Reported by Dr. Sinclair Grey III
Let’s face it: Many people within the African-American community have a problem acquiring wealth and sustaining it. Those who are financially illiterate will quickly find themselves struggling not only with what they earn, but what to do with it once they receive it. Even with all of the disparities between whites and blacks with regard to the money, there is still hope to have the wealth gap closed.
In a report by the Pew Research Center, it was concluded that the typical Black household has about $5,600 in wealth. On the other hand, for the typical White household, the amount is $113,000. As you can clearly see, we have a problem.
According to an article in Black Enterprise, there are several key factors that contribute to this vast disparity in wealth. Discrimination is the most prominent of factors in the past and today that continues to plague Black America’s economic advancement. Further proving this fact, two studies show that up to 80% of an individual’s wealth can be accounted for by intergeneration material transfers, and that three-fourths of where a person winds up—in terms of wealth—is determined solely by the wealth status of their parents. The Black community—due to the long history of racism, employment discrimination, block busting, red lining, and many other systemic discriminatory factors—has not experienced the same economic opportunities that have allowed whites to amass the substantial wealth they have been able to transfer from generation to generation.
Whenever money leaves our community, other communities are becoming richer while ours are declining. Jews, Asians, and Whites tend to spend their money within their community first with local businesses before spending outside their community — this is not the case for African-Americans.
As soon as someone within the African-American family structure “makes it,” i.e. becomes financially stable, and attains wealth, they are expected to take care of others. Never mind their own bills and needs; it’s expected that everyone is taken care of.
Rappers are usually the ones who give bad financial advice in their music, but there are exceptions. A few years ago, a rapper actually came to the forefront with the kind of advice that everyone needs. The advice is a few years old, but since money is still green, we’ll tell you a little bit about what he said.
David Banner described this by using his example of being in the entertainment business. He states, “A rapper/producer such as myself may have a multi-platinum record or single out, but it can be months or even years before we see our share of the money. Managers, agents, attorneys, and other such professionals, can easily earn a combined 50% off the top, and that’s before we can even start to think about taxes. Since fewer and fewer musicians are working with major labels these days, we often have to pay for our own studio time, engineering, mixing, mastering and more before releasing our music. “
Here’s what Banner has to say about managing your money:
- Be smart and live for yourself and your family
- Hire a Top Business Manager
- Educate yourself on your financial matters
- Have a financial mentor
As African-Americans, we have the power to do more with our money than waste it. Let’s become better financial stewards over that which we’re blessed to have.