By Tori Rose, Special to the AFRO
The topic of building Generation Wealth in Black communities is something that Black families have pondered for generations. What is the definition of wealth? Can we create wealth? What do “they” mean a wealth gap? How big is the gap, really?
As a teacher of financial literacy, a community advocate, a political scientist and a mom these questions have stayed at the forefront of my decision making as I raise my son and make plans for his financial future, and the future of his children.
Most of us understand, in some way, the racial wealth gap started with our nation’s history of institutionalized racism and slavery and it has continued with the systemic restrictions of information, poor financial education, limited wealth building opportunities and discrimination.
So… what are we to do?
FIRST, my advice is to LEARN the rules of the game! Blacks must know how money works. Not understanding how money works, means we will not know how to make money WORK for us!
In school, we are not taught about money in any substantive way. Black people must step forward and teach their children about money, especially since most of us don’t learn money concepts until we are teenagers getting our first paychecks. For some, by the time we’re teenagers, poor money management habits had been instilled, and it takes a lifetime to unlearn poor habits.
In general, we still largely distrust the financial system and banks. Most of our distrust comes from a lack of understanding. I encourage my students, my community, EVERYONE to ask questions about interest rates and fees. It is important to understand how the banks leverage your money or why your money doesn’t grow in specific accounts. It is your right to ask questions.
For years, unfair financial practices such as redlining, and credit discrimination, increased the wealth gap. It is TRUE that Black families were held back from being able to create generational wealth. We did not intentionally take a seat on building generation wealth, and we are not generations behind because we are “bad with money”.
Secondly, budgeting and planning are KEY.
Today, we can shift the narrative and shorten the gap. Black Americans can begin to build wealth by building healthy financial practices, like saving and investing. We must divorce ourselves from the fear of looking at our paystubs. We need to understand our deductions and our tax amounts. Watching money come in and out of your pay can be a point of anxiety for some, but there is POWER in knowing.
Thirdly, we MUST get CREATIVE. Through entrepreneurship, small business ownership and investment opportunities Black Americans can create generational wealth. We are resourceful people who have the capability and innovation to dominate in any arena.
Building wealth requires us to be strategic. This means researching, learning and understanding systems that our counterparts have learned along the way… systems like taxes and the tax code. Understanding taxes, understanding debt and getting out of personal debt allows you to have leverage in your business. Reducing your personal debt will allow you to establish business credit and grow wealth and put a plan in place to secure assets. Assets allow you to build wealth for the future.
I believe Entrepreneurship is going to be the way for generational wealth to evolve in our communities. So much so, I stand as proud mom of a 10- year-old entrepreneur. His understanding of business and money starts now… for the future!