT YOU CAN DO

Overcoming the bamboo ceiling may take time. You can start with networking with peers, coworkers and other successful industry leaders. If you are interested in connecting with other Asian Americans, look at professional groups established for Asian Americans and Pacific Islanders. You might be able to find one in your profession or in the career you would like to have.

You can also look into Jane Hyun’s book, “Breaking the Bamboo Ceiling.” She dives deeper into how to advance in your career as an Asian American, navigate misunderstandings and challenges at work, find ways to take advantage of your talents and give ideas on how employers can support you as an employee.

4. Savings and Retirement Habits

A 2018 Prudential study found Asian Americans who are foreign-born, on average, are saving and investing about 47% of their monthly income. For U.S.-born Asian Americans who have higher median incomes, they are contributing 36% of their monthly income into investment and retirement plans. Comparing this to the general population, most people are allotting 10%. The study also shows that Asian Americans are more “comfortable managing their own investment portfolio” than the general population.

With employers providing 401k and retirement plans, the study discovered that foreign-born Asian Americans are more likely to use these options than U.S.-born Asian Americans and the general population. The research also notes a higher percentage of U.S.-born Asian Americans are more likely to own a business or work as independent contractors than foreign-born Asian Americans. A high percentage of foreign-born Asian Americans are working in full-time positions.

WHAT YOU CAN DO

Consider saving and investing your money as soon as possible, whether you are a full-time employee, small business owner or independent worker. You can take a look at your work’s 401k plans if your company offers one, or investment accounts, such as a Roth or traditional individual retirement account (IRA).

Begin financial planning early so you can plan out your financial goals — both for the short term and long term. It would also be helpful to learn how to spend wisely during your retirement.

5. Student Loan Debt and Unmet Financial Need

In a 2018 Center for Law and Social Policy (CLASP) study, about 3 in 4 students have unmet financial need and aid when it comes to higher education. For Asian Americans, they “have the greatest amount of unmet need, regardless of the institution they attend.” Asian Americans also have the highest dollar amount needed to attend college compared to other demographics. For a four-year public institution, its study shows 79% as unmet financial needs for Asian American students, which is closer to the average of all students at 75%.

The income inequality among the Asian American population could be a contributing factor to the unmet financial needs. The cost and location of the institution and the international students from Asia could also be factors.

WHAT YOU CAN DO

Explore several different options for student loans. Make sure you qualify for them, and if you do, apply to as many of them as you can. You can also find scholarships and grants specifically available to Asian American students.

If you need to work while you attend college, establish a budgeting plan to live with a low income. If you’ve already graduated from college and have student loan debt, you can get your student loan debt canceled or forgiven.

Experts on Navigating Financial Challenges

MoneyGeek spoke with financial leaders in the Asian American community to provide expert thoughts on challenges and opportunities to be prosperous. These experts draw from their own experiences to provide you with helpful advice and resources.

  1. What are your own observations about the financial challenges within the Asian American and Pacific Islander community?
  2. Why do you think these disparities exist?
  3. What are your own observations about the wealth gap within the Asian American and Pacific Islander communitiy?
  4. How might this wealth gap affect the population?
  5. What financial advice and resources can you share with Asian Americans who are facing financial challenges?

Marco Sison
Marco SisonRetirement Coach at Nomadic FIRE
John Li
John LiCo-Founder & Technical Lead at Fig Loans
Shang Saavedra
Shang SaavedraPersonal Finance Blogger at Save My Cents

Resources for Asian Americans and Pacific Islanders

Many useful resources and tools are available to help you thrive financially, whether you have immigrated to the U.S., have a low income or are looking for ways to continue growing your money. You can find several financial services and programs, advocacy organizations, community support groups and housing assistance resources below.

Professional Organizations

  • Asian American Organizations You Need to Know: Diversity Best Practices published a list of 20 professional Asian American organizations you can join. You can find organizations for advertising, engineering, journalism, legal rights and healthcare, and organizations for Asian American subgroups, such as the Japanese American Citizens League (JACL) and Korean American Coalition (KAC).
  • Asian Pacific American Chamber of Commerce (APACC): The Asian Pacific American Chamber of Commerce’s mission focuses on business relationships for Asian- and U.S.-based companies. It also provides resources to Asian Pacific Americans through mentorships, information to help make strategic business decisions and a support network to build successful businesses.The U.S. Pan Asian American Chamber of Commerce is a nonprofit organization. It represents Asian- and non-Asian-American businesses and professionals, focusing on business, sciences, the arts, sports, education, entertainment, community and public service. USPAACC provides education, advocacy support and networking opportunities.
  • Asian American Business Development Center: AABDC helps Asian-American businesses succeed in a mainstream, competitive marketplace by expanding opportunities and promoting their contributions. It also strives to encourage Asian-American companies to take an active role in policies to help minority businesses.

Advocacy Organizations

  • The Asian Community Fund at the Boston Foundation: This organization is a permanent endowment that increases awareness of the Asian American community. It provides helpful resources and grants to nonprofit organizations serving Asian Americans who have a low income and are economically disadvantaged and/or immigrants.
  • OCA - Asian Pacific American Advocates: OCA is a national nonprofit organization. It has several programs to help the Asian American and Pacific Islander community to foster development, leadership and engagement. Its members advocate for the well-being of Asian Pacific Americans in social, political and economic-related conversations and policies.
  • National Coalition for Asian Pacific American Community Development (CAPACD): CAPACD is a coalition of local organizations working to help Asian Americans with a low income. It consists of over 100 organizations that assist Asian American and Pacific Islander communities and neighborhoods. It offers data and research, policy and advocacy and programs to empower Asian Americans and other communities of color. CAPACD’s programs focus on housing counseling, small business, creative placemaking and financial capability.
  • Asian American Advocacy Fund: Located in Georgia, the Asian American Advocacy Fund strives to include Asian Americans, Native Hawaiians, Pacific Islanders and other immigrant populations in policy conversations at the federal, state and local levels. Its mission is to improve the lives in these communities through equality, fair treatment and self-determination.

Community Support Groups

  • Pacific Asian Consortium in Employment (PACE): PACE supports about 40,000 low-income and underserved Pacific Asian and other diverse communities in the Los Angeles area. Its mission is to solve challenges and increase opportunities in employment, education, housing, environment and business.
  • Asian Americans for Community Involvement (AACI): AACI works with marginalized and vulnerable ethnic communities in Santa Clara County. It is a large community-based organization that helps its community members improve their well-being, including physical and mental health.
  • Asian Pacific Community in Action (APCA): Located in Arizona, this nonprofit organization helps local Asian American, Native Hawaiian and Pacific Islander communities. It focuses on health equity, access to healthcare and defending community rights.
  • Asian Pacific Islander Community Leadership Foundation (ACLF): Its mission is to help Asian Pacific Islanders develop leadership skills and encourage civic engagement. ACLF offers training and support to those dedicated to public service, community empowerment and social justice. Over 150 participants in its Community Leaders Program (CLP) have advanced in leadership positions related to social justice.

Housing Assistance Resources

  • East Bay Asian Local Development Corporation (EBALDC): EBALDC serves the Oakland and East Bay communities. Its mission is to help low-income residents live in affordable homes and stay in healthy, vibrant and safe neighborhoods. The nonprofit organization also provides social and financial services to support the Asian and Pacific Islander communities and other diverse populations.
  • Asian Americans for Equality (AAFE): AAFE works with Asian Americans and other disadvantaged communities in the Manhattan and Queens areas. It has created over 1,000 affordable rental units and helped first-time homebuyers finance their mortgage payments.
  • National Asian American Coalition (NAAC): The NAAC’s Homeownership Center offers down payment assistance and counseling for the homebuying process, understanding mortgages and developing a credit profile needed to buy a home. The coalition works with Framework to educate homebuyers and provide them with the information they need to buy their home through an online course, which costs $75.

About the Author


Roselle Caballes is a Filipino-American millennial. She works at a fin-tech company as a sales enablement specialist and an online marketing and visibility coach. One of her passions is raising awareness on the challenges affecting the Asian American population.

About the Author


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Roselle Caballes is a Filipino-American millennial. She works at a fin-tech company as a sales enablement specialist and an online marketing and visibility coach. One of her passions is raising awareness on the challenges affecting the Asian American population.


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