The Question of Race and Money
The question of race and money. Are white families doing better than black families? The question of race and money has always been top of mind for me. I have made it my life’s journey to understand the cycle of poverty and how to help families break the cycle of poverty. Another question I would always ask is the following. Why is the creation of generational wealth less attainable in the black community?
What is the key to success?
Studies show when both parents are present in the lives of children, children do better. However, beyond having both parents at home, home ownership tells a clearer picture of financial success. Families which have the financial resources to own their home do better than families which don’t. Home ownership opens many doors and lifelong opportunities.
The question of race and money in reference to home ownership. Home ownership is a major accomplishment and is a financial barometer for future success. Home ownership breeds future home ownership and builds generational wealth. Homeowners feel more accomplished and confident. That sense of accomplishment and confidence is passed down to future generations. The road to home ownership is open to all but it is easier for some.
Is home ownership easier for white families?
In theory home ownership is available to everyone. However, theory is not reality. Today, many barriers still exist which prevent many non white families from becoming homeowners.
Credit is the first thing white families talk about consistently and teach their children about. In non white homes, credit is rarely discussed. And when credit is discussed it is usually followed by misinformation.
Saving in non white families is usually a luxury. In white households It is taught from an early age. White families teach their kids to save for their own personal goals from an early age. Non white families earn and consume. Most do not save or invest. Those bad money habits are passed to future generations.
A major part of buying a home is saving. Without savings you are unable to obtain a home. An easy way to save for a goal is to save money in your bank account. However, many non white families are grossly underbanked. Furthermore, non white bank clients pay the most in bank fees per capita. Creating a vicious cycle of further pushing non white families out of the banking system.
To stop this vicious cycle we need to teach our children from an early age to save for their goals. To work towards their goals and to live within their means. It’s easier said than done but limiting social media helps. Seeing the lives of others and the stuff they have and do trains our brains to want those things.
Credit, income, savings and education
The question of race and money in reference to credit, income, savings and education. Education is such an important part of the equality equation. Without comprehensive education sites such as Budget Build Buy black families will remain with the lowest home ownership and the least amount of wealth in this nation.
Understanding the steps to home ownership is critical to building wealth. Let’s continue to teach our children about the importance of having good credit and being smart about making large purchases.
Some non white families go to the extreme – they feel never having credit is a good thing or something to be proud of. Not having credit will prevent you from building wealth. Ignore those idiots which have millions of dollars in the bank and claim we don’t need credit. Credit is important.
Our kids need access to better education. Education creates opportunities. But the path to a good education is not affordable for most of us. Furthermore, many non white families properly prepare for higher education. White families speak to college early and often. They plan and save for college almost from the time of their child’s birth. Sometimes even small savings can lower the total college bill.
At Budget Build Buy we provide free resources to assist our tribe and their kids go to college with the least amount of cost possible. Non white families also invest less in college prep courses which play a big role in obtaining scholarships and an overall free ride to higher education.
Born on 3rd base
When non white kids leave college they have to work hard to find a good job or career to pay the bills. However, many white kids leave school and it seems they have the world at their feet.
As an advisor I speak to many families which have kids leaving college and entering high salary jobs weeks after graduation. Few of these kids were ever intellectually impressive. However, they had a leg up on their competition. That leg up on that competition would come in different forms. A family friend connected them to an internship or hired them right out of college. The wealthy continue to be wealthy and build generational wealth by leveraging their networks.
The saying being born on 3rd base and thinking you hit a triple builds a sense of privilege and false sense of accomplishment which the benefactors never want to change or challenge. For many people change or social justice is not important because they benefit from it and their kids will as well. No surprise, most white families have a successful uncle or friend or college buddy who is very successful and can connect their children to better opportunities which they would not obtain otherwise.
Work harder to arrive on 3rd base
For non white families they can use the tools from Budget Build Buy to save on college and avoid as much undergraduate debt as possible. However, receiving education beyond that will cost a lot more. Typically you are looking at at least another $100-$200k in college expenses for law school or medical school and some MBA programs. These careers will open doors to very lucrative salaries. So plan early and often, something we do not see many non white families doing.
Learn to leverage other resources like many white wealthy families do. Many white families use uncle sam to pay for their higher education goals. The military or service in general to this nation can provide for the necessary funds. Learn how to do the same.
Encourage success at all times
The question of race and money teaches us college is not available to everyone. And in many white families the option to start a business is always present and encouraged. Encouragement is always important and a common theme. We need to support our children and our families in everything they do. Avoid destroying the dreams of our children because we don’t see the value in what they are doing.
Family encouragement from an early age is important, white families encourage and invest in team and organized sports for their children. Athletic spending is very important and limits poor families from these activities. Organized sports helps develop many skills for children which lead to leadership roles in the future.
Families with barely enough to eat will be hard pressed to send their kids to swimming camp or golf school. However, finding opportunities to have kids in organized activities can go a long way. Look to local charitable organizations or sponsors to help build that team spirit.
Seeing is believing
Seeing both parents work and save and build towards home buying goals, vacation goals, business ownership goals and retirement goals goes a long way. Having a healthy home where both parents sit with their kids for dinner each night is paramount to long term generational success.
The question of race and money shows us that white families have a healthy relationship with money. That comfort is historic and has a lot to do with how wealth was built in this country. However, non white families have historically had an unhealthy relationship with money. That is also based on history and systematic racism.
For families which have wealth, they were taught as children how to build wealth. They pass that knowledge to their children. Furthermore, they assist their family in building wealth. Many young homeowners today received financial assistance from their family. The financial assist would come in the form of down payment assistance, college tuition assistance or seed money for a business venture. That financial assistance takes a huge weight off the shoulder of individuals starting out in life.
The Question of Race and Money
The tools at Budget Build Buy will help level the playing field. However, systematic changes are required to truly build a country where everyone can build generational wealth.
