It’s high time for black men in America to realize they have great potential to accumulate wealth. And, the first step towards building riches is to save. The annual expenditure of black people is 4 percent greater than any other race despite the fact they have the highest rate of poverty – says The State of Working America. Learning to save wisely, a black father can secure his family’s future and support his kid’s higher education. Moreover, after several years, these savings may yield enough capital for profitable future investments. Also, if some saving is put in an emergency fund it will protect the African-American father and his family from any uncalled-for events just as job loss etc. Without a doubt, all this is work hard and a lot of savings but it comes with the full potential of building wealth. Let’s inspect the current scenario and explore real ways how average black family men can become rich.
The current picture
Even today, many black men are without bank accounts and are living on check cashing methods and prepaid debit cards. Their dependency on tangible items can be traced back to their long history of financial deceit as they seem to feel more secure with cash on hand and prefer spending it rather than depositing it in a bank. A survey by Prudential Research in 2013 reported that 40 percent of black Americans regarded themselves as spenders, 51 percent as savers while only a small 9 percent believed in investments.
Improving financial profile
The global asset management firm, T. Rowe Price, advises African-American men to save 15 percent of their salary for retirement while living on 70 percent of income. From remaining 20 percent of savings, an emergency reserve should be built to take care of at least a quarter or half a year’s living expenses. The emergency fund also helps in covering emergency medical bills, home repair, and in-between job situations. For those with a fixed income and annual raises, a simple way to save is by keeping away the raise as extra money.
Dr. Boyce Watkins of “Black American Money” book fame believes that black men should own a business to build wealth. This, they can do by investing a part of their current job raises rather than bulk-spending cash on consumer temptations. A good financial project to invest in is real estate which helps generate residual income. Black men with families and children can use a 529 account which offers federal tax benefits and college saving flexibility. Many experts think that stock investment, although risky, can give an additional financial support. Another hack of building wealth is to reduce debt. Equally important is to up credit scores and keep credit report clean by making on-time payments and keeping the credit limit below 30 percent.
“Income feeds your stomach but assets change your head” – African-American author Melvin L. Oliver. It is these hard years of savings and smart investments which will become real assets paving the way towards the accumulation of wealth. This wealth, in turn, will be inherited by future generations of the Afro-American father and that’s how the black wealth legacy will be created and the great American dream realized.1