How We Can Close Racial Divides and DEMOLISH the Racial Wealth Gap
The racial divide and prejudices have had a big impact on black families throughout the US. Almost everyone is aware of the day-to-day struggles involved in combatting this problem and surpassing all the obstacles it places in its path.
One of the biggest obstacles is the wealth gap, which is so enormous the Institute of Policy Studies believes it would take 228 years to close.Lack of wealth or multigenerational wealth can slow down progress, development, and limit opportunities available to future generations, which is why it's necessary to start working on closing it now.
What is the Racial Wealth Gap?
The racial wealth gap occurs when one race of people have substantially more wealth than people of other races.We are speaking of wealth and not income as they are two different concepts.Wealth is multigenerational and accumulated over time. It helps benefit entire family lines and has a positive impact on future communities.When people are wealthy, they have money and resources needed to uplift their community around them.Currently, black Americans have a median wealth of around $11,000 while white Americans have a median wealth of around $140,000, which is 12 times higher.
This gap in wealth expands over time as each generation has access to fewer resources and opportunities.Over the last 30 years, the wealth of white families has grown three times that of black families. According to the Institute of Policy Studies, if this gap continues to grow, black people will have zero median wealth by 2053.
How Did The Racial Wealth Gap Start?
The racial wealth gap surfaced when blacks were denied opportunities and deliberately held back for hundreds of years.Institutionalized racism, bias, restrictions, and denying access to education stifled their growth.For a long time, black people couldn’t own property. They were denied access to loans, higher-level education, and lacked mentors to guide them through the business world. We talk a bit about this on our About page. With so many obstacles in place, it was difficult for black people to find stable incomes, let alone generate enough wealth to stabilize generations.
Millennials are Changing Everything
Many media publications like to blame millennials for every sin under the sun, but many of time are transforming black communities for the better.Racism, bias, and restrictions are still present, but millennials are better educated, more informed, and have exposure.They also live in the innovation economy, which means they can take up entrepreneurial and investment opportunities to create wealth. Current and future generations have a much better chance of bridging the wealth gap than ones before them, though they do face new challenges because of overwhelming student debts and the state of the economy.
Investment in Real Estate
Owning property is one of the surest ways to build wealth because properties retain and grow in value over time. Having a solid roof over your head also means you can save money for other things like investing in a business or buying income-generating property.You can view some of our real estate articles below:Ways to Pay off Your Home FastAverage Salary Needed to Buy a Home in the U.S.How to Increase Your Home's Worth Instantly
Investing in real estate has very low barriers of entry besides capital. Equity from the housing is about 2/3rdof the wealth of a typical household, which means owning a house that’s clear of mortgage is one of the first and most substantial ways to create multi-generational wealth. Unfortunately, many millennials are wary of investing in property because they have less income to spend.
According to surveys by Goldman Sachs, 60% of millenials choose to rent a property while 30% live with their parents.This is understandable because millenials are under enormous student debt and often have to live near major cities to find job opportunities. Real estate experts recommend looking for properties in a much more affordable market.If you can get your credit score to over 580, it is possible to get a FHA loan with a down payment of just 3.5%. You can live in this home for a year before renting it out to generate wealth if needed.
Generating Wealth Through Entrepreneurship
Starting a business is an excellent way to generate wealth, but it is also a great way to uplift the community because you create employment opportunities. Millennials are starting businesses at a rapid pace and there are several black entrepreneurs in the community.Click HERE for a look at some amazing side-hustles you can pick up to make more income.Many black entrepreneurs and millennials work hard to create opportunities for the ones following them.For example, entrepreneur Rodney Sampson has created programs like CodeStart, 100BlackAngels, HBCU@SXSW, etc.
All of these are designed to empower black entrepreneurs. Similarly, Morgan DeBaun started Blavity, a media website for POC, and activity works on uplifting the community through conferences like EmpowerHer and companies like AfroTech.Creating businesses and getting into entrepreneurship is a great way to generate wealth.Flourishing businesses also trigger development in urban environments, bringing more employment, better education, and creating a stable environment.
By accumulating wealth, current generations can start bridging the wage gap and bring more prosperity to the community.