In class we talked about the importance of building wealth. We learned to focus on increasing our wealth rather than focusing on becoming rich. A number of factors can affect the accumulation of wealth. Things such as the environment we are in and spending habits can have a drastic affect on our wealth.
I came across an article that spoke about the gap between black and white families. The contrast in the amount of wealth that black families and white families have is extraordinary. Studies have shown that on average white families have accumulated nine times as much wealth in comparison to blacks.
While education and inheritance does play a role in building wealth, the biggest reason for the huge gap lies in home ownership. A larger amount of whites own homes compared to black families, close to 30% more white families own homes. With owning a home, most of their wealth lies in their ownership. It is smarter to own a home instead of renting a home. Renting a home is almost like burning money, it goes toward that one month of living and that’s it.
While education and income can be used as an excuse for the gap in wealth, studies have shown that white families are smarter in their spending. Even with equal income between the two, whites are able to build toward their wealth because they already have cash saved up from smart spending. On the other hand blacks are using their income for emergencies.
Increase in education will help build income but even with high income, money management plays a big role. Black families need to make sure that they use their income wisely and work toward wealth rather than riches. Living within one’s means and being frugal so that money can be saved to purchase a home can help close this enormous gap.
Good blog Paul I agree with you but when speaking on the discrepancy I also did some research of my own and home ownership most definitely is wealth and white families know how to hold on to it and grow it more. For the black families is seems the stereotype of not being fully educated on the basis of wealth or buying and owning a house is apparent and because of that many black families rent houses. We are all responsible for our own knowledge but at times its hard not feel and see the reality that white families do receive more help when it comes to the process of purchasing a home in comparison to a black family. Below is a link I found that speaks justice what I just stated
ReplyDeletehttp://www.buzzfeed.com/annanorth/racial-wealth-gap-has-tripled-since-1984
The wealth gap between blacks and whites in the United States is undeniable. What baffles me, in the few minutes after reading posts like yours Paul and in the brief moments after watching perhaps a "Black in America" expose on television, is how easy it is to shuffle these statistics into the back corners of our collective consciousness. As an African-American, I sometimes feel that I should be more mindful of the reality that exists around me, but then I think, "I am mindful." I proceed question myself, uncomfortable in the dissonance created by knowing how seldom I champion our cause, knowing how often I settle. Reading your blog has inspired me to extend the conversation. In a world where money matters, financial knowledge is power. My penny loafers won't be as comfortable now, save that I am stepping toward changing this wealth gap. My duty now is to find out how. Thank you.
ReplyDeleteThe following is a link to a journal that further discusses the American racial wealth disparity:
http://amstat.tandfonline.com/doi/abs/10.1198/016214502388618401#preview
Interesting post Paul, prior to reading this article I did not having any idea about the large accumulation of wealth gap between African American and White families was this large. As you mentioned in the article these large gaps could be do to a number of factors including education, environment and other circumstantial evidence. Moving forward from graduation I will certainly be looking more closly into buying my home or condos versus simpl renting and throwing money away. But more importantly I will try my best to pass the news along to others about the importance of saving early and purchasing homes versus renting space.
ReplyDeletePaul, you make some good points in your post. I think what really holds African American's back as a whole, is our consumerism mentality when it comes to things we dont need. On average, African Americans spend the most money in consumer markets than any other race. We (as in African Americans) talk about and buy luxury goods as a way to show that we earned a living. This post has made me put my own spending habits in perspective. I can be very frivolous with my spending habits, especially on clothing items and things that are not a necessity. Thanks to your post, I will try my best to budget!
ReplyDeletePaul, these are exactly the types of posts that our community needs to be reading. However, I do believe education is the key. You state, "Increase in education will help build income but even with high income, money management plays a big role." Education allows people to earn exponentially greater income and at least give them some money to manage.(It is true that people with high income can mismanage their money.) One thing that we all can benefit from is financial literacy. If more blacks knew how to save, spend wisely, invest, establish credit, and the long term benefits of buying a home, I believe the disparity would be much smaller.
ReplyDeleteNice article Paul, I liked how you covered some of the main points of what may hold African Americans back from being as wealthy as white families. However I feel that one of the key components holding us back lies within the whole ordeal of what a family really means. In today's society, many African Americans tend to start families before they even realize what they're doing. Many African American teens are out in the streets bringing children into this world without even knowing how to raise them. I feel as long as we continue to have babies producing babies we will make it almost 10Xs harder for ourselves to become wealthy if we are putting ourselves in a very tough predicament of always having to choose a job or staying in school. Most of the time the person whom you have impregnate in your teen years won't be the person you will be with ten years later meaning that child could possibly never know the true feeling of having a real family. Until we are able to reach out into our communities and help out our youth, the gaps between Whites and Blacks will only continue to increase.
ReplyDeleteI enjoyed reading your blog Paul and I too agree that the black community needs to a better job with regards to spending habits. If feel like African Americans tend to by more material things or items that will benefit them at then time rather then spending there money on something that will help them in the future. Thats why it its so crucial for people to come back and help the community because having the knowledge of money management can boost the poor statistics African Americans fall in.
ReplyDeletei agree 100% Paul. I believe blacks need to learn how to spend their money more wisely along with changing some of the things we value. If we start spending more money on the necessary rather than giving into our lust for wants it would benefit our pockets tremendously. I think material things hurt the black community more than anything.
ReplyDeleteI liked this post very much. You did a good job in writing it Paul. I was aware that white families on average had more wealth than black families, but I was not aware that they had nine times more wealth than black families. Those numbers are alarming. I feel like part of the problem is that us as African Americans like to spend money frivolously on material items that we do not need instead of putting that money away and saving it. Many of our brothers, and ourselves to an extent sometimes, would rather buy that new pair of Nike's, or those new 24" rims rather than invest that money or buy something that will benefit the overall quality of your life. Until we as a people learn that material items do not matter in the long run, we will never be able to overcome this statistic.
ReplyDeleteHere is the link to another article on this topic.
http://www.usatoday.com/story/money/personalfinance/2013/02/27/racial-wealth-gap-growing/1948899/
This article says that a study was conducted in which they found that the wealth gap between the two races has nearly tripled over the past 25 years.
Great blog Paul! As I read this article, I thought about the materialistic culture among Blacks in Atlanta, and it made it me thing, "Is it worth it?", in the grand scheme of things. We need to be less focused on being the "Joneses" and keeping up with our white counterparts, and be more concerned about laying down a foundation for our community financially.
ReplyDeleteI agree that most of these maladies can be erased by education/establishing a trade. An increased number of blacks obtaining an education increases our position socially and economically. Education will give us the power to make sound decisions that will make a positive economic impact on our communities. With an education, our communities will be "rich" with knowledge and prosperous for years to come.
I agree and believe these are all great posts! If I could add one thing, I would say we should consider the source of what makes, enables or drives us to behave/spend in such ways. The answer, media. Today, the young black culture is driven by rap artist. Rap artist flaunt their success by buying material things. As if the acquisition of luxury items is an accurate depiction of what it means to be successful. This along with poverty and lack of education results in our communities subjecting themselves consciously or unconsciously to the desire to have material wealth, not equity ownership in a home or a portfolio of bonds and mutual funds.
ReplyDeleteWe need to recognize what role these images are playing on us and our surrounding communities. Then we can begin to make serious change.
Here is a link to explore this topic further:
http://www.amazon.com/Black-Noise-Culture-Contemporary-America/dp/0819562750
There is definitely a huge difference in the amount of wealth a black family accumulates and the amount a white family accumulates. It is a fact that home ownership is a major determining factor of how much wealth a family accounts for. It is up to black people to raise the awareness level and solve this problem. Education and the passing down of valuable information and traditions to newer generations could tremendously change this fact. Great Post!
ReplyDeleteI definitely don't find this information striking. in general white people are better savers than africna americans; which is equated to how much spending power we have. Also, it's important to note that over 50% of african American households are single parent. So, therefore whatever amount one of our parents accumlates quickly strinks. I think that we have to do a lot better if we want our kids to have a sustainable future. This disparity when only continue to grow if we don't assertain the proper education and knowledge.
ReplyDeleteI still believe that there is something to say about homeownership, in that it can be a blessing and a curse. Research shows that while blacks, as a percentage of their total constituency, own fewer homes, most wealth in the black family home is tied to the price of their home. This is a problem because if, as in the case of the subprime mortgage crisis, the values of homes decrease rapidly, this disproportionately affects the wealth of blacks and hispanics as compared to white Americans. Minorities should learn to utilize the many financial vehicles available to them, in order to diversify in the number of avenues of wealth that they have.
ReplyDeleteI agree emphatically with Paul's post. It is quite sad that with all the strides forward that African Americans have made, that we are still so far away from the income of whites. I also agree that the culprit for this discrepancy lies in the fact Caucasians are generally much better at saving their income and spending more thriftily than African Americans. I believe that as African Americans, we must do better at spreading the word and increasing awareness that saving is in most cases vital to a person's financial success. How to do this, I'm not sure. However, I believe that the answer will soon be discovered and that the bridge between African Americans' and Caucasians' wealth with decrease.
ReplyDeleteI completely agree with everything stated in the particular bog posting. I have had discussions before about why there is such a large gap between Caucasians and African Americans when it comes to household wealth. There are numerous factors that go into this topic of course, however money management is definitely at the forefront. While a person must first have access to income or inherited funds in order to manage their wealth, the ones that do must look at opportunities to save and invest. Since my upbringing I have been taught the importance of saving and the value of a dollar. I was raised by a very frugal father who was never interested in frivolously spending money, and this type of upbringing has had me cautious of my spending habits all my life.
ReplyDeletePaul, these are the type of things that should be brought to the attention of the black community. I personally don't find this information surprising due to the black communities" keeping up with the Jones" mindset. White people are better savers and make better investment decisions than blacks. I also agree with Tywan's point. The fact that a lot of African American households are single parent affect the income greatly. Also the relationship between black people and credit has a lot to to with the lower wealth.
ReplyDeleteGreat post but I think you should have expressed your opinion on it in another paragraph or so. Simply because we all know the real reason why black families are not as wealthy as white ones even when it comes to spending. As Mr. Kanye West once said, "Things we buy to cover up what's inside". Black Americans will always be behind white Americans in wealth because black Americans always feel the need to prove something. I have seen literally millionaires in subtle, hybrid toyotas while black American millionaires will most likely be caught in that 2012 Mercedes or that 2013 BMW. Let's face it, once, if black Americans can someone find peace within themselves and find pride in providing for their great great grandchildren, we will forever be behind.
ReplyDelete