What Every Millennial Black Woman needs to know about Money

1 In 3 Americans Have Less Than $5,000 In Retirement Savings.

The usual reaction to this is, “Not me”. However, yet again, I’m not here for the emotions just looking at the stats. Millennials are underprepared to be adults. Ironically, we are the most educated and we have access to more information than any other generation before us. I would even argue that we have way more latent skills than Digitalswho barely understand that Wi-Fi isn’t infinite and that they might want to hit Ctrl+H to delete their history every once in a while. This is a cautionary tale since Women are the most significant element in any society, equipping them is paramount. They are the Poto Mitan(Haitian Creole: Foundational pillar) of the family.

By 2053, Black households will have a median wealth of zero.

Having grown up on E! Keeping Up with the KardashiansAmerica’s Next Top ModelThe HillsThe Real Housewives (every version), and The Bachelor… Our adulting love language plays out similar to a Megatron music video; complete with Brunches, Exotic locations, fake friendships/relationships, faux smiles, Photoshop/Filters, and Photoshoots.

In order to grow richer, it is time to understand the information presented and most importantly take action. Reach out to a few friends and have several drinks while drafting new plans and solutions to avoid catastrophe. It’s important to note that wealth in this country looks very different for white and black families largely because black families have been shut out of wealth opportunities due to discrimination and lack of investment by policymakers over several generations.

The Unspoken Financial Stats associated with Being Black in America:

*As always, I’m just living on this earth too so don’t blame the messenger just look at the stats, and start generating solutions if you feel strongly about them.

  • While African Americans account for just 14% of the population of the US population, they bolster over $1.2+ trillion in spending power. It has long been my belief that the spending of Blacks and other minorities in America listed the country out of the recent Recession and the world. We were pretty much the only group prioritizing spending over savings and investments. When all the investment tides raised all ships. We weren’t on board. We were at the bar in Fort Lauderdale.
  • As of the 2010 U.S. Census, there were 42 million black people in America (including multiracial African Americans). That means $1.2 trillion is about $29,000 in spending power per person. Simply put, we have the money. How are we using it?
  • The Black travel movement has increased in 2018 to $63 billion from $48 billion in 2010. Average spending per trip around $1,345 – $2,078 which does not include pre-purchases on clothing, excursions, gym memberships and more.
  • Average time spent on social media for the week: 15+ hours. Average time spent reading: 2 hours. According to the Nielsen report, African-Americans watch 37 percent more television than other demographics, and their consumption proclivities are equally influential.
  • While the African-American household earns less than the market average, their annual retail spending accounts for 87 percent of total market retail spending, demonstrating what the industry dubs as “hyper vitality and extreme resiliency.”
  • Billionaire Robert F. Smith’s recent historic promise to pay off approximately $40 million in student loans incurred by 2019 graduates of Morehouse College will be a game-changer for the 396 graduates. This breaks down to an average debt of $100,000 per student. This brings to question how much do you owe? And did that number balloon in deferment.
  • Black students borrowed nearly $29,344 on average for a bachelor’s degree at a public university in 2012, $3,500 more than the average white student.
  • One in five Americans (21%) have NO retirement savings at all. For Black women, this is a double-bladed dagger. Women outlive men. Any partnership without a retirement plan, fall back on the woman, unfortunately. If unmarried, the burden rests solely on the woman for long term support or her children.
  • One in three Baby Boomers (33%) have around $0 – $25,000 in their retirement savings. The next 20 years set up the sandwich effect and retirement disaster that the community is ill-equipped to handle.
  • According to the Federal Reserve’s Survey of Consumer Finances, in 2013, the median white household had $13 in net wealth for every $1 in net wealth of the median black household.
  • The median wealth of a young debt-free black household was just $4,500 more than that of young indebted white households.
  • African Americans have cornered the ethnic hair and beauty market, ringing up $54 million of the $63 million total industry spend in 2017. This level of spending accounts for 85.65% of the market.
  • More than 85% said student loan debt was a major source of stress, and one in three said such debt is the biggest stress in their lives.
  • The average white family had more than $130,000 in liquid retirement savings (cash in accounts such as 401(k)s, 403(b)s and IRAs) vs. $19,000 for the average African American in 2013.
  • The mean of black household wealth is $138,200—for whites, that number is $933,700.
  • One in 10 African Americans works with a financial professional compared with one in four white Americans.
  • Outside of company retirement accounts, only 37% of African Americans own wealth-building products such as stocks and mutual funds.
  • According to The 2018 State of Women-Owned Business Reportcommissioned by American Express, while the number of women-owned businesses grew an impressive 58% from 2007 to 2018, the number of firms owned by black women grew by a stunning 164%, nearly three times that rate.
  • Even Forbes touts, “Black women are the fastest-growing group of entrepreneurs in the U.S.” However, obtaining adequate start-up capital remains a hurdle. Many, of said businesses, have trouble staying financially afloat or churning real profits. The “Imma be my own boss and it will fix everything” approach is a lot harder than it seems.
  • For women of color, average revenue dropped from $84,000 in 2007 to $66,400 in 2018, while for non-minority businesses, revenue rose from $181,000 to $212,300.
  • Eighty-three percent of African American seniors lack the retirement assets they need to last the remainder of their lifetimes.
  • African Americans age 62-70 have a median net worth of $46,200 as compared to $331,700 for whites.
  • According to the Federal Reserve, the average balance of African Americans in 401(k)s is only $23,000. And Social Security and the Racial Gap in Retirement Wealth found the average balance for African Americans in pensions and IRAs was $10,300, vs. $105,600 for white Americans.
  • Forty-six percent of African American seniors rely on Social Security for at least 90 percent of their income, compared to 35 percent of Whites.
  • Only 42 percent of African Americans owned a home, compared to 68 percent of Whites. African American homeowners are 86 percent more likely than Whites to have an underwater mortgage.
  • Marriage is another avenue that traditionally has been invoked as a means of increasing wealth for women. However, Black women often marry down which severely limits the wealth potential of the entire family.
  • Average American over weddings run north of $33,000+. A sunk cost for less than 10 hours which threatens to torpedo any fledgling young marriage in the first 3 years.
  • Only 54.3 percent of African American workers have employers who offer a retirement plan. Of the African Americans with access to an employer-sponsored retirement plan, only 81 percent participate. Missing out on around $70,000+ of matching contributions over 30-years before any market growth at 8% annually.
  • A member of a white family is twice as likely to receive an inheritance in comparison to a black family member, and the inheritance received is usually three times larger. For every dollar of wealth owned by a typical white family, the median black family owns just five cents.
  • Single mothers, regardless of race, have virtually no wealth to draw upon in times of crisis or job loss – further dimming prospects for the next generation. Married white women without children have over $200,000 more in wealth than married white women with children and six times the wealth of black women who similarly have no children.
  • Typical single black women with a college degree is $11,000 in debt. Married black women in their 30s and with college degrees are $20,000 in debt.
  • Older, single black women with a college degree have a mere $11,000 in wealth, which is the lowest of all groups in that age range and is in stark contrast to the $384,400 in median wealth among single white women with a bachelor’s degree.

Many are merely ignoring their responsibilities, hoping it will get better. …It doesn’t. We play ourselves to be the success story but in truth, we might just be the cautionary tale.

So What’s the Current Net Worth of Black Women (in the US as of 7.2019)?

  • Single black women without a bachelor’s degree ages 20–39 have a net worth of $0.
  • Single black women without a bachelor’s degree ages 40–59 have a net worth range of just $1,000 to $2,000.
  • Single black women without a bachelor’s degree age 60+ have a net worth of just $12,000.
  •  Single black women with a bachelor’s degree ages 20–39 have a net worth range of -$11,000 to $0.
  • Single black women with a bachelor’s degree ages 40–59 have a net worth range of just $6,000 to $9,500.
  •  Single black women with a bachelor’s degree age 60+ have a net worth of just $11,000.

I was asked, “How do we go about legacy building? The answer is simple and will always remain simple. Correct your personal finances. Marry a liked minded person who also corrected their issues. Raise kids with balanced values. Know your net worth.

To help get you on the right path to financial independence, Shavon Roman, a financial adviser at Atlanta-based The Piedmont Group offers this advice:

  1. Financial education: It’s imperative to have a savings and spending plan, allowing you to tell your money where to go and keep track of it.
  2. Financial planning and execution: So what should African Americans do before investing in stocks or other asset classes like real estate or starting a new business? Roman’s first suggestion is to do your research. Know your risk tolerance. Monitor the investment and its performance regularly. When it comes to achieving wealth-building goals, eliminate high-interest debt, reduce debt, and establish a savings fund.
  3. Professional help: Seek advice from a financial professional equipped to help you establish and reach your financial goals. Check out their background, references, and makes sure they are licensed in the state they work in.

Lawrence’s Simple Notes:

  1. Grab my Net/Max Financial Plan. I have one for Singles, For single parents, and Finally for Couple with or without kids.
  2. Reduce unnecessary expenses so you can do what you absolutely love to do in life. Avoid unknown scope creep and cost creep. I ended up adding $10k to my student loans in 6 months through “deferment”.
  3. Meal Prep is life. Brunch is the death of finances. And lean off using the credit card.
  4. And, Start learning as much as you can about finances.

For even more content such as this, stay connected with my Linktr.ee/GQ_accountant. You might also like Black Men: the Death and Rebirth of Financial Role Model. As always, share, like and definitely begin having the conversation about money before it is too late.

Bonus: When you see those feel-good post/articles about Black women doing well; they are often just using them for the Ad-generating clicks. We can’t have research papers and stats saying one thing and a random article saying everything is ok. Don’t believe me. Ask your friends about their debts. And go back to your old community and see how much people are struggling. Just a thought. Be careful of false sense of security. They’ve killed the dreams of far more with less.

*originally published on LinkedIn

Written by Lawrence Gonzalez