A people without a strong economic base is a people without power. Disparities in wealth serve to reinforce social inequalities. This is perhaps the reason why the poor and disenfranchised fall victim to discrimination at much higher rates. Discriminatory practices against Black Americans for generations has contributed to a significant wealth disparity between Blacks and Whites in America. When we look at the wealth gap and compare disparities in rates of pay for Blacks and Whites, the data is staggering. According to the Economic Policy Institute, as of 2015, Black men of the same education and experience made 22% less in the same region of residence. While, in 2016, the median wealth of white families was almost 10 times that of Black families according to the Federal Reserve’s 2017 Survey of Consumer Finances. This frightening trend persists. While the wealth gap is much wider than the income disparity, the later serves to expand upon a redistribution of wealth that did not occur after the abolishment of Slavery.
While Blacks are at a disadvantage as far as the wealth gap, there are certain steps that can be taken to change this. For Instance, being strategic about debt can create higher rates of saving and investing. Low income individuals and families are more vulnerable to an emergency that may require them to take on debt. Subsequently, if they cannot meet the terms of the debt repayment, it could have severe financial consequences, such as bad credit, foreclosure, and repossession.
A potential solution to this problem is being strategic about debt. By using debt as a credit building tool, we can prepare ourselves for potential emergencies. This can be done by (1) securing low interest credit before you have a financial emergency. (2) Then use it strategically before you need it and (3) repay it in full monthly. This way you can avoid higher interest debt in emergency situations, while improving your credit for important wealth building purchases, such as buying a home. Be patient. Getting out of debt is a long-term process.
While good credit is an important part of most wealth building strategies. The other component is capital. This will require saving. A task easier said than done for the low income. However, finding a way to live below your means is critical to saving systematically. Start small. With as little $5 a week or a dollar a day, you could begin the process. There are an array of investment Apps for your phone that specialize in getting investors started with low capital. Again, patience is key. Wealth building is a gradual process that takes time.
By: Marlon Greenwood
