By Gary A. Johnson – Black Men In America.com
Updated June 30, 2025 (Originally posted November 5, 2010)

How Black people spend their money has been a hotly debated topic not only on this site, but in our office, at social events and in beauty and barber shops across America.  This article has been the most read and commented article for 15 years running.  Given its impact, I’ve updated it to reflect current realities and offer fresh insights.

Gary Johnson – Publisher (Black Men In America.com)

What Black Consumers Say About Money

According to the Pew Research Center, most Black adults are clear on their financial goals:

• 67% say being debt-free is essential to financial success.
• 65% want enough money to enjoy life.
• Nearly half (49%) see home ownership as crucial, while 44% emphasize passing down assets and 43% want multiple income streams.

Yet most also rate their current financial situation negatively (64%). Over half worry about money daily, and 28% say they couldn’t cover three months of expenses if they lost their income.

Black Spending Power & Consumer Habits

• In 2024, Black purchasing power reached $1.8 trillion, outpacing general U.S. consumer spending at 5% vs. 3% annual growth.
• The median wealth of Black families is just $44,900.
• Top purchases? Salty snacks, soft drinks, vegetables/herbs.
• Black and Hispanic consumers outspend Whites by 30% on clothing, cars and jewelry.
• 25% of Black consumers prioritize products reflecting their culture.

But there are also deep challenges:

• 59% say they’ve been mistreated in stores.
• Only 33% use mobile banking; 55% are unbanked or under-banked, relying on cash.

And tellingly, Black consumers say they’re willing to shift $260 billion in spending to companies that truly meet their needs.

Where the Money Goes: Spending Priorities

For low-income Black households, spending looks like this (Bureau of Labor Statistics):

1. Housing – 45.5%
2. Food – 23.5%
3. Transportation – 11.5%
4. Healthcare – 4.1%
5. Entertainment – 3.8%

The Black hair care industry alone is valued at $2.51 billion, with Black women spending 9x more on ethnic hair products than non-Black consumers.

Highlights from “Big Spenders, Small Investors:  Blacks Have Little to Show for Hard-Earned Dollars”:

Are We Spending Wastefully?

While there’s no inherent connection between Black people and Lincoln vehicles, there are some interesting trends and historical contexts to consider. Lincoln, as a luxury brand, has been historically associated with certain demographics, including older buyers and those seeking formal transportation like limousines. Additionally, Lincoln has made targeted marketing efforts towards Black consumers, particularly younger generations, which may contribute to perceptions of a connection.

Some surveys and reports suggest that Black Americans, particularly younger generations, show a higher propensity to purchase luxury vehicles, including Lincolns. One report indicated that Black people are 40% more likely to drive a Lincoln compared to other races according to BLAC Detroit. 

Serena Williams is the face of the new 2025 Lincoln Navigator. From my perspective, this is a clever marketing move on the part of Lincoln as they are tapping into Williams’ widespread social media influence.  Serena is the G.O.A.T. (Greatest Of All Time) of tennis, and a force in fashion, and philanthropy. 

According to marketing studies, each year Black Americans spend:

• $47 billion on Lincoln vehicles
• $3.7 billion on alcohol
• $2.5 billion on Toyotas
• $2 billion on athletic shoes
• $600 million at McDonald’s and fast food chains

 

Yet only 43.9% of Black Americans own homes (vs. 73.5% of Whites), and most have under $50,000 in retirement savings. Dr. Boyce Watkins put it bluntly: “We don’t use money to invest or produce. When we get our tax refund, we go straight to the store.”

Historical Roots & Systemic Barriers

Here’s something to think about.  According toTingba Muhammad of the Nation of Islam Research Organization (NOIRG) wasteful Black spending is rooted in slavery. According to their research 42 million Blacks have a spending power amounting to $1.1 trillion, which gives each man, woman, and child an annual spending power of $26,200 dollars.  Blacks spend their money overwhelmingly with white businesses on the following products and services:

• Tobacco $3.3 billion
• Whiskey, wine, and beer $3 billion
• Non-alcoholic $2.8 billion
• Leisure time spending $3.1 billion
• Toys, games, and pets $3.5 billion
• Telephone services $18.6 billion
• Gifts $10 billion
• Charitable contributions $17.3 billion
• Healthcare $23.6 billion

Nation of Islam researchers argue this spending pattern is rooted in history: after slavery, many Black Americans distrusted banks or legal systems. Instead, they trusted only what they could immediately buy and hold. That psychology, they say, was deliberately reinforced by economic oppression.

So, today, many Blacks don’t trust banks, or the courts—Blacks “trust” only that which they can hold in their hands at that very moment. As destructive as that behavior is to Black progress is exactly how profitable that behavior is to whites—who will do anything to keep Blacks on that thinking track.

55 percent of Black Americans are unbanked or under-banked meaning they do not have a bank account or the appropriate bank account. (Federal Deposit Corporation Survey)

Meanwhile, systemic policies still widen the gap:

• The Homestead Act excluded Black families from land ownership.
• The original Social Security Act left out domestic/agricultural workers — mostly Black.
• Redlining blocked Black home ownership.

Result?

• 76% of Black consumers live paycheck to paycheck.
• How Long Does Money Stay in Various Communities?
  • Black community: 6 hours
  • White community: 17 days
  • Jewish community: 20 days
  • Asian community: 30 days

How Higher-Income Black Americans Spend

A Merrill Lynch study of Black households earning $125K+ found they:

• Focus on supporting family, paying off debt, and preparing for retirement.
• Are 5x more likely to financially support parents than other affluent groups.
• Invest more in entrepreneurship and unique career paths — yet reinvest only ~$68K into businesses vs. $468K for white counterparts.

Black Elite:

A distinct “black elite” or “black upper class” is emerging, comprised of individuals with high disposable incomes and net worth, including entrepreneurs, professionals, and high-earning individuals in various fields.

A study by Credit Suisse and Brandeis University’s Institute on Assets and Social Policy found key differences in wealth-building approaches:

• Wealthy Black Americans are less likely to invest in stocks and bonds, favoring safer assets like CDs, savings bonds, and life insurance.
• Black Americans invest more in real estate than Whites—41% of non-primary residence assets versus 22% for Whites.
• Black business owners reinvest less in their businesses—$68K on average vs. $468K for White business owners.
• White business owners invest 7 times more in their companies despite equal business ownership rates.

Matthew Corbin’s 5 Reasons Why Black People Struggle Financially:

1. Spending more money than earned
2. Lack of support for Black-owned businesses
3. Insufficient savings
4. Limited investment knowledge
5. No clear plans to escape poverty

The Church & Black Wealth

No discussion of Black money is complete without mentioning the church.
Since 1980, Black churches have collected an estimated $420 billion in tithes and offerings, an average of $252 million a week. Author Byron Woulard argues:  “The money spent tithing could have bought 93,000 homes or paid college tuition for 933,000 students.”

I wonder how many churches in the US have ATM machines on-site?  With the swipe of a credit card, you, too, can give to God.

     

Photo Credit: Mike Hammer – Charlotte Observer.com

Historical Context: “The Secret of Selling the Negro Market”

For a fascinating look at historical perceptions of Black consumer power, check out the 1954 film The Secret of Selling the Negro Market. Created by Johnson Publishing Company, the film was designed to educate white advertisers about the purchasing power of Black Americans.  This film shows how Black spending habits were viewed decades ago and invites reflection on how far we’ve come—and how far we still have to go.

So What’s Next? Building Generational Wealth

Experts like Kimberly Anderson-Mutch offer solutions:

—Teach kids about money early.
–Invest in real estate.
–Build businesses.
–Buy stocks & diversify income.
–Write wills & estate plans.

The racial wealth gap isn’t just a historical problem — it’s alive and well in 2025. Despite higher levels of education and entrepreneurship, the typical Black family still holds only a fraction of the wealth of white families. In fact, the gap has widened.

Where We Stand Today

In 2025, the typical Black family still owns just 15 cents for every dollar held by a white family.  Wealth is generational. Without an inherited cushion, it is very difficult for Blacks to make any significant financial gains.

Black consumer spending is shaped by economic conditions, cultural values, and systemic barriers. This ongoing series aims to spark discussion, provide resources, and promote financial empowerment.

Some economists have suggested that people invest in state-funded trust accounts for every child. These could reduce the Black-white wealth gap from 16x to just 1.4x. Another suggestion is legislation to support first generation home buyer support in the form of grants or forgivable loans for families without inherited housing wealth.  One of the most talked about initiatives is targeted student debt relief since Black graduates carry the highest debt loads.

Final Thoughts

This isn’t about shaming Black spending. It’s about awakening our collective power. If we don’t tackle the roots of this problem, we’ll be updating these same stats in 2035. As a community, we can’t wait — we must build savings, support Black businesses, and push policies that close these gaps for good.

If 42 million Black Americans control $1.1 trillion, that’s $26,200 per person, every year. Imagine what could change if more of that money stayed in our hands, invested in our kids, our businesses, and our future.

If you want to educate yourself and others about how to earn and spend your money responsibly, read the book, Black Dollars Matter: Teach Your Dollars How to Make More Sense, by James Clingman.

There is a great organization called World of Money.  Founded in 2005, the World of Money is a New York City based 501(c)(3) non-profit organization whose mission is to empower youth through the engaged, local delivery of professional quality financial education. World of Money Founder and CEO, Sabrina Lamb, while attending a financial planning seminar, was inspired by a compelling question. Are children, in the course of their education and upbringing, getting this information on how to manage their financial life? After conducting some research on the subject, Ms. Lamb found that the answer to her question was a resounding “no”. So, after affirming the detrimental effects of this knowledge gap, she set forth to leverage her experience as an entrepreneur and love of working with children to create World of Money.  Click here to visit their website and learn more.

There over 35 Black owned banks and credit unions in the United States.

Check out the list below!

1. Omega Psi Phi Credit Union – Lawrenceville, Georgia
2. Phi Beta Sigma Federal Credit Union – Washington, DC
3. One United Bank – Los Angeles,California
4. FAMU Federal Credit Union – Tallahassee, Florida
5. Credit Union of Atlanta – Atlanta, Georgia
6. North Milwaukee State Bank – Milwaukee, Wisconsin
7. Seaway Bank – Chicago, Illinois
8. The Harbor Bank- Baltimore, Maryland
9. Liberty Bank – New Orleans, Louisiana
10. United Bank of Philidelphia – Philidelphia, Penn
11. Alamerica Bank – Birmingham, Alabama
12. Broadway Federal Bank – Los Angeles, California
13. Carver State Bank – Savannah, Georgia
14. Capital City Bank – Atlanta, Georgia
15. Citizens Trust Bank – Atlanta, Georgia
16. City National Bank – Newark, New Jersey
17. Commonwealth National Bank – Mobile, Alabama
18. Industrial Bank – Washington D.C.
19. First Tuskegee Bank – Tuskegee, Alabama
20. Mechanics & Farmers Bank – Durham, North Carolina
21. First Independence Bank – Detroit, Michigan
22. First State Bank – Danville, Virginia
23. Illinois Service Federal – Chicago, Illinois
24. Unity National Bank – Houston, Texas
25. Carver Federal Savings Bank – New York, New York
26. OneUnited Bank – Miami, Florida
27. OneUnited Bank – Boston, Massachusetts
28. Tri-State Bank – Memphis, Tennesse
29. Citizens Bank – Nashville, Tennessee
30. South Carolina Community Bank – Columbia, South Carolina
31. Columbia Savings and Loan – Milwaukee, Wisconsin
32. Liberty Bank – Baton Rouge, Louisiana
33. Liberty Bank – Kansas City, Missouri
34. Citizen Trust Bank – Birmingham, Alabama
35. Liberty Bank – Chicago, Illinois
36. Liberty Bank – Jackson, Mississippi
37. Toledo Urban Credit Union – Toledo, Ohio
38. Hill District Credit Union – Pittsburgh, Pennsylvania

Photo credit:  Couple counting money — Image by © Jose Luis Pelaez Inc/Blend Image/Blend Images/Corbis

** Sources:  U.S. Bureau of Labor Statistics (BLS) Consumer Expenditure (CE) Survey,

http://racisminamerica.org/the-real-reason-why-blacks-spend-their-money-and-dont-save/, CNN, Harvard Business Review,

http://curatorsofdopenessblog.tumblr.com/post/72870270050/black-money-white-money

Gary Johnson is the Founder and Publisher of multiple online platforms, including BlackMenInAmerica.com, BlackBoatingandYachting.com, and others. He is also the author of 25 Things That Really Matter in Life: A Quick and Comprehensive Guide to Making Your Life Better—Today! and a contributing author to The Black Father Perspective: What We Want America to Know and In Search of Fatherhood – Transcending Boundaries: International Conversations on Fatherhood.

Gary launched MasterChef Gary’s Premium Organic Seasoning in 2019 and has since expanded his ventures to include Calculations Talk Show, The Thought Brothers, and a podcast and website supporting the Justice for Black Farmers movement. In 2023, he founded Gary Johnson Media, LLC to focus on public relations and social media strategy.

Most recently, he created Gary’s Weight Loss Journey, a motivational site chronicling his personal path to better health.

Learn more about Gary’s work at Gary Johnson Media, LLC.

“When we’re faced with someone else’s success, it makes us think about why we can’t do it instead of how the other person did do it.”

–Author Chris Hogan
“Everyday Millionaires”

There have been three great books on the subject of wealth that I have been blessed to read over the years.  The first one: “Think and Grow Rich” by Napoleon Hill.  The second: “Think and Grow Rich: A Black Choice” by Dennis Kimbro, Ph.D.  The third one is the newcomer “Everyday Millionaires” by Chris Hogan (2019, 250 pages, Ramsey Press/The Lampo Group, LLC).

Hogan, fresh off of his successful previous work “Retire Inspired” decided to tackle the issue of millionaires from the ground or street level.  Hogan has been a regular visitor to the famed Fox Business Network, and is a part of the Dave Ramsey family of financial experts.

There is a lot in the work that may scare more than a few readers–in a good way.  The book has eleven chapters, and plenty of ‘action steps’ and quotes from those in the book’s research who have ‘done it’…become everyday millionaires through hard work, sticking to their plans, and not giving up.

According to the Hogan’s research, there are more reasons why people can become millionaires than you can shake a stick at.  One of the key factors in accumulating wealth rests in the work ethic of the people involved, coupled with solid marriages.  Chapter titles include: “You’ve Been Lied To”, “Live on Less Than You Make”, and “Stick To It”.  If you’ve ever wanted a book that can give you flat-out reasons why you can become well off financially without a lot of double-talk, THIS is the work for you.

“Everyday Millionaires” by Chris Hogan is available from your favorite bookstore or electronic book seller.  It is worth the investment to give a copy to your favorite graduate, during graduation season.

The Things Millionaires DON’T Invest In

Mike Ramey is a Minister, Reviewer and Syndicated Columnist who lives in Indianapolis, Indiana.  He brings current and lesser-known titles to light to re-kindle a love for reading and thinking in a sea of modern technology.  Feel free to reach him via email at manhoodline@yahoo.com.  © 2019 Barnstorm Communications.

Creating and managing a budget can be difficult. Even if you are not a business owner, it is important to organize your finances so that you are able to afford the things you want, and save for your future as well! There are many tools available which can help you with tracking your spending, paying your bills, and assisting you with saving and investing for the future.

One such app is called You Need A Budget (YNAB). This tool has a very intuitive interface, and syncs all of your accounts in one place. Having everything in one spot makes it simple to take an overview of your current financial status, and where you can make improvements. You are also able to sync up with family members so you all have instant access to the budget plan. YNAB costs 84 dollars a year, but on average customers save around 6,000 dollars! You can find out more about how YNAB differs from other budgeting apps here.

Secondly, it is important to make sure you are saving! It is recommended that 20 percent of your income goes towards savings. Chime bank has a helpful automatic savings tool which rounds purchases to the nearest dollar. The roundup is then transferred into your savings account! Chime also has no fees which can save you over 300 dollars a year. The average individual spends around 329 dollars a year on banking fees, so a bank with no hidden fees is another great way to save!

BillGO is another great app for assisting you with your budgeting and finances! BillGO allows you easily view all of your bills on one simple app. Everything is always up to date, and the app is extremely easy to use! They even have option which makes it easy to split bills. This feature is perfect for those who have roommates and may be splitting rent and utilities!

Although creating a budget and managing money can be difficult, there are tools out there to help. Find the app that works best for you, and get your finances back on track!

How to Kickstart a Budget When You are Doomed by Debt by Andy Masaki

What does it take to break free from your debts? What do you think? It’s money right?

Well no!! It’s a budget that can help you to be debt free.

But there’s one big problem, when you are in debts. Your head can’t think right and straight. Too many thoughts, too many debts, utter confusion, and you seem to be doomed by your own money mistakes!
Credit cards seem to be flying all around you like honeybees with their debts like poisonous stings.
Some even have payday loans to take care, while others are busy fighting student loans.
And, don’t tell about those demotivated cutie femmes, who have a mortgage or an auto loan to defeat!!

In such devastating times, the last thing you want to do is keep your debts aside and think about a budget. You might feel the rush to use up your whole paycheck to wash all of your debts!

And that’s where we make the biggest blunder of all….

Remember it’s all about right channeling of your money. If you can’t pull the rope from both ends, one end being income and the other the expense, then the rope will fall.

Here’s how to start a budget when you are in debt:

• First understand how much money you need to clear your debts:

This part is the most crucial and fundamental part for you to formulate a budget.

Your debt amounts will impact your budget to a great extent. If you don’t know how much is about to go out, then you will have no idea how much to store.

Moreover, prioritize your debts. Obviously at the first glance secured debts seem to carry the highest importance, but guess what; it’s the unsecured debts that should be your primary affair!

Secured debts like mortgages or auto loans are long term accounts, that you can’t get rid of whenever you want. They have a fixed set of terms, conditions and time limits. Clearing a loan before the scheduled time can result into a penalty.

So, our concern is definitely unsecured debts or consumer debts. These include credit cards, personal loans, and anything else that’s not backed by a security.

Therefore, calculate all your debts, and get a clear number in your head, that this amount of money is what you need to clear all of your debts.

• Second, list your regular expenses for each month:

Beside debts, we all have other expenses to deal with.

The best thing you can do is list all such expenses one by one as per their priority. Like groceries, utility bills, transportation costs, and all, are your first priority. You can’t live without doing these expenses. They comprise your livelihood.

Notably, these expenses are also flexible, and you can minimize them without much of a hassle. Everything depends on you. Say, you can avoid eating outs, or if needed stop using your car too much, and instead use public transports.

Also try to regulate energy consumption, so that you can save on your utility bills. These small changes that you will make, will save you a lot, which you can in turn use to make extra payments for your debts.

• Allocate fixed amounts to all of your expenses:

Be predictive, responsible, and assign fixed values to all of your expenses. I understand that there’s always something called unexpected expenses in everyone’s life, but your aim should be to minimize them as much as you can. Probably that’s why you should save money for emergency expenses.
Also don’t miss out on the debt payments. Count them in as a part of your expenses.

See cutie, there’s nothing called a fixed budget as such! At least I don’t believe in it. I believe that you are the budget itself!! If you want, and if your decisions are right, then a budget is accomplished.

So, list all the expenses and write down the fixed values beside them. Once you are done, add them up and see whether or not it’s crossing your total income.

If your total expenses are falling under your income limit then your budget has played well!

Practically the aim of controlling your expenses, is to increase your savings. So with whatever amount is left after subtracting your expenses from income, you use it to do extra debt payments or satisfy your savings goal.

Now what if the budgeting itself is not enough, your debt payments are huge and are crossing your overall income?

This is when you feel injustice is being done to you.

But there’s a big time solution. Take help of a debt payoff calculator to see how much you can save on your debt payments, if your income is not consenting with your debt expenses.

You can also get a part time job, or an extra side hustle if you want to increase your income.

No matter whatever you do, you still have to budget your money for your own good! Else nothing can help you in the long run.

With this we come to the end of our discussion. Hope this article was of some help for your debt situation. Don’t forget to comment down below, for further advice and queries!!

Author Bio: Andy Masaki is a financial writer and blogger who specializes on the topic of debt. He frequently writes for the Oak View Law Group and is a active member of several online forums where he shares his tips on how to lead a financially independent life.

• Breakdown of Average American Salary by Age
• Education Matters
• Not All Degrees Are Created Equal
• Other Occupation-Related Factors that Contribute to Salary Differences
• Income Difference by Geographic Locations
• Gender Inequality Issue
• How Much Does an Average American Spend?
• The Reality of Savings
• What You Should Know About Your Taxes
• Plunging Your Money on Interests in Your Lifetime
• How Much of Your Income Goes into Living Expenses?
• The Reality of Spending
• Conclusion
• Earnings Depending on Education

How Does Your Salary Compare to Those of Your Peers?

According to a survey conducted by the US Census Bureau in 2015, the median individual salary of an average American is $33,617.

Based on calculating the average career expectancy to be 40 years and assuming the annual salary to remain static throughout the career, an average individual in United States is expected to earn approximately $1,344,680 in his/her lifetime.

As for couples, the median income is $82,078.

When calculated with the same formula, the average household is expected to earn $3,283,120 in its lifetime.

You probably think that this number is highly inaccurate for aby of the following reasons:

1. How much you actually make in comparison to that number
2. The unlikeliness of your salary remaining the same throughout the years
3. The fact that you may work more or less than 40 years.

You may think these numbers are not relatable to your situation at all, but quite the contrary!

It plays an important role in allowing you to start visualizing how much money you can make in your lifespan and how you measure up against the rest of the country.

If you are over the median range, you are off to a great start.

But if you are below the median, do not be discouraged.

By understanding how various factors can affect your salary earnings, you can work towards a better future.

Breakdown of Average American Salary by Age

One of the reasons that you may earn less than the country’s median annual income range is that you are a relatively fresh employee.

Because age is often correlated with job experience and knowledge/expertise, it is rather predictable that younger workers earn less than older workers.

But the question is how much salary change can you expect in your career?

And can you expect your salary to plateau in a certain age range?

To answer,, let us first look at the median yearly income for various age ranges:

As illustrated in the graph, the age group between 16 and 19 has a much lower annual income.

This is because the jobs available to individuals in this age range tend to be minimum wage entry occupations that are often related to manual labor workforce.

As seen in the 20 to 24 age group, the wage increase leaps by about $5,000.

This has to do with the number of workers achieving a higher education and receiving much better wages in their early 20s.

Now here is the catch:

According to statistical studies done by the Federal Reserve Bank of New York, your salary in your 20s has a major effect on how your salary will increase in the future.

In essence, the higher your start-off salary is, the more drastically your wages will increase between the ages of 25 and 55 before tapering off until your retirement.

For the average employee, the wage will surge by 38% between the ages of 25 and 55 and then plateau as they shift towards retirement.

Sadly, this only applies to individuals who are within the average range.

Those who remain among the lowest 5% of earners in society actually see a decline in their incomes over the years between the ages of 25 and 55.

You may wonder why.

This is because many of these low-paying jobs are manual, labor-intensive occupations and individuals are much more likely to suffer from physical injuries and to be pushed out of their jobs as they become less productive.

The only individuals who continue to see their salaries surge ahead are those lucky ones who rank in the 95th percentile range of America’s economic status.

These individuals are most likely highly educated professionals such as lawyers, engineers, doctors, technology-related experts, and large business owners.

During their career, they can expect their income to grow 1,500% of their starting wage.

Education Matters

With so many college students so heavily in debt, many people wonder if higher education is really worth the investment.

This debate boils down to whether people with a college degree will earn more than those without a college degree…

The answer is YES.

As mentioned earlier, from the analysis of the wage difference based on age differences, those in the 16 to 19 age group are usually workers who do not have a college education.

There are even individuals within that group that have not graduated from high school.

Relying only on their restricted amount of knowledge and skills, they have a very limited amount of occupation selections.

On the other hand, just by having a college degree, individuals will considerably increase their occupation options and are 20% much more likely to be hired than those who only hold a secondary school diploma.

As of 2015, fresh college grads already earn $5,000 more than workers without higher education.

Over time, the wage gap between the two groups will drastically become wider as the higher schooling group sees a constant wage increase whereas the latter group remains as minimum wage workers of the society.

Debate on High Tuition Fees and Student Loans

For skeptics who raise the problem of student loan debts, here is an analysis of whether a college degree is truly worth your time and money.

According to the data provided by the National Center for Education Statistics, the cost of a 4-year college education averages around $56,000.

In 2010, the cost of the same education deal averaged around $82,000.

Although it seems that the price has soared by 50% over 30 years, many people have not accounted for several factors:

1. Economic inflation over 30 years
2. Increase of financial aid available to students that charges a much lower interest rate now than 30 years ago
3. Increase of scholarships provided to students with great grades and/or who have made great contributions to society
4. Forgiveness programs available for high-demand occupation degrees
5. More tax-deductible benefits available for individuals who are paying back their student loans

Just by going over these four factors, one notices the rise of tuition fees is not so drastic after all.

Even though you are required to pay back the student loan, your immediate higher pay and substantial wage increase over time will allow you not only to get out of debt sooner but also to purchase a home faster.

However, if you decide to forego higher education and opt to enter the job environment sooner, even though you may start earning money earlier, you will have less chance of a wage increase.

Over time, that will make you the hare in the money race.

If you are still not convinced, let us take a closer look at the survey conducted in 2016 by the United States Bureau of Labor Statistics.

According to the data:

• Full-time employees who are 25 years old and over without a high school diploma have a median weekly wage of $494.
• Full-time employees who are 25 years old and over with only a high school diploma and no higher education have a median weekly wage of $679.
• Full-time employees who are 25 years old and over with some higher education (e.g. associate’s degree or some college experience) have a median weekly wage of $782.
• Full-time employees who are 25 years old and over with a bachelor’s degree have a median weekly wage of $1,155.
• Full-time employees who are 25 years old and over with an advanced degree (e.g. professional training, master’s, and/or doctoral degree) have a median weekly wage of $1,435.

If these individuals work all 52 weeks in a year, their median annual income comes to:

If you take a look how much the median bachelor’s diploma-holding individual makes in a year ($60,060), a 4-year education merely costs 1 ½ years of their earnings.

In exchange for the tuition fee, you can climb to a much higher earning status within a shorter amount of time.

If you need even more proof, according to the information provided by U.S. Census Bureau, it is estimated that a master’s degree will earn you about $1.4 million more in lifetime earnings than if you were to hold only a bachelor’s degree.

Solely from this information, we can see that a higher education degree will boost both your starting income and your wage increase over the years.

Hidden Perks of Higher Education Jobs

Something often not mentioned is the added work-related benefits enjoyed by people in higher education jobs.

They can enjoy more paid vacation days, which translates into fewer actual working weeks, than the lower education group does.

Moreover, these individuals also enjoy other work-related benefits such as better health insurance and life insurance plans as well as more money put towards their retirement savings.

All these can decrease their annual expenses and increase the money they can enjoy after retirement.

So unless you are the next Bill Gates, Steve Jobs, or Mike Zuckerberg, attending college is always a great investment to boost your earning power.

Not All Degrees Are Created Equal

Even though a college degree is a crucial factor contributing to a person’s earning advancement prospects, there are a number of things you should know:

1. Any college degree, associate degree, and even some college education, will allow individuals to earn more than those with only a high school education. This fact is true whether you are comparing income during the start of a career, midway in a career, or at the end of a career.
2. There is always a discrepancy in salary amongst individuals within the same occupation. Those who are more qualified or trained in a more prestigious college will often receive a pay rate that is higher than others.
3. There are always exceptions to the rule. Some individuals with only a high school diploma will out-earn those with a bachelor’s or associate’s degrees. And there will be some college graduates who will earn an income that is within the low-income range.

4. The top 90th percentile high school graduates out-earn the bottom 10th percentile of college graduates no matter what major they studied.
5. Degrees that accentuate measureable specialized skills tend to project the highest earnings. Some examples are engineering, physics, logistics, computer science, finance, and economics.
6. Degrees that are associated with children education, home economics, religion studies, counseling, social work, and fine arts tend to have the lowest median incomes.

Should People Make the Switch to More Profitable Degrees?

After looking at the earnings data, many people might jump to the conclusion that if they immediately switch to another major, their salaries will make the adjustment and subsequently increase their lifetime earnings.

This assumption is flawed, however, as many other factors can contribute to differences in salary.

1. Your grades matter. If you make a sudden change, you might not be as well-prepared as other students who have concentrated on the same field since as far back as high school. With much more knowledge and experience (e.g. intern jobs, related volunteer work, awards, and scholarships), they will have better opportunities to score much higher-paid starting positions than you.
2. You may lack many prerequisites to make the faculty switch. In a worst-case scenario, your college may not offer the program you are looking for.
3. Your current college may not be known for certain degrees. Even if you make the change, your resume may look less impressive than those of individuals who have graduated from more prestigious programs.
4. Even if you make the switch right away, you have wasted the last few years and will lose more time in catching up with your peers. By entering the job force later than your peers, your lifetime earnings will be significantly less than individuals who have graduated earlier with relevant work experience.

The truth is that the data presented only shows the median salary calculated from the census survey of all individuals who work full-time in their industry.

It means that 50% of these individuals will earn more than the median and 50% will earn less than the median.

As mentioned before, there is always an exception to the rule.

Depending on your knowledge, credentials, and skills, you have the ability to make much more money than your peers.

What matters is whether your knowledge and skills are in high demand.

For example, a hairdresser is expected to earn about $30,000 as their annual salary.

However, elite hair stylists who work with performers and are top of their game can expect to earn upwards of $80,000.

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Founded in 2005 by DeForest B. Soaries, Jr., dfree^® is a financial freedom movement that addresses the cultural, psychological and spiritual influences on financial wellness and offers practical strategies for achieving financial success.

About the Author

What do you think of when you hear the word retirement?

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By Erica Quinn, InvestmentZen.com

Posted July 18, 2017

The last decade has seen a marked increase in false assumptions regarding the millennial generation. Despite being the generation promising to make the world a better place, many people assume that due to the high percentage of millennials receiving help from their families, a number reaching 35%, they have a poor work ethic and are completely failing to plan for the future. The data simply doesn’t support those assumptions, however, with a greater percentage in the full-time workforce and higher savings rates than their Gen X counterparts.

The millennial generation faces a unique set of economic challenges. From cripplingly high student loan debt acquired while earning the college degree necessary for even most entry-level positions, to housing costs rising far faster than the median income, millennials deal with challenges different than any previous generation in getting a strong financial start in life. With many housing markets pricing the young families right out of the market, it’s no wonder so many of them still live at home, saving all they can.

Despite higher education rates than any other generation, a millennial with a degree can look forward to a median income comparable to that, adjusted for inflation, of a non-degree-holder in 1980. Savings account interest return rates don’t return enough to be remotely useful as an investment tool, while debt interest rates have skyrocketed. Millennials have responded by having far lower average credit card debt than their parents.

In order to combat the unique challenges they face, millennials are completely redefining the way Americans live, changing the face of professional industries across the board, and living lives in a completely different way than their parents and grandparents. This inevitably brings criticism and pressure from older generations, many of whom oppose change of any kind. Changing circumstances demand changing lifestyles, however.

Take a look at the infographic below for a direct comparison of millennial finances as compared to their predecessors.

Photo credit:  Couple counting money — Image by © Jose Luis Pelaez Inc/Blend Image/Blend Images/Corbis

How Do Millennial Finances Compare To Previous Generations by Erica Quinn

While Canadians freak out over avocado toast and housing prices, let’s see what’s happening with Millennials in the United States.