More News on the "Money Gap"
5/2/2013 11:31:00 AM
I know I have been talking about money a lot but as we face fiscal crisis nationally, there’s another reason you need to save and invest instead of dropping cash on Jordans and rims.
According to a new study by the Urban Institute’s Opportunity and Ownership Project, white families averaged six times the wealth of black and Hispanic households ($632,000 versus $98,000 and $110,000, respectively). However, the income gap, by comparison, is much smaller, according to the study. In 2010, the average household income for whites was $89,000, about twice the $46,000 average for black and Hispanic families. So why are black and Hispanics consistently behind in income and wealth? They site four key reasons: inequality in home ownership, income, education, and family inheritances.
This may scare you, as you may feel what can you give for your kids to inherit. Lack of life insurance policies – term or whole life – can leave something behind. But don’t forget the “s” word: save. Black Americans, generally, don’t save as much as whites so black folks don’t amass generational wealth. And don’t think of wealth as “millions”! Whether you save 3%, 5 or 10 of every dime you get, put something away in savings and investment plans for the future. And it’s okay if you may not know what to do. Read Suze Orman, Dave Ramsey books but take a peek at Black Enterprise’s Wealth for Life Principles. According to blackenterprise.com, the purpose of the principles are meant to serve as a step-by-step guide to responsible saving, investing, and spending in order to build wealth and pass it on to future generations. They note that wealth preservation goes hand-in-hand with wealth accumulation. What are the 10?
1. I Will Live Within My Means
2. I Will Maximize My Income Potential Through Education and Training
3. I Will Effectively Manage My Budget, Credit, Debt, and Tax Obligations
4. I Will Save At Least 10% of My Income
5. I Will Use Homeownership as a Foundation For Building Wealth
6. I Will Devise An Investment Plan For My Retirement Needs And Childrens’ Education
7. I Will Ensure That My Entire Family Adheres To Sensible Money Management Principles
8. I Will Support the Creation and Growth of Minority-Owned Businesses
9. I Will Guarantee My Wealth Is Passed On To Future Generations Through Proper Insurance And Estate Planning
10. I Will Strengthen My Community Through Philanthropy
For details on each principle click here. These principles place greater emphasis on financial discipline. Yes – discipline. That means you may not be able to grab it just because you want to have it! You may have to sacrifice the salon or nails every week to create something that last long-term. Whether if it’s a college fund, emergency savings or something for your family later, make the sacrifice now. After all you can’t pass on the Jordans, or rims as a family heirloom.