Money has always been a taboo subject and too many people become uncomfortable when we talk about it. Finances can be stressful, but the only way we can make a change is by knowing what we are facing. For decades, America has faced a wealth gap amongst the different groups of people that call this country home. While I want to stress the importance of this topic, it is also very unfortunate that we do not hear about this as much as we should.
The wealth gap in America is one that is very noticeable when driving around any major city across the country. On one side, you may see skyscrapers and Penthouse apartments. On another side, even just a few blocks away at times, you can see the old apartment buildings that are visibly worn down and the buildings and businesses that are just trying to make it through another day to survive. Visually, we can see the difference, but very rarely do we speak about it as a society; that needs to stop now.
According to U.S. Census Bureau statistics, the median wealth for African Americans under the age of 35 is just under $6,000. When we take a look at Hispanics in that same age group, it jumps to $11,200. For Caucasians under the age of 35, the median wealth increases to just over $25,000. When we take a look at the over 55 age group, the numbers merely will speak for themselves. For African Americans, the median wealth for those over 55 becomes $53,800 and for Hispanics it jumps to $111,500. When we examine that same age group for Caucasians, this time the median wealth increases to $315,000.
When evaluating this data, one thing we need to consider is: what is the major difference in financial behaviors that affects their overall wealth? From personal experience, there is a huge gap in financial literacy and what resources are available amongst different communities. To find a more concrete answer, let’s really look into how different groups of Americans accumulate this wealth that we are discussing.
Inheritance. The Survey of Consumer Finance reported that in 2015, the average inheritance Americans were expected to leave behind for loved ones was roughly $177,000. Unfortunately, minority groups do not have a high percentage of receiving an inheritance, which can be a major contributing factor as to why this wealth gap exists. Do families that are more financially prepared throughout their upbringing have a tendency to leave an inheritance? I believe so, and financial literacy plays a huge part in this gap overall.
In a 2019 Federal Reserve report, 7.2% Hispanics and 10.1% of African Americans received an inheritance. The percentage of White families that received an inheritance was 29.9%. This wealth gap in America has a solution at hand, but we need to make society aware of the issue.
Financial Literacy. The great saying goes, “Don’t fix something that is not broken…” but Houston, we have a problem here- it is broken! Engaging our community partners and establishing relationships with financial experts can really help move the dial across the country. Did you know that only 6 states across the U.S. actually mandate a finance course to be taken in high school as a part of their graduation requirements? This number needs to go up and we need all legislators to help make it happen. If you know any State legislators in your area, it may be a good idea to write them a letter or email them about getting a requirement mandated for finance courses in high school.
All in all, we can definitely make big strides in bridging this gap to make financial freedom equal for us all. Financial education is going to be crucial to helping move the dial, but when we come together as a community, we can make it happen!
Happy Financial Literacy Month!
Check out our new Two Sense Money Podcast episode below!