Financial Empowerment Advice for African Americans

African Americans spend $1 trillion annually.  One dollar circulates in Asian communities for 30 days, in Jewish communities for 20 days, and white communities 17 days. However that same dollar in African American communities circulates every 6 hours. What this means is that a dollar earned in the African American community leaves that community before the sun goes down. In other communities it stays for weeks on end. 

In addition, a mere .2%, or $.02 of every dollar an African American spends in the U.S. goes to African American owned businesses. Ninety-four percent of African Americans have some type of debt: credit card debt, student loan debt, mortgage debt, or personal loan versus 5% of Americans who have some type of debt excluding their mortgage.

By comparison African Americans spend most of their money or credit on: clothing, appliances, alcohol, cars, electronics, computers, cell phones, clothing, travel, hair care, accessories, food, and household furnishings versus other communities who balance their spending with saving, investing and homeownership. 

Brand name products represent 82% of African American households’ total purchases compared with 31% of private labels and less than 1% of purchases from African American businesses. African Americans are a community of spenders and often times don’t balance their consumer spending with investing, saving and generating wealth the way other communities do.  It’s time to become a community of savers, investors and owners. 

Solutions to help African Americans effectively manage their money:

1. Generate wealth. Some ways to generate wealth are becoming a homeowner, starting a business, investing in real estate, planning for retirement, becoming a franchise owner, capitalizing on compound interest, and keeping debt low. Home ownership is 44% among African Americans, but should be much higher.
2. Hustle. Start a part-time business while working full-time to earn extra money. Use the money to contribute to a retirement account or pay off debt.
3. Do better. Do better than your parents or grand-parents. 
4. Save. Save 10% - 20% each money towards a retirement account.
5. Plan for the Unexpected. Create an emergency savings account to cover monthly bills and expenses for 9-12 months.
6. Passive. Find at least way to generate passive income.
7. Reduce spending. Reduce monthly spending by 30-50%. 
8. Mortgage. Pay off your home prior to retirement.
9. Retirement. Consult a financial advisor to ensure you contribute enough money to reach your retirement goals.