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Why Black People Stay Persistently Poor, Broke and Struggling

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black-woman-cryingBy Nomalanga Mhlauli-Moses

Institutional racism is a known and proven reason why African Americans are disproportionally affected by poverty and all the social ills associated with it. Of course there are other factors, two of which have been outlined in a report by the Urban Institute.

According to the Urban Institute, two primary reasons why African American families do not accumulate nearly as much wealth as their White counterparts is that they have higher student debt and a significantly lower likelihood of getting large amounts of money from family members.

Using nine charts, the report shows that in the last 50 years, there has been no improvement in the financial well-being of the Black community and the wealth gap between Black Families and White families has not closed.

The charts also show why Black middle-income families still struggle in spite of having jobs and steady incomes. White students start their careers already ahead because they tend to have a much lower loan burden than their Black counterparts. According to the report, in 2013, 42 percent of Black people between the ages of 25 and 55 had student loan debt while only 28 percent of whites had the same debt.

Black people tend to have higher student loan burdens because they are much less likely to get help from family members, as opposed to their White counterparts who get financial assistance, gifts and inheritance from family members.

White families receive major financial contributions and inheritances at a rate that is five times higher than Black families so Black families tend to get stuck in a terrible cycle of financial instability and struggle that keeps being passed on from generation to generation.

The burden of student loan debts means that Black families are less likely to save and invest, resulting in less money for retirement and an inability to cope with major life events and emergencies that require money. In the end, Black families remain financially unstable and unable to accumulate wealth, while their White counterparts gain financial stability and build wealth.

According to the report, White people have triple the wealth of Black people in their 30s and by their 60s, White people have over $1 million more in average wealth than Black people, which is over 10 times more.

The wealth gap is further increased by White people generally having higher incomes than their Black and Hispanic counterparts, which, according to the report, is a partial reflection of  “historical racial disadvantages that continue to affect later generations” (institutional racism). The report reveals that a White person will generally earn $2 million over a lifetime, while a Black person will earn $1.5 million.

I wrote a a blog post that relates to this topic and in the post I said that Black people can reverse this vicious cycle. One of the reasons why I focus a lot of my coaching and speaking programs on Life Balance for women, specifically Black women, is that I believe that if we can learn how to build wealth in a way that still honors our marriages and families, we can begin to reverse the cycle of poverty.

Black women outnumber Black men in their college enrollment which shows that we have a desire to gain the skills and knowledge to lift ourselves out of poverty but those efforts are diluted by the student loans that accompany getting an education. Mounting student debt is then often compounded by trying to survive in a single parent home where only one adult is responsible for bringing in an income and also trying to raise great kids.

I don’t make a secret of the fact that I believe that marriage is part of the puzzle when it comes to lifting Black people out of poverty and building wealth that can be passed down from generation to generation. Strong families are the foundation on which stable communities are built and they are also the foundation on which generational wealth is built.

Nomalanga is a Life Balance Expert. Her speaking and coaching programs help busy women who struggle to balance Marriage, Motherhood and Money-Making™.  She is an avid blogger and a sought after instructor and speaker.