- African Americans spend too much and do not save enough. There is a common misconception that African Americans blow their money on flashy items and material things, rather than save and invest in assets that can yield them long-term earnings. The truth is African Americans tend to have the largest ratio of saving in relation to their income compared to other racial groups. Since Blacks are susceptible to economic downturns, layoffs and long-term unemployment, many tend to save money more, according to Prudential’s report on the African American Financial Experience.
- African Americans are lazy and do not want to work hard. African Americans are chronically unemployed or underemployed as compared to other social groups. According to a reportreleased by Pew Research Center, African Americans are “the last to be hired and the first to be fired,” and many are also unemployed for a longer period of time. African Americans are constantly seeking additional work to get ahead but quality employment can be difficult to obtain and maintain.
- African Americans do not build wealth because they are comfortable relying on public assistance. Low-income white Americans are the largest beneficiaries of food stamps, according to the U.S Department of Agriculture. Some African Americans do rely on public assistance as a means of income-patching to withstand unemployment or underemployment, but in no way is it a reliance of choice. In the mid-80s, welfare and other public assistance programs created asset limits for beneficiaries, and thus reduced the ability for recipients to build a safety net to transition off benefits and become fully self sufficient.
- African Americans abuse credit cards and have more credit debt than others. In a report released by DEMOS and the NAACP, middle class African Americans have similar rates of default and late payments as do their white counterparts. Similarly, the African American middle class, like the American middle class, rack up credit card debt “to make critical investments in their future, including for higher education, entrepreneurship, and medical expenses”- not extravagant purchases. Many people use credit cards to patch their income or as a “safety net” to replace dwindling incomes and stretch resources.
- African American businesses do not succeed because they are not supported by African Americans. There is much rhetoric around black purchasing power and the need to leverage it into black-owned institutions as a means of community and economic development. In order to grow and thrive as a community, African Americans need more than just black dollars, but also external patronage, benefits and investments as seen with some of the most successful black businesses as noted by Alfred Edmond Jr. for American Express.
The false narrative about African American wealth building has largely proliferated because it is easier to blame the victim than to acknowledge or address the larger structural inequalities that disenfranchise a group of people. Moving forward, as a community it is necessary to dispel these myths with facts.
African American wealth cannot and will not look like white wealth.
The historic socioeconomic, cultural factors that impact the everyday lives of African Americans do not reflect that of their white counterparts. The responsibility and duty to individuals, family and community requires a different wealth and economic outlook. But the first step is to shatter the myths that cloud our political and public policy debates and deal with what is real and true.
and saving money doesn't build wealth, not sure why folks still don't get that