The wealth gap is the lack of economic equity and mobility between races, due to disenfranchisement and other factors. While building wealth continues to be an uphill battle for many Black folks, there are real steps that people of color can take now to start building wealth. Listed below are steps that will help set up future generations for success in achieving wealth and a piece of the American Dream.
To build wealth, you need to start by discussing finances with family and friends. Especially since Black people are more likely than their white counterparts to borrow and loan money they don’t have. Get comfortable with discussing habits around saving, increasing income, and investment options. If starting the conversation seems to be difficult, try alternative routes such as playing games like Monopoly, reading books such as Our Black Year, watching shows like Shark Tank, or even listening to podcasts such as Earn Your Leisure.
Signing up for WiProsper’s email newsletter will also ensure that you have financial literacy at your fingertips.
Small business owners and entrepreneurs have, for a long-time, been the biggest wealth earners in Black communities. According to the 2019 Census Bureau, there are an estimated 134,567 Black-owned businesses bringing in over $133 billion in annual revenue. The economic impact behind this statistic reveals how massive the opportunity is for new Black businesses when they are equipped with the right tools and resources to be successful. Starting businesses and passing them down to new generations increases the chance for higher income, savings, and generational wealth.
There are numerous ways to build wealth when you own property. House hacking, flipping, short-term rentals, and more enable people to accumulate wealth while providing stability and security to your loved ones. According to a 2019 study, the homeownership rate for Black people was 42%.
While everyone does not need to be an entrepreneur, all Black folks deserve to have ownership and residual income streams. According to a recent study, people of color are behind when it comes to investing in the stock market. You can start investing today with apps like Fidelity, Robinhood, or Acorn.
Only 27.5% of Black Americans have a will, up from 25.9% in 2020. Many myths surround estate planning, which is the act of passing on affairs and assets to loved ones once you transition. Contrary to popular belief, estate planning is not only for loved ones who are dying, but also for business owners who may suddenly be unable to run their business full time. It’s important to have succession plans in order for black generational wealth to expand past one generation.
Equity crowdfunding is a new way for everyday people to invest in private companies.. Prior to President Obama signing the JOBS Act in 2012, only the most wealthy could be crowd investors. Now, anyone over the age of 18 can be an equity crowd investor. There are thousands of crowdfunding platforms and many different types available to choose from.