Here’s an alarming fact: the net wealth of the average Black family in the US is just one-tenth of that of a white family. 

Even more disconcerting: even though the institutional and systemic roots of this chasm are centuries old, data shows that no progress has been made in the past 70 years to reduce income and wealth inequalities between Black and white households.(1) With stats like that, it’s clear there’s a lot of work to be done. 

We understand that deep societal change is necessary to fully tackle the racial wealth gap. But if you’re wondering what you can do in the here and now, we have a few tips and resources for Black Americans to get ahead financially.

Tips to get ahead financially

Money talks

We get it. Talking about money is taboo, especially in the US. Rachel Sherman, a sociologist at the New School, theorizes that money is often an off-limits topic for Americans because of “the incompatibility of the idea that we have a democracy in which all citizens are equal and the fact that we have a class system that produces a lot of inequality.”(2) 

The good news is that these discussions are becoming more common. For example, the 2020 Ariel-Schwab Black Investor Survey found that while only 10% of Black Americans discussed the stock market growing up, 37% talk about it now.(3) Being more vocal about money has the potential to help drive greater attention to these imbalances, and help us take ownership of them so that we can enter into a fearless financial future for all.

That being said, we understand that it’s not a comfy subject. For many, facing hard numbers can also feel like a measurement of personal value. Remember that your earnings statement is not correlated with your self worth. What’s in it for you? Taking an honest evaluation of your financial situation is the only way you can begin setting specific and measurable goals. 

Consider talking more openly about money with a financial advisor or simply begin the conversation by following Black platforms with financial cred on social media. Here are a few to get you started:

• Michelle Singletary (@SingletaryM), award-winning financial journalist and “The Color of Money” personal finance column for The Washington Post
• Kevin L. Matthews II (@buildingbread), former financial advisor turned investment educator with a weekly newsletter
• Tonya Rapley (@myfabfinance), committed to building a space for women to talk about money and help people make financial decisions they’re proud of

Don’t forget that public advice should not replace the counsel of a personal financial advisor who is aware of your unique situation.

Set smart money goals

After you assess where you’re at, you can decide where you want to go and set goals you can actually reach. The important thing is to add your “why.” Putting a reason behind each goal is a great motivator to help you cross things off your list on your way to success, however you define it. Here are some common goals that are particularly relevant to the Black community:

• Automate savings. Only 42% of Black households have a savings account.(4)
• Create an emergency fund. 73% of Black adults do not have enough emergency savings to cover three months of expenses.(5)
• Ask for a raise. Women of color are 19% less likely to have received a raise than white men, and men of color are 25% less likely.(6)

Your financial focus all depends on your needs and personal motivators. If you are looking to automate savings, for example, a specific “why” could be to put that money saved towards helping your child get through college debt free. 

Once you’ve got these goals in mind, write them down. Putting them on a piece of paper or a spreadsheet makes it easier to keep track and hold yourself accountable.

Use tools to help you budget

Managing spending is one of the most important tactics and habits to develop for overall financial wellness and the well-being of future generations. Founder of Melanin Money and financial planner George Acheampong says that a change of perspective is in order: 

“Most people think budgeting is about preventing you from doing what you want to do, quite the opposite. The purpose of budgeting is telling your money where you want it to go, so you don’t have to wonder where it went. Which actually gives you more foresight on how to plan out the things you want to do.”(7)

You’ll have to do some work to determine the type of budgeting that’s right for you, but once you’re there you don’t have to go it alone. There are many budgeting apps available to help you gain control over your spending.

Save up to buy a home 

Historically, owning a home has been one of the most effective ways to generate wealth in this country, but discriminatory housing laws have long prevented people of color from taking part in this investment opportunity. Even though policies like redlining—allowing lenders to offer higher rates to customers in certain neighborhoods based on race—have been outlawed, discrimination still persists. 

It’s still an uphill battle to achieve Black homeownership in America and the numbers show it: according to the US Census Bureau the homeownership rate of white households was 73.8% compared to 45.1% for Black households in the first quarter of 2021.(8)

If buying a house is your goal, establish your budget, savings timeline, ideal location, and non-negotiables. Once you’ve saved enough, take some time to know your rights so that you can easily recognize red flags, like being told a property isn’t available when you know otherwise. Organizations like the Fair Housing Justice Center are good to be aware of as well. 

Financial fearlessness

While policies should do the heavy lifting of reducing the Black wealth gap long term, there are some things Black Americans can do right now to get ahead financially. Whether using Zip as a tool to help manage spending or aggressively saving for a home that’ll stay in the family for generations to come, we want to empower people to gain control of their futures so that they can live more fearlessly today.

Footnotes

1. Harvard.edu

2. The Atlantic

3. Ariel-Schwab Black Investor Survey

4. Consumer Federation of America

5. Pew Research Center

6. Payscale Raise Anatomy Report

7. Black Enterprise

8. Forbes Advisor