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A report 2021 by Goldman Sachs found that “due to complex historical factors and ongoing discrimination, black Americans – and especially black women – remain at a severe disadvantage on a wide range of economic measures, including wealth, income and health. The median black household owns almost 90% less wealth than the median white household, and the gap is even slightly larger for single black women compared to single white men. The report found that this is largely due to the pay gap, with black women’s hourly pay gap standing at 15% compared to white women and 35% compared to white men. Other factors include the education gap, the access to capital gap, the personal finance gap, and the housing gap.
While the wealth gap that black women currently face is disheartening, there are steps that can be taken to help close the gap. In this section “Financially Savvy Female”we chat with Brandy Mickens, Financial Advisor and Executive Vice President of Fair Trade Advisors mid-American branch, on some of the solutions to narrow the gap.
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Start discussing finances openly
Mickens grew up in a household where money, savings and overall financial planning were not discussed, and believes this lack of open discussion is one of the reasons there is a major wealth gap in the world. black community.
“To bridge the racial wealth gap, I recommend that black women discuss various topics with their friends and also be open to sharing their own personal financial planning journey,” she said. “Talking to friends about money is an amazing opportunity to share experiences with each other and learn some of the common pitfalls.”
Specifically, Mickens wants women to talk about how to recover from leaving the workforce, planning after divorce, and personal fears and concerns about money.
“I think it’s so important for black women to connect with each other or with a financial planner because there are unique challenges and opportunities that it can be hard to know how to tackle on your own,” he said. she declared. “I remember when my own mother got divorced, she had so many questions about her finances but didn’t know who to talk to. This caused a long delay in his planning for his financial future.
She also advises her clients who are mothers to talk about the importance of saving with their children from an early age so that they can instil good financial habits in their successors.
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Make an effort to mitigate student debt
According to Association of University WomenBlack women have the highest average total student debt, at $41,466 for undergraduate degrees and $75,085 for graduate school one year after graduation.
“The good news is that black women graduate from college at a higher rate than black men, but the challenge is that college often comes with debt, which can prevent them from taking other important financial decisions,” Mickens said. “They start saving or planning too late in life because they just let things snowball until they’re racked with debt. Also, black women tend to graduate with more debt because they end up paying for a lot of the expenses themselves and don’t have a safety net, help from family, or support. some type of inheritance to cover the costs.
Mickens recommends that when considering college and advanced degrees, black women look at all options and find something affordable.
“I also recommend that they speak with a counselor about paying off debt while saving and qualifying for student loan forgiveness programs,” she said.
Create a financial legacy with life insurance
The Goldman Sachs report found that “single black women are four times less likely to inherit assets than single white men, further perpetuating the generational wealth gap.” Preparing the next generation for success by leaving a legacy is one way to bridge the gap.
“Black women are typically the primary breadwinner, head of household and/or single parent, which leads them to make decisions about money every day,” Mickens said. “Black women tend to place a high value on family and making things even better for the next generation, so leaving a legacy and a legacy is a very big and important decision. To that end, life insurance is generally an affordable and important way to leave a legacy for your family and build a generational legacy.
Have a comprehensive financial plan
“A lot of black women don’t plan the way they should because they’re biased by advisors or by advisors who don’t understand their unique situation, who they are as a person, and their relationship to money,” he said. Mikens said. “All of this can lead to distrust of advisors and therefore a lack of planning. Black women should seek a counselor who can identify with them and understand their unique needs.
In addition to seeking professional help, black women can take steps on their own to improve their financial literacy, which can help them create a financial plan that’s right for them.
“It is paramount that women get involved in financial education programs, workshops, etc., so that they get the education, tools and techniques they need to collaborate on household financial plans. or go it alone, depending on their unique scenario,” Mickens said.
GOBankingRates wants to empower women to take control of their finances. According to the latest statistics, women hold $72 billion in private wealth – but fewer women than men consider themselves to be in “good” or “excellent” financial shape. Women are less likely to invest and are more likely to have debt, and women are still paid less than men overall. Our “Financially Savvy Female” column will explore the reasons for these inequalities and provide solutions to change them. We believe financial equality starts with financial literacy, which is why we provide tools and guidance for women, by women, to take control of their money and help them live richer lives.
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