I thought it fitting that my first post should be about the article that started it all for me. I was actually reading Money Magazine which had a brief excerpt from a study saying the median wealth for single black women is $100 compared to single white women with median wealth of $41,500. I had to pause…no stop. It was just a quick snippet, but I had to look up this study to understand where this was really coming from. This statistic is household wealth for working women between the ages of 18 to 64. Even more startling is that single black women have almost no wealth before age 50. I felt immediately upset. I didn’t realize, at the time, that this statistic was my siren call to my future.
Having earned degree in Finance from the 2nd best undergraduate finance program in the United States at the time, I know there is a definite difference between wealth and money. But what I didn’t understand, oddly enough, is that wealth doesn’t mean being rich. If your balance sheet at the end of the day is positive you have generated wealth. Very simple concept. The concept of wealth is also passed down from one generation to the next. In general in white households children are expected to achieve a certain level of success and wealth. And in some cases wealth will be passed from generation to the next. In non-white households children see their parents struggle to pay bills and hear about winning the lottery and being rich. The association becomes with the amount of money you have, not wealth. This is a broad generalization. The economic crisis has turned almost every concept on its head. There are also more resources than ever before to educate oneself about money matters.
What is wealth? Wealth is simply owning more than you owe. The left side of the balance sheet lists assets (real property, cash, stocks, etc.); the right side lists debts (credit cards, loans, car note, etc.). To have wealth, you need more on the left than you do on the right. Even if you make $30,000 a year, you can still have wealth. It’s harder for sure, but it’s possible.
Back to the article. This study was conducted by the Center for Community Economic Development in a report aptly named “Lifting As We Climb: Women of Color, Wealth and America’s Future” published in Spring of 2010. They collected and analyzed data from the 2007 Survey of Consumer Finances, a report the Federal Reserve Board issues every three years that examines household finances in this country. The reasons for this disparity are numerous and complex, certainly more than can be tackled in a single blog post. The study cites three possibilities. First, people in general from low-income backgrounds (disproportionately being women of color) rely on credit cards to survive. Second, due to discrimination in the in lending, women of color are less likely to be financed and often rely on credit cards to fund their start-ups and businesses. Third, women of color are less likely to have bank accounts based on their neighborhoods. In low income communities you are more likely to see payday lending shops rather than banks places to save up money.
No matter what the reason for this phenomenon we can turn this state of being around. This is a real thing we need to have real talk about to yield real results. The new black chick will be educated about her choices to build a solid financial house and strive for financial freedom. I myself have reached my middle and am looking to create financial freedom for myself. I’m hoping to have others on the journey with me. By others I mean you.
I’m just keeping it new.