Black People….We Too Can Create Generational Wealth
By: Taryn Foster
Tags: Taryn Foster, Financial Planning, African American, Financial Tips, Financial Literacy

Everyday, I listen to people discuses their personal finances and their personal financial goals. I listen to them talk about their financial issues, both big and small. They talk about savings for larges purchase such s buying a home or planning for a child’s educational journey. We discuss retirement goals, business goals, ways to create a legacy for the families and how to create generational wealth. As a financial planning assistant, I work with many different people from many different backgrounds, cultures, and ethnicities. My experience in this field however has opened my eyes to a great problem. Many of my fellow African American people lack basic financial literacy and the knowledge to create financial freedom and generational wealth.

Let us start by defining a few terms used in the Finance world. According to Investopedia, “Financial literacy is the ability to understand and effectively use various financial skills, including personal financial management, budgeting, and investing. The lack of these skills is called financial illiteracy.” According to CNBC Select, “Generational wealth refers to any kind of asset that families pass down to their children or grandchildren, whether in the form of cash, investment funds, stocks and bonds, properties or even entire companies.” Each of these work hand in hand with each other and can be achieved with the proper knowledge and discipline.

Studies has shown that financial wellness among African American’s is significantly lower than other races.” A New State of the American Family Study by Massachusetts Mutual Life Insurance Co. (MassMutual), showed that many African Americans don’t have tangible assets needed to make those goals happen now.” The study brings forth a realization that high debt, low savings, and lack ownership of financial products such as stocks bonds and real estate. Key indicators discovered in the study:

· Of those surveyed in the study, 31% believe that the “American Dream’ for African Americans is solely fading.

· Outside of retirement accounts, only 37% of African Americans own wealth-building products such as stocks and mutual funds.

· Only 35% believe they are doing a good job of preparing for retirement.

· 33% have less than one month of funds saved for a crisis and less than 25% have amassed more than six months of emergency savings.

· 58% are actively involved in educating their children on finances versus 48% of Caucasians. Forty percent rely on family members for information

The inequalities that African American people face today also effect their ability to sustain financial wellness and create generational wealth for their families. While many African American people want to improve their financial wellness and literacy, many lack the knowledge and resources to do so. Below, are things that African Americans can do to build financial literacy, create financial wellness, and build generation wealth according to Shavon Roman, a financial adviser at Atlanta-based The Piedmont Group.

· FINANCIAL- Having basic knowledges about savings, budgeting, loans, interest rates, credit, and budgeting.

· FINANCIAL PLANNING AND EXECUTION- Know the risk tolerance, planning out goals, and creating a plan to achieve those goals. If you cannot afford to hire one, there is a plethora of resources to aid in assisting. Make financial planning a family priority by included the whole family included children.

· PREPARE FOR THE UNEXPECTED. Protect your family with appropriate amounts of life insurance and disability income insurance.

· ESTABLISH SAVINGS. Open a separate savings account designated for your emergency fund and add to it every paycheck.

· SAVE FOR RETIREMENT. Think about your current and future expenses to see if you are saving enough right now.

While financial wellness and literacy lacks in the African American community, there are a great deal of resources available to help education and aid them in building financial security and creating generational wealth for their children and grandchildren. In prior years, financial education lacked in many African American homes due to lack of knowledge, resources, and inequalities. While African American still face many inequities today, the ability to create financial wellness is their but requires the will power and discipline of the person seeking to achieve it.