A Formula for Wealth Creation in the Black Community
defined by Merriam-Webster as “all property that has a money value, economic utility or an exchangeable value”. One’s net worth can be loosely defined as the difference between a household’s assets and debt. The wealth gap between black and other communities is staggering and stagnating. Black households have roughly one-eighth the wealth of white households. The data shows that white Americans with a college degree are on average three times as wealthy as black Americans with the same credential, and in families whose head of the household is employed, white families have 10 times the wealth of black ones. 41% of white families receive an inheritance from relatives, averaging nearly $150,000 (average white household wealth is $188,000) whereas just 13% of black families receive bequeathed wealth, averaging under $40,000 (average black household wealth is $24,000).
The accumulation of wealth depends on many factors. While chance is a significant factor in determining the environment and the wealth one is born into, it should not be looked at a stabile factor in wealth accumulation. This work will outline four focus areas for building wealth in the black community.
The focus areas discussed in this work as keys to black wealth creation are, Financial Management and Value Creation (Understanding credit and budgeting), the time value of money, managing risk and return, and understanding cash flow vs. wealth. This work proposes these factors in a superseding manner to classical idea such as “get a college degree” or “pull yourself up by your bootstraps” due the demonstrate disadvantages cited above for black households.
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https://www.brookings.edu/blog/up-front/2020/12/08/the-black-white-wealth-gap-left-black-households-more-vulnerable/
https://www.theatlantic.com/education/archive/2018/07/black-white-wealth-gap-inheritance/565640/
