How Minorities can close the Wealth Gap

chart-household-wealth-top

In America we always hear about the wealth gap along color lines. Whether we hear it all year from activists or during election season from politicians pretending to care, we all have some level of familiarity with the concept that, minorities, particularly black people, in this country are far behind white families when it comes to wealth building, accumulation and retention. There is no denying the facts or ignoring the systemic policies and practices that keep the divide alive. You can’t enslave a particular group of people for centuries, marginalize them for decades and vilify  them in the media and still expect them to thrive. However, there is a point where people of color have to make an effort to improve their situations.

I will acknowledge that  I know very well that the gap will not close in my lifetime. Furthermore, as a black daughter of immigrant parents, I face sexism, racism and other forms of prejudices because of my family’s background. So I want to be clear that this is not a “blame the victim” bash-fest. I am not ignoring the very real biases that are woven into the fabric of American society. On the other hand, I also don’t think it makes any sense for people to throw their hands up and simply give up on putting forth any effort because the system wasn’t design for them. Is it fair that you have to work twice as hard to see half of the result? No. It also doesn’t mean that you should throw in the towel and stop playing the game. Fighting to see a change in the way things work and working towards self-improvement are not mutually exclusive. You can hate the rules of the game and still participate. A second place trophy is better than being disqualified. So I will continue to advocate for accountability as much as I do for equality.

With that said, I am going to list some of the things that middle class black people can do to ensure that their children are better off in the future.

Get life insurance – Often times, people die and leave their young children with nothing. Sometimes, they die and become a burden to adult children who now have to bear the costs of burials. Unless you are terribly old or ill, life insurance is relatively inexpensive. It’s not tremendously risky given the fact that we will all die eventually. Should you die unexpectedly, your young children can have sufficient funds to ensure they are provided for, and if you die at a more advanced age, your older children will have somewhat of an inheritance.

Stop kicking your kids out at a young age – No one expects you to have your bum do-nothing children mooching off you for the rest of your life. However, regardless of what the government says about their adult status, 18 year-olds are still clueless about life. They do not have the maturity or the earning potential to have a full life outside of your home. They do not have any skills to get an adequate job, they are likely still in school and lack the experience to avoid life-ruining mistakes. There is a reason why the drinking age is 21. They are not done growing. I have heard plenty of stories of young black children being kicked out at 16 or even as young as 14. That is absurd. Give your children a chance to thrive. They did not ask to be born. You brought them into this world and it is your responsibility to provide for them and care for them until they have all the necessary tools to brave the world with high likelihood of success. Don’t be surprise that your child is not thriving if they’ve had to pay rent since they were 18. They will never have sufficient savings or good enough credit to get ahead in life.

Give your children meaningful gifts – Struggle does not build character. There is no glory is struggle. It may build resentment, snowball into more struggle, reduce quality of life, but it doesn’t build character. Knowing the value of a $1 and the importance of hard work are not the same thing as struggling. Building character is making your children do chores. Building character is making them get a full-time job in the summer. Not letting them suffer because you didn’t have anyone to take care of you. Help them buy their college books so they don’t rack up credit card debts they can’t afford. Put money away for them over the course of their lives so when they get married and/or buy their first house, you can have something substantial to give them.

Help build your child’s credit – Black parents are so notorious for misusing their children’s social security number that it has become a joke that the light bill is in the 3-year old’s name. You are responsible for you child’s well-being. That does not stop at the physical state of making sure they don’t fall down the stairs and aren’t hungry. You are responsible for nurturing their mind as well as their socio-economic status. This means, that responsible parents do not damage their children’s economic standing in life by ruining their credit at birth. Instead, protect your child’s identity and when they are old enough, help them build their credit. You can contact your credit card company by asking what the minimum age is for adding an authorized user to your account. Some companies will allow someone as young as 16 to be added. Pay the bill in full every month, don’t carry a balance and make no late payments. That will not only teach your child how to use credit responsibly, it will also start to help build their history. Granted, the boost for being an authorized user will not be very big. FICO changed their scoring model to drastically cut back on the effect joint history can have on an authorized user’s score because some people with questionable credit were exploiting that feature. However, if you are responsible yourself, it certainly can’t hurt. Not to mention, it will teach them the proper behaviors for when they are allowed to strike out on their own.

Be open about money – There is often this secretive relationship with money. We tend to not discuss money in general. However,  your child is not a nosy relative or a stranger or even someone who will look to exploit you. They are part of your household. Most importantly, they can’t learn anything about proper personal finance management if they don’t know how money works. They are certainly bound to repeat your mistakes if you never share them. You shouldn’t see a financial mistake as an embarrassing failure but as a teachable moment. My parents did not talk to me about money. My money management skills developed as a result of my natural inclination to be risk adverse. I grew up afraid of financial insecurity. I grew up worrying about retiring in squalor, on the verge of eviction or having my car repo’d. That is who I am. It wasn’t a particular incident that caused me to be this way. That’s how I’ve always been in all aspects of my life. Risk adverse nearly to the point of risk avoidance. So I spent my life reading up about money, personal finance, the state of the economy and how it affects my life. But that is not most people’s nature. For many, they grow up modeling behaviors they witness. Sometimes they are “live in the moment” type of personalities and don’t put much thought into how today’s actions can have a butterfly effect on their long term financial future. I’ve had many conversations with young people who said: “My parents never taught me this. No one told me about money. I had to figure it out on my own.” You can’t teach them good habits if there is not an honest conversation happening.

Be honest – This is something I have seen in my own family. Dishonesty that sets unreasonable expectations. Your children rub elbows with peers of all walks of life. If they aren’t clear about what their socio-economic status is, they may have unreasonable expectations about what you can and cannot afford. If you spent your whole life misleading them, you might feel guilt or pressure to extend yourself and provide things you really have no business buying. I have personally witness relatives of mine buying their children luxury vehicles in high school while their cable went unpaid and their gas bills piled up. These people spent their entire lives living the lie that they could afford anything. However, as the children got older, their taste became more expensive and the parents weren’t just sacrificing savings to make things happen, but basic necessities. Those children then grow up being used to a living standard that is above their means and they have to choose between maintaining that standard they’re familiar with to keep up their peers and cutting back to something more realistic. Needless to say it’s extremely difficult and they end up on a financial hamster wheel until they can change their habits.

These are some of the ways I think black parents in America can work to improve the lives of their children. Certainly, it doesn’t guarantee success or even that the descendants of the slaves will be as wealthy as the heir of the slave-owners. But if you can’t commit to doing everything within your power to improve the lives of the children you birth, you have no business being a parent. Your job is to make sure your kids are better off than you were, and their job is to do the same for your grandchildren. Anything less is a race to become a permanent underclass.

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