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  • David Crockett, MBA, Ph.D.
    David Crockett, MBA, Ph.D.
  • Michael Broughton
    Michael Broughton
  • Kalinda Ukanwa, MBA, Ph.D.
    Kalinda Ukanwa, MBA, Ph.D.
  • Elaine Dickson
    Elaine Dickson
  • Bridgette Long
    Bridgette Long
  • Jennifer Streaks
    Jennifer Streaks
  • Anthony Copeman
    Anthony Copeman
  • David Crockett, MBA, Ph.D.
    David Crockett, MBA, Ph.D.
  • Michael Broughton
    Michael Broughton
  • Kalinda Ukanwa, MBA, Ph.D.
    Kalinda Ukanwa, MBA, Ph.D.
  • Elaine Dickson
    Elaine Dickson
  • Bridgette Long
    Bridgette Long
  • Jennifer Streaks
    Jennifer Streaks
  • Anthony Copeman
    Anthony Copeman
  • David Crockett, MBA, Ph.D.
    David Crockett, MBA, Ph.D.
  • Michael Broughton
    Michael Broughton
  • Kalinda Ukanwa, MBA, Ph.D.
    Kalinda Ukanwa, MBA, Ph.D.
  • Elaine Dickson
    Elaine Dickson
  • Bridgette Long
    Bridgette Long
  • Jennifer Streaks
    Jennifer Streaks
  • Anthony Copeman
    Anthony Copeman
  • David Crockett, MBA, Ph.D.
    David Crockett, MBA, Ph.D.
  • Michael Broughton
    Michael Broughton
  • Kalinda Ukanwa, MBA, Ph.D.
    Kalinda Ukanwa, MBA, Ph.D.
  • Elaine Dickson
    Elaine Dickson
  • Bridgette Long
    Bridgette Long
  • Jennifer Streaks
    Jennifer Streaks
  • Anthony Copeman
    Anthony Copeman
  • David Crockett, MBA, Ph.D.
    David Crockett, MBA, Ph.D.
  • Michael Broughton
    Michael Broughton
  • Kalinda Ukanwa, MBA, Ph.D.
    Kalinda Ukanwa, MBA, Ph.D.
  • Elaine Dickson
    Elaine Dickson
  • Bridgette Long
    Bridgette Long
  • Jennifer Streaks
    Jennifer Streaks
  • Anthony Copeman
    Anthony Copeman
  • David Crockett, MBA, Ph.D.
    David Crockett, MBA, Ph.D.
  • Michael Broughton
    Michael Broughton
  • Kalinda Ukanwa, MBA, Ph.D.
    Kalinda Ukanwa, MBA, Ph.D.
  • Elaine Dickson
    Elaine Dickson
  • Bridgette Long
    Bridgette Long
  • Jennifer Streaks
    Jennifer Streaks
  • Anthony Copeman
    Anthony Copeman
  • David Crockett, MBA, Ph.D.
    David Crockett, MBA, Ph.D.
  • Michael Broughton
    Michael Broughton
  • Kalinda Ukanwa, MBA, Ph.D.
    Kalinda Ukanwa, MBA, Ph.D.
  • Elaine Dickson
    Elaine Dickson
  • Bridgette Long
    Bridgette Long
  • Jennifer Streaks
    Jennifer Streaks
  • Anthony Copeman
    Anthony Copeman

During the last five decades, the Black community has had limited access to building wealth for generations. A closer look at wealth in America reveals staggering racial wealth disparities. Even before the Covid-19 pandemic, the 2019 national Black poverty rate was more than double the white poverty rate in the U.S. (roughly 22% compared to 9%, respectively), as reported by the Kaiser Family Foundation (KFF).

The average white family’s wealth is eight times higher than the wealth of an average Black family, according to the Federal Reserve. Systematic inequality, lack of financial literacy, high default rates on student loans and employment discrimination, among other factors, have led to the racial wealth gap.

You can find several tools and resources below to help tackle a few financial challenges and develop ways to create wealth for yourself and your future family.

How Profound Are Systematic Inequalities and Racial Gaps in Finances?

An illustration of two houses: one made of coins and the other is made of U.S. dollars. A red line separates them.

For centuries, the struggle for African Americans to build, secure and maintain wealth has been ongoing in the United States. Many financial barriers began during slavery and continued after emancipation throughout the last 50 years. These barriers contributed to Black and African Americans’ opportunities for creating wealth.

The History of Racial Income and the Black-White Wealth Gap

Until its abolishment in 1865, slavery legally prohibited Black people from earning wages. Following emancipation, laws continued to marginalize Black and African Americans by restricting their freedoms and denying them opportunities. When it was first initiated in 1935, Social Security did not cover most Black Americans as it excluded farmers and domestic workers from benefits. Black people made up 65% of those occupations. Prior to the Civil Rights Act in 1964, Black codes and Jim Crow laws — which legalized racial segregation in the South — detailed what work Black Americans could do, what they could earn and even their ability to leave after hired. Some states even restricted what property Black people could own.

Why Does the Racial Wealth Gap Persist?

Despite the end of these discriminatory policies and laws some 55-plus years ago, they created a systematic inequality that has been difficult to eliminate. They are deeply entrenched into America’s labor, housing, education, healthcare and justice system. These discriminatory policies originally set out to ensure white people could build more wealth than Black people. And over time, it contributed to Black Americans, on average, having considerably less wealth than white Americans. Studies show that since the 1960s, following Civil Rights, Black Americans’ financial stance compared to white Americans' has shown little progress with homeownership, unemployment and overall wealth holdings.

6 Financial Challenges and Solutions to Close the Wealth Gap

Several challenges impact Black families trying to secure wealth and build financial wellness. Lack of financial literacy, systematic inequalities, lower income and limited homeownership can interfere with this community reaching financial freedom and independence. With all of these elements at play, many may find it difficult to build savings, survive income disruptions and create generational wealth.

1. Access to Mortgages and Homeownership

Redlining was one of the earliest forms of institutionalized racism. It allowed lenders to offer increased rates to customers in certain neighborhoods based on their race. Although this was outlawed in 1968 by the Fair Housing Act, it can still occur today.

A 2018 National Community Reinvestment Coalition study found three out of four neighborhoods that were redlined 80 years ago are still struggling economically. For example, some public policies presented as supporting economic improvement, creating new public spaces or fixing urban blight deprived Black communities of property ownership and affordable rental housing.

Black homeownership had a record low of 40.6% in the second quarter of 2019 since 2016, according to the Census Bureau. But white homeownership was more than 30% higher and consistently remains 30% higher for every quarter between 2016 and 2020.

WHAT YOU CAN DO

Be on the lookout for red flags that indicate discrimination. For example, if an agent is trying to direct you to specific neighborhoods with certain races or religions, or the agent tells you a property is not available when you know it is. It can also be discrimination if you are being denied a property because of your source of income or you receive public assistance.

If prospective homebuyers believe they are discriminated against, they should reach out to organizations such as the Fair Housing Justice Center, or similar nonprofit groups or local human rights commissions.

In the case of mortgage discrimination or scams, such as an inflated mortgage rate or a denied application, applicants have the right to see any negative credit information and dispute it. Report suspected mortgage discrimination or fraud to the Consumer Financial Protection Bureau (CFPB) for alleged violations of the Equal Credit Opportunity Act and the U.S. Department of Housing and Urban Development (HUD) for alleged violations of the Fair Housing Act.

Also, know your buying power by obtaining your credit report and reviewing it for accuracy. You’ll want to fix any incorrect information that may affect your loan qualification or interest rate. If you need help building or boosting your credit, try becoming an authorized user on someone’s card who has a long history of paying on time, using a responsible cosigner or obtaining a secured credit card.

There are also credit-building tools like Experian Boost that provide positive payment history and allow you to add utility payments to your credit report.

Establishing and maintaining a good credit record will also help reduce your home insurance costs. To lower your costs even more, consider buying your home and auto policies from the same company for a multi-policy discount, seek out other discounts for professional associations or employers and shop around for the best rates. The National Association of Insurance Commissioners has information to help you choose an insurer in your state.

2. Securing Employment and Higher Income

Employment discrimination and a lack of hiring opportunities make it difficult for Black families to overcome poverty or build wealth if they’re unemployed or stuck in low-wage jobs. In the last 25 years, Black Americans have seen no change in hiring rates. The Harvard Business review assessed subtle forms of racial stereotypes and unconscious bias has changed very little over time despite increased efforts for diversity and inclusion. Since the 1990s, white applicants received 36% more callbacks than Black applicants with an identical résumé.

When it comes to getting a raise, PayScale reports that people of color are less likely to receive one when asked. According to its “Raise Anatomy” report, women of color were 19% less likely to have received a raise than white men, and men of color were 25% less likely.

The U.S. Bureau of Labor Statistics started collecting data on the African American unemployment rate in 1972. Since then, the rate has generally been twice as high as the white unemployment rate, as reported by the Center for American Progress. During the pandemic, the unemployment rate has only worsened for Black Americans. In the third quarter of 2020, the Black employment rate was 13.2%, while the rate for white people is 7.9%, according to the U.S. Bureau of Labor Statistics.

The Federal Reserve reports in a 2019 Survey of Consumer Finances that Black families’ median and mean wealth was less than 15% that of white families at $24,100 and $142,500, respectively.

WHAT YOU CAN DO

You can implement some savvy strategies that can make living on a small salary manageable, such as finding assistance programs, asking friends and family for help or making small changes to your lifestyle to help save.

There are also a few strategies to help you when you are ready to ask for a raise.

1. Be confident. You have the right to ask for fair, increased compensation if your work validates it. 2. Research, research, research. Find out the salary benchmarks or current market values for your position in your company and industry, and use that documentation to support your request. 3. Document your wins at work and use that to champion your request as well. 4. If your manager says no, request a timeline to have the conversation again.

Look for employers committed to diversity and offer programs to support people of color through Diversity Employer, which includes an online job board, or The Black Perspective, which promotes companies actively recruiting African American applicants.

3. Learning How to Make Informed and Effective Financial Decisions

The TIAA Institute-GFLEC Personal Finance Index (P-Fin Index), a survey that measures financial literacy, revealed African Americans demonstrated a low level of financial literacy. The P-Fin Index showed African Americans only answered 38% of personal finance questions correctly compared to white Americans who answered 55% correctly.

Black people received the highest scores in knowledge on borrowing and managing debt while their lowest score was in comprehending risk and uncertainty, insuring, investing and go-to information source.

The gap in financial knowledge between Black and white Americans may be partially due to educational opportunities. African Americans who are college-educated answered 53% of the P-Fin Index questions correctly on average, compared with 24% among those with a high school degree or a lower education level.

WHAT YOU CAN DO

African Americans with strong financial literacy are more likely to plan and save for retirement, have additional savings and manage their debt better. There’s no limit to how much research you can do — the more knowledge, the better. Learning more about your money can help you develop a budget, save more and improve how you manage your expenses.

Listen to money podcasts such as Brown Ambition or His and Her Money for insights from African American financial experts and entrepreneurs.

You might also consider getting life insurance. It can be an extension of financial security for you and your family. You can use it as a means to pass on generational wealth, replace retirement income, pay off debt when a partner dies or even make sure that a child or grandchild can go to college.

4. Cost of Using a Financial Expert

A financial advisor can help you navigate taxes, pay down debt and plan for savings. Advisors can provide advice and resources on how to best manage your money and make sure you align with your financial goals. According to the P-Fin Index, Black Americans lack financial knowledge in understanding risk and investments. They also have difficulties understanding credit.

But many people don’t use a financial advisor. For many, the cost may be the factor, especially if you live on a low income.

WHAT YOU CAN DO

There are free and low-cost options. Some advisors offer complimentary consultation or services. The Foundation for Financial Planning offers pro bono financial planning through its local chapters. You can also find financial advisors at the Financial Planning Association for free during the pandemic.

If you are looking for a Black financial advisor, explore the Association of African American Financial Advisors. There’s also plenty of free advice online through your 401k provider, bank or credit unions.

5. Not Building a Savings or Emergency Fund

Most financial experts would tell you emergency savings is a priority, and you’ll want to save at least three to six months of living expenses.

However, because African Americans have historically had less access to stable jobs, higher wages and retirement benefits at work – all key elements that help support savings — they have been less likely to accumulate savings and invest. The current tax code also provides families with higher incomes increased tax incentives associated with both housing and retirement savings, according to the Center of American Progress.

WHAT YOU CAN DO

Look at your income, assess your monthly living costs and aim to save 10% to 20% each month. Setting aside a designated amount of money each month allows you to build up emergency funds, reduce and manage debt and prepare for retirement. Make it even easier on yourself by doing automated savings so that the money is automatically stored away.

To build assets, you have to manage your spending and start thinking about investing. It may be tempting to stray from your budget, but keep in mind that money spent on certain items, such as brand-name clothes and luxury cars, when you don’t necessarily need them is money that you can’t save or invest to grow wealth over time.

6. Paying for Education and Using Student Loans

Lack of wealth could translate into fewer opportunities for upward mobility like pursuing an education and the ability to pay for it. Black families often rely heavily on student loans and risker student debt options to finance higher education.

Borrowing money is not bad. It can be a good way to establish credit, and it’s a reasonable option when done responsibly. It can become a challenge if the borrowers cannot pay their loans on time.

Data from the National Center for Education Statistics shows that 12 years after entering college, a typical African American student who attended college in the 2003–04 school year owed more than what was originally borrowed, and 49% defaulted on their loans.

WHAT YOU CAN DO

Several organizations, colleges, associations and nonprofits offer scholarships and grants for Black students to help with affordability and understanding the application process. Relying on grants and scholarships to fund college can help African American students be more financially stable in adulthood.

When you graduate from college, look into resources and tools to help you pay down your student loan debts. Start by creating a budget and develop a plan to reduce your debt on a monthly basis.

Expert Panel on Black Finances and Addressing Financial Challenges

Black and African Americans can start building wealth by developing money management skills and addressing financial challenges. MoneyGeek spoke with seven experts who can help you establish smart financial habits. They also provide advice on housing discrimination and managing student loans.

  1. What are some of the financial barriers that you’ve observed the African American community face?

    Most of the financial barriers in the African American community stem from a lack of financial education. Given the rise of more African Americans completing their college degree, a huge financial barrier is underemployment. African Americans are not getting good-paying jobs right out of college.

    Aside from the income disparities, there is a disconnect with having a solid financial plan for your life. They are faced with student loan debts, credit card debt, lack of affordable housing options and living paycheck to paycheck. These barriers are recipes for predatory lending and being financially vulnerable.

    (Being) financially vulnerable means you are one check away from a financial disaster. This disaster can lead to homelessness, repossession of a car, food shortage or a payday lender situation. In addition, African Americans lack generational wealth. Families go from one struggle bus to another struggle bus with no funds for purchasing a wealth-building asset (i.e., home).

    There are a myriad of financial barriers many Blacks face. One of the barriers includes not having direct access to sufficient capital, whether it be cash or leverage funds. Blacks are underpaid in America, earning less than their white counterparts. To every $1 a white man earns, a Black man earns 87 cents, and to every dollar a non-Hispanic white man makes, a Black woman earns 63 cents.

    The lack of access to enough capital in the workplace can also influence Blacks’ ability to garner capital from financial institutions. For many years, the culture of systemic racism has dominated the financial industry and caused many Blacks to not have the ability to own homes. However, not having adequate liquid assets can impact a bank’s decision not to offer Blacks mortgages.

    Three of the biggest financial barriers I’ve observed, both personally and through research, are 1) lack of generational wealth, 2) lack of access to financial capital (including credit) and 3) lack of access to information (or) knowledge about the inner workings of consumer financial markets.

    I think the first (lack of generational wealth) is one of the main reasons why the second and third barriers exist. Based on my own research in algorithmic bias, a fourth emergent financial barrier for the African American community is bias embedded in artificial intelligence/machine learning algorithms and their data.

    This fourth barrier exists primarily because historic and systemic biases in financial services underpin today’s data and algorithm designs, which are now increasingly used to determine who gets financial services in the first place.

    The main financial barriers confronting African Americans are structural features of the United States economy. The disadvantages are considerable considering every part of the financial picture.

    If we start with financial inputs — money coming in — African Americans, particularly men, run far higher unemployment rates than their white counterparts. Black male unemployment is typically at least twice that of white male unemployment, and this has remained basically unchanged over the life of the unemployment measure. It doesn’t matter what statistical controls for so-called human capital one uses. The racial employment gap is quite large. These depressing numbers are worse than they appear on the surface because they do not account for the effects of mass incarceration. Add to that, once employed, we see all the same racial disparities in compensation and promotional opportunities.

    Today, based on 2016 data from the Fed, African Americans own 3 to 4% of the country’s wealth “pie.” I will also note that the variance from place-to-place is also quite large; that is, Black wealth in many places is not even close to that 3 to 4%. Black and Brown people in the U.S. are extremely asset poor. According to sociologist Louise Seamster, the racial wealth gap, rather than shrink over time, actually doubled during the five-year Great Recession. As a practical matter, asset poverty means going through life with little to no cushion against income shocks. It also means that they likely pay higher prices for credit than whites with comparable incomes, all else equal.

    The main culprit is pretty obviously public policy. Government at every level (federal, state and municipal) has at various moments allowed and even encouraged anti-Black discrimination in markets for labor, real estate, banking/credit and insurance. Simultaneously, the government has enacted public policy intended to bolster wealth-building via the tax code and monetary policy that directly excluded African Americans or allowed them to be excluded. For instance, consider the history of New Deal policies, like Social Security. In order to win support from southern senators, FDR gave his blessing to exclusions for agricultural and domestic workers, who were overwhelmingly African American.

    Financial barriers include a lack of access to credit, lack of financial education, difficulty in securing funds to start a business (and) systemic bias in the financial industry. African Americans have a hard time navigating the financial system every day, from being chronically unbanked and having poor credit scores to experiencing lower unemployment rates and an inability to secure financing to start businesses. The financial system as it exists right now is not favorable to African Americans.

    Common barriers I see include underinvestment in Black communities, including a lack of access to good schools, which is the most basic of the building blocks and launching pad for success in life. Also, the absence of generational wealth, so regardless of major transactions — house, college (and) car — there is limited financial support from family and very little, if any, savings. Purchasing a house becomes harder and even out of reach.

    Also, because of the deep and entrenched historical and institutional barriers that existed, and some still exist today, Black families were largely excluded from the primary wealth-building source: owning a home. (The) government’s heavy hand in this, including redlining, exacerbated the problem and banking institutions were/are stingy in loans to Black families and businesses. Inability to get funding is still a major issue and stumbling block.

    One of the main financial barriers faced by African Americans is lack of access due to systematic racism and discrimination. African Americans have been continuously overlooked when it comes to financially empowering things, like job opportunities or receiving loans for purchasing cars, homes or attending college, leading them to struggle to build and maintain generational wealth.

    Outside of being overtly discriminated against in the financial space, African Americans also are weighed down by the burden of less access to credit-building, which leaves them in a vicious cycle that is difficult to escape. They are given little to no tools to build their credit, which only leads them to be denied the very credit products that could help them earn a good credit score.

    The credit products African Americans do receive are often predatory loans that have extremely high-interest rates that are very difficult to pay back, leading to missed payments, which ultimately hurts their credit score. So, lack of access to quality financial tools and products is the biggest barrier African Americans face in the financial space.

  2. What are some tips to help African Americans build wealth?

    Seek and find financial education opportunities and share the information with your whole family. Having a basic understanding of money management is critical. Life insurance is a solid wealth-building opportunity for generational wealth. Back in the day, I remember the insurance man coming door-to-door collecting insurance premiums. If nothing else, African Americans kept life insurance and paid it regularly. Today, GoFundMe is the new plan. Life insurance is income protection and can set you up for the future. There is a disconnect on the importance of having life insurance and not to (only) have it with your employer.

    Having a solid financial plan is critical to understand your financial goals and to address threats (and) opportunities. The main area to address is spending and debt obligations. (These two) will determine your credit history, credit score and purchasing power. Knowing your financial position helps to get better rates on home loans, and purchasing a home is an important wealth-building opportunity for families.

    Develop a plan to address any credit delinquency and stay away from Payday loans. I think African Americans have been pushed into the degree mill, and trade-skilled professions should be highlighted as an option. Trade-skilled professions are in high demand and make a great wage with a minimal cost of education.

    Lastly, African Americans should not be afraid to invest in the stock market. Now with anything, you should do your research and take it slow. Stock investing has to be normalized within the African American community.

    In order to build wealth, Blacks should begin by utilizing their 401(k), especially if the employer offers a matching contribution. If one does not have access to an employer-sponsored retirement plan, they can consider an IRA — whether it be a traditional or Roth. Another way Blacks can build wealth is through teamwork, utilizing family and friends (as) financial and human capital resources to leave a legacy.

    Knowledge is power. Build up their knowledge of how consumer financial markets work. The more knowledge we have about these markets, the more ways we can discover how to access financial capital. Knowing how to get access will, in the long run, lead to generational wealth. That means building up a high-level of financial literacy about how credit works, including how credit scores impact jobs, lodging and other resources. That also includes building up knowledge about how investment markets work, particularly in stock and real estate markets.

    The pushback often is, “well, I don't have thousands of dollars lying around, so I can't afford that,” or “you have to be a professional with a finance degree to know that stuff.” However, the reality is that you don't need a finance degree or thousands of dollars to start building equity. But you do need knowledge of how it works. For example, anyone who could afford to buy a meal at Wendy’s for a family of four could also, with enough knowledge, use that money to buy one share of Wendy’s stock, which is $22.52 as of December 16th.

    African Americans cannot “save” or “thrift” their way out of these structural disadvantages. Whatever wealth African Americans accumulated during the Clinton-boom years was effectively wiped out by the Great Recession. In this sense, the COVID-19 global pandemic is just grinding African American wealth, which was already obliterated, into finer bits of dust.

    Advocate for changes to public policy, such as:

    • Medicare for all
    • a federal “jobs guarantee” at a living wage
    • increasing marginal tax rate on the wealthiest households to pre-Reagan era levels
    • student loan forgiveness and free college
    • “baby bonds” or trust (an initial investment in a newborn child who can access as an adult)
    • and most importantly, reparations for descendants of U.S. chattel slavery

    It’s important to increase savings and decrease debt to build wealth. Work on improving credit scores and create multiple streams of income. Take advantage of 401k and IRA benefits. But I really think that creating a business or a side hustle that brings in more money would be most beneficial.

    Homeownership continues to be the best and most successful way to build wealth. Taking advantage of government-subsidized loan programs and historically low-interest rates, plus the recent commitments from many financial institutions to invest in Black and urban neighborhoods, are great opportunities.

    Opt into workplace 401K/403B or similar type retirement savings, if available, and start as early as possible. The markets have experienced tremendous growth in the last decade, but that wealth will only accrue to current investors.

    Purchasing life insurance that can leave family members with some financial security is another option to grow wealth, and do it earlier when it’s cheaper and when one is typically healthier.

    It is imperative that African Americans know exactly what is going on with their finances at all times to ensure that they are not getting manipulated or scammed in any way. A second tip would be to make sure they are starting their credit-building as soon as possible to avoid having approval for certain credit products denied when they really need them.

    (One way) they can do this is by setting their children up for good credit early. (They can do this) by adding them as authorized users on their credit cards, responsibly using credit cards starting at their young adult phase in life or by reporting alternative data to the credit bureaus through third-party apps like ours, Perch Credit. Perch Credit allows users to build their credit using recurring expenses like rent, Netflix, Hulu and Spotify payments by reporting them to the credit bureaus as credit-worthy data points.

  3. What are some ways African Americans can improve their financial literacy? Are there any specific resources that you recommend?

    I believe one way for African Americans to improve their financial literacy is normalizing that there is a need to get financially literate for the whole family. They should seek opportunities to get the education offered through local organizations. In addition, having a financial coach is a great way to have a personal accountability partner to help achieve financial goals. It is important to develop a relationship with financial professionals to keep you informed and on the right financial track.

    Add a financial book to your “self-care” routine. Don’t forget there are several great financial influencers on Instagram and communities to follow: @bridgettelongmpa @betterwallet @budgetqueen_blog and many more.

    I love Michelle Singletary’s financial books. In addition, I utilized Dave Ramsey’s seven baby steps program to pay off debt and set up a solid financial plan.

    Blacks can improve their financial literacy through three ways: acknowledging their history (or lack thereof) with money, assessing where they are today and taking actionable steps to create a life and legacy.

    Growing up, many Blacks had no information or misinformation as it relates to money. They can start by reimagining their relationship with money and realigning their current habits.

    There are also plenty of great books on personal finances, such as “Think & Grow Rich: A Black Choice” by Napoleon Hill and Dennis Kimbro, “The Richest Man in Babylon” by George Clason, and “PowerNomics” by Dr. Claud Anderson. There is also a current animation series, $hares, which helps Black millennials learn about various financial concepts and become comfortable talking about money.

    Gaining knowledge about the building blocks of financial literacy (such as household budgeting, managing debt and savings) provides a solid foundation in understanding financial markets. Here are free resources that I recommend where you can learn more about these topics:

    I hesitate to disparage financial literacy in the abstract. And people in the U.S. generally need to better understand the entire monetary system, both as consumers and citizens with a political interest in a more sane income distribution. However, that does not seem to be the purpose of many programs that use the phrase “financial literacy” to describe themselves. To be clear, there is nothing wrong with advising people to try as best they can to negotiate better rates on credit cards, insurance and the like, but so many people are in dire straits these days (that) this kind of advice isn’t helpful. Big, structural changes are needed.

    That said, I’d rather light a candle than curse the dark. Here are some sources I think are helpful to understand the current economic predicament in Black America and some ways out of it.

    • “Color of Money: Black Banks and the Racial Wealth Gap”, by Mehrsa Baradaran, who was recently named to Present-elect Joe Biden’s transition team.
    • The Basics of Modern Money by Geoff Coventry
    • Black Debt, White Debt” by sociologist Louise Seamster

    To improve financial literacy, normalize talking about money and credit as a family. Start teaching children about money and credit at an early age and show them how to pay bills. Make saving money a conversation as well as an action. Sit down together and talk about the household budget, use your bank’s app to keep up with savings and bill payments, and use the Mint financial app to help with tracking your budget.

    It’s never too early to start building financial literacy, and some high schools now offer financial literacy and budgeting classes. In my experience, a lack of knowledge (with) budgeting, financial planning, investment and retirement savings exacerbates the wealth gap. If you are the first in your family to go to college, the likelihood you have been exposed to these topics are slim.

    Attending events or getting resources at local libraries, U.S. Small Business Administration (SBA)/SCORE, other community organizations that offer free webinars and workshops are ways to hone financial literacy skills. Financial institutions such as Fidelity, Yahoo Finance or Vanguard have a lot of investment information for free. Taking a course through Coursera, EdX or other free platforms are other good options, so is listening to podcasts or following blogs that deal with financial literacy.

    1) Joining groups and foundations that focus on providing financial education and financial empowerment for free, such as Next Gen Personal Finance or the National Endowment for Financial Education.

    2) Advocating for it to be taught in schools so that kids and teens can get a general idea of what financial literacy is before being thrown into the real world.

    3) Apps like Perch, which teaches easy-to-digest 60-90-second animations about financial topics ranging from savings to cryptocurrency.

  4. Stats show that African Americans suffer from high delinquency of student loans. Can you offer any advice on how to manage student loans?

    The key to managing student loans is understanding your loan payment options, communicating with the loan servicer and applying for the appropriate program based on your income and circumstances. There are a number of programs such as income-based repayment plans, Public Service Forgiveness Loan, student loan discharge for special circumstances and student loan forgiveness for teachers, nurses, doctors and military (members).

    Understanding your budget and what you can afford is key. Along with making the minimum payment, try to send extra toward the loan principal with any extra windfall income.

    Always communicate with your student loan servicer when you have a change in circumstance such as a job loss so they can provide you with options. Pay your balance on time and in full, especially if you are in a forgiveness program such as the Public Service Forgiveness Loan program. If you are in a forgiveness program, track your payments and make sure you understand which loans qualify for forgiveness and which ones do not.

    A contributing factor to the higher student loan delinquency rates is the lack of generational wealth to draw upon to pay for college. African American students borrow more than other groups to pay for college yet earn less in jobs when they graduate. Based on research at the Brookings Institution, for example, African Americans with a graduate degree have nearly twice the amount of student debt as white counterparts. However, on average, they earn less than whites with just a bachelor’s degree. More borrowing and fewer learnings from an education naturally contribute to higher delinquency rates.

    My advice for managing student loans is to: 1) build high knowledge about alternative ways of managing debt, and 2) take advantage of available income-contingent loan repayment programs. These programs set monthly loan repayments based on income and adjust as the person’s income adjusts. Studentaid.gov is a good resource to learn about these types of plans.

    Getting a college education is perhaps the one thing people in the U.S. universally agree is important. The United States put the Baby Boomer generation through college via the GI Bill and tuition rates at public colleges and universities that could be paid with minimum-wage work. And it was a much better nation for having done so. The change to private financing occurred in earnest while I was pursuing my undergraduate degree in the late 80s/early 90s, and everyone aside from the banks is worse off for it. Given the problems this nation faces in the wake of this global pandemic, free post-high school education is precisely the kind of investment in the commons this country should be making.

    My advice on managing student loans is to join those of us advocating to push Congress to forgive outstanding student debt with an eye towards making college education a public investment.

    Student loans for college should be used as a last resort instead of the first resource we use. Look for scholarships and state grants. Encourage high grades and normalize going to a good state school. When kids are young, open up a 529 plan.

    High student loan debt again points to the lack of generational wealth, absence of counseling and limited knowledge, as well as needing a loan to cover living expenses. Parents and students become heavily burdened if there is no savings, family trust or 529 plans. The best way to mitigate student loan debt is to limit it as much as possible — attend community college (some are free like in Rhode Island) or go to public colleges and universities in-state.

    Research and chase financial aid dollars (and) scholarships, including at the local/community level. Be willing to pursue options beyond (your) first choice for college, and if borrowing is a must, do it prudently. Get a work-study or a part-time job to help, and only borrow what’s needed. If a situation arises after college that makes repayment difficult, call and talk to the lender and restructure the loan. There are deferments, forbearance and lower payment options available.

    A main piece of advice for African Americans struggling to repay their loans is that there are resources and options available for them. For example, there are loan forgiveness programs specifically made for African Americans dealing with this problem. These can be a great tool for them to get some relief. Another option is to refinance their loans to try to get a lower interest rate on them. Lastly, in order to avoid this situation, African Americans need to look for scholarships or grants to attend college instead of relying on loans.

  5. Historically, housing discrimination has stunted African American’s building of wealth. What can a prospective homebuyer or renter do to protect themselves?

    It is critical for a prospective buyer or renter to know their credit history and buying power, meaning credit score and financial position. One of the most important first steps is to order a credit report and review it for accuracies and/or errors. The credit history is used to determine your buying power and the cost of your buying power. Having the ability to examine your credit position early is key. I always tell my clients, “No one should know your financial business better than you.”

    (The) next step is to identify a real estate professional to guide you through the process. With the saturation of information found online, some feel there is no need for a real estate professional because everything was spelled out online. Well, this is a big fallacy. Experienced real estate professionals understand the market, and they have a legal and ethical duty to represent you in the best interest. If you have no real estate experience, you may miss steps within the transaction, lose money and/or end up with a bad deal.

    I would recommend seeking an experienced real estate professional and signing up for a homebuyer education program through local nonprofit organizations. The real estate professional or mortgage lender should be able to direct you to an organization.

    If you experience housing discrimination, it’s always vital to contact your state’s human rights or civil rights commission. Also, locally, you can reach out to a community legal service organization in your area where you can obtain free legal advice.

    Homebuyers and renters should take the time to research state and federal laws against housing discrimination. Make sure that you know the complaint process at HUD for homebuyers, and if you are a renter, know your state’s laws (especially during this pandemic) and know what landlords can and cannot do. Most states have protections in place for renters to prevent immediate eviction.

    Systemic racism and discrimination in lending have been two of the biggest barriers in accessing capital. Both affect the ability to rent or own. In terms of protection, start with managing the things within your control, including credit history, debt management, employment stability and saving for deposit or down payment. And know your rights as the process for renting or buying will at some point require confirmation of identity in a manner that reveals race/ethnicity, and the possibility of bias becomes real.

    Prospective renters or homeowners should not shy away from reporting any unprofessional, unethical and/or discriminatory behavior during any part of the homeownership or rental process. This might include being steered away from or to certain neighborhoods, being offered or charged higher interest rates or landlords pretending a property is already rented. It is really critical to know what rights and where to call to seek help or report an issue.

    The first thing African Americans can do to protect themselves in the homebuying or renting process is to make sure they are building their credit as soon as they can. Doing so will be harder for lenders and landowners to deny them. Also, it is important that they do their fair share of research and compare all their options for getting the homes. Lastly, some rent-to-own programs such as Dream America focus on financially empowering tenants so they can own the home they are currently renting.


  • Bridgette Long
    Bridgette LongFinancial Coach & Consultant, Managing Real Estate Broker for Quality Professional Management, Inc.
    Anthony Copeman
    Anthony CopemanFinancial Education Instructor and Founder of Financial Lituation and $hares
    Kalinda Ukanwa, MBA, Ph.D.
    Kalinda Ukanwa, MBA, Ph.D.Assistant Professor of Marketing, Marshall School of Business, University of Southern California
    David Crockett, MBA, Ph.D.
    David Crockett, MBA, Ph.D.Professor of Marketing and Moore Research Fellow, University of South Carolina
    Jennifer Streaks
    Jennifer StreaksFinancial Journalist and Author
    Elaine Dickson
    Elaine DicksonFounder/CEO of Mavenly Consultants, LLC
  • Michael Broughton
    Michael BroughtonCo-Founder and CEO of Perch Credit, Inc.
  • Bridgette Long
    Bridgette LongFinancial Coach & Consultant, Managing Real Estate Broker for Quality Professional Management, Inc.
    Anthony Copeman
    Anthony CopemanFinancial Education Instructor and Founder of Financial Lituation and $hares
    Kalinda Ukanwa, MBA, Ph.D.
    Kalinda Ukanwa, MBA, Ph.D.Assistant Professor of Marketing, Marshall School of Business, University of Southern California
    David Crockett, MBA, Ph.D.
    David Crockett, MBA, Ph.D.Professor of Marketing and Moore Research Fellow, University of South Carolina
    Jennifer Streaks
    Jennifer StreaksFinancial Journalist and Author
    Elaine Dickson
    Elaine DicksonFounder/CEO of Mavenly Consultants, LLC
  • Michael Broughton
    Michael BroughtonCo-Founder and CEO of Perch Credit, Inc.
  • Bridgette Long
    Bridgette LongFinancial Coach & Consultant, Managing Real Estate Broker for Quality Professional Management, Inc.
    Anthony Copeman
    Anthony CopemanFinancial Education Instructor and Founder of Financial Lituation and $hares
    Kalinda Ukanwa, MBA, Ph.D.
    Kalinda Ukanwa, MBA, Ph.D.Assistant Professor of Marketing, Marshall School of Business, University of Southern California
    David Crockett, MBA, Ph.D.
    David Crockett, MBA, Ph.D.Professor of Marketing and Moore Research Fellow, University of South Carolina
    Jennifer Streaks
    Jennifer StreaksFinancial Journalist and Author
    Elaine Dickson
    Elaine DicksonFounder/CEO of Mavenly Consultants, LLC
  • Michael Broughton
    Michael BroughtonCo-Founder and CEO of Perch Credit, Inc.
  • Bridgette Long
    Bridgette LongFinancial Coach & Consultant, Managing Real Estate Broker for Quality Professional Management, Inc.
    Anthony Copeman
    Anthony CopemanFinancial Education Instructor and Founder of Financial Lituation and $hares
    Kalinda Ukanwa, MBA, Ph.D.
    Kalinda Ukanwa, MBA, Ph.D.Assistant Professor of Marketing, Marshall School of Business, University of Southern California
    David Crockett, MBA, Ph.D.
    David Crockett, MBA, Ph.D.Professor of Marketing and Moore Research Fellow, University of South Carolina
    Jennifer Streaks
    Jennifer StreaksFinancial Journalist and Author
    Elaine Dickson
    Elaine DicksonFounder/CEO of Mavenly Consultants, LLC
  • Michael Broughton
    Michael BroughtonCo-Founder and CEO of Perch Credit, Inc.
  • Bridgette Long
    Bridgette LongFinancial Coach & Consultant, Managing Real Estate Broker for Quality Professional Management, Inc.
    Anthony Copeman
    Anthony CopemanFinancial Education Instructor and Founder of Financial Lituation and $hares
    Kalinda Ukanwa, MBA, Ph.D.
    Kalinda Ukanwa, MBA, Ph.D.Assistant Professor of Marketing, Marshall School of Business, University of Southern California
    David Crockett, MBA, Ph.D.
    David Crockett, MBA, Ph.D.Professor of Marketing and Moore Research Fellow, University of South Carolina
    Jennifer Streaks
    Jennifer StreaksFinancial Journalist and Author
    Elaine Dickson
    Elaine DicksonFounder/CEO of Mavenly Consultants, LLC
  • Michael Broughton
    Michael BroughtonCo-Founder and CEO of Perch Credit, Inc.
  • Bridgette Long
    Bridgette LongFinancial Coach & Consultant, Managing Real Estate Broker for Quality Professional Management, Inc.
    Anthony Copeman
    Anthony CopemanFinancial Education Instructor and Founder of Financial Lituation and $hares
    Kalinda Ukanwa, MBA, Ph.D.
    Kalinda Ukanwa, MBA, Ph.D.Assistant Professor of Marketing, Marshall School of Business, University of Southern California
    David Crockett, MBA, Ph.D.
    David Crockett, MBA, Ph.D.Professor of Marketing and Moore Research Fellow, University of South Carolina
    Jennifer Streaks
    Jennifer StreaksFinancial Journalist and Author
    Elaine Dickson
    Elaine DicksonFounder/CEO of Mavenly Consultants, LLC
  • Michael Broughton
    Michael BroughtonCo-Founder and CEO of Perch Credit, Inc.
  • Bridgette Long
    Bridgette LongFinancial Coach & Consultant, Managing Real Estate Broker for Quality Professional Management, Inc.
    Anthony Copeman
    Anthony CopemanFinancial Education Instructor and Founder of Financial Lituation and $hares
    Kalinda Ukanwa, MBA, Ph.D.
    Kalinda Ukanwa, MBA, Ph.D.Assistant Professor of Marketing, Marshall School of Business, University of Southern California
    David Crockett, MBA, Ph.D.
    David Crockett, MBA, Ph.D.Professor of Marketing and Moore Research Fellow, University of South Carolina
    Jennifer Streaks
    Jennifer StreaksFinancial Journalist and Author
    Elaine Dickson
    Elaine DicksonFounder/CEO of Mavenly Consultants, LLC
  • Michael Broughton
    Michael BroughtonCo-Founder and CEO of Perch Credit, Inc.

Resources for the Black and African American Community

There are many resources available to help you achieve financial wellness. From programs that improve finance education to scholarships and mortgage financing assistance, these organizations and programs can help you get on the path to success.

Financial Services and Programs

  • Operation Hope: This nonprofit offers free programs and services to clients to help with youth financial literacy, homeownership, credit and money management.
  • Black Cooperative Investment Fund: This 501(c)(3) provides microloans to the Black community through pooled funds and raises awareness about economic empowerment, equity and wealth-building for the Black community.
  • AFCPE ®: This is an organization of certified financial experts. It is a great source to find a financial counselor or coach who can help you navigate your finances. It also offers free virtual financial counseling and coaching sessions to individuals and families struggling financially because of COVID-19.

Advocacy Organizations

  • Prosperity Now: This national nonprofit helps build financial security for families and communities with low income through research, solutions and supporting policies.
  • The National Council of Negro Women: This assembly of national African American women’s organizations and community-based sections provide research, advocacy, services and programs on health, education and economic empowerment in the United States and Africa.
  • 100 Black Men of America: Through mentoring, education, health and wellness and economic empowerment, this organization focuses on empowering young African American men.
  • Joint Center for Political and Economic Studies: Founded in 1970, this nonprofit public policy organization works on ideas, research and policy solutions for people and communities of color.
  • National Urban League: This civil rights organization focuses on economic empowerment in underserved urban communities and offers comprehensive house counseling, educational opportunities, job and workforce development and other services.
  • The National Association of Black Accountants: This nonprofit association works to support opportunities for people of color who want to work in accounting, finance consulting and other related businesses.
  • National Black Chamber of Commerce (NBCC): With over 200 chapters located in 40 states and 50 nations, this is one of the largest black associations. It’s dedicated to economically empowering and sustaining African American communities.

Community Support Groups

  • Black Women’s Blueprint: This mobile “healing” unit supports a variety of needs for Black women, including maternity and infant needs, as well as assisting with rent and temporary housing.
  • The Empowerment Program: This organization provides support groups and resources to help individuals overcome stressful life events, such as substance use and trauma, and provide ways to cope and recover.
  • 2-1-1: In a number of communities, you can dial 2-1-1 on your phone and will have access to information regarding a variety of services and programs, including housing, employment and education opportunities in your local area.
  • Modest Needs: This nonprofit provides short-term financial assistance to individuals and families with low incomes and are in temporary crises.

Housing Assistance Resources

  • NCRC Housing Counseling Network: This HUD-approved network of housing counseling agencies has provided counseling to 40,000 households nationwide. Their services include pre-purchase counseling, homebuyer education, mortgage delinquency and default resolution, among many more services.
  • Making Home Affordable: This government program provides you access to HUD-approved housing counseling agencies, advice to avoid scams and social networks to stay connected on info and resources.
  • USDA Home Loans: You can learn more about U.S. Department of Agriculture home loans. These home loans help people who have low or medium incomes purchase houses in rural locations.

About the Author


expert-profile

As a longtime writer and editor with a master's degree in journalism, Erin has written about a variety of topics over the years including lifestyle, business, entertainment and government, but she has spent the last few years focused on various money topics like banking, insurance and budgeting for AAA Living Magazine, Wells Fargo and BB&T. She loves creating content that inspires financial empowerment.


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