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Juneteenth: Building Generational Wealth
Juneteenth Celebration and 5 Steps to Building of Generational Wealth
As we celebrate Juneteenth this year, we need to remember how we got here. The Black tax. Today, where news travels at the speed of light, news traveled at a small fraction of that speed in the 19th century. It took over two years to inform the last of the enslaved persons about the Emancipation Proclamation. Slaves were taxed an extra two years with building wealth for their former slave owners. Instead, they should have been building wealth for themselves.
Today the Black tax looks a little different. Economic stability for Blacks in America has always been fragile, making building Generational Wealth that much more challenging. It’s a multi-layered problem. The culprits; historical injustices, disparities in educational and employment opportunities, racism, and overall structural inequities. As we celebrate Juneteenth 2023, the average Black American earned 22% below what is considered middle class. While income is part of the equation, building wealth is the accumulation of assets and the diversity of those holdings.
The Black tax today got its origins from South Africa and referred to money that Black professionals felt obligated to provide their families every month outside of their own living expenses. This was an expense that their white counterparts didn’t have because most of their families were relatively self-sufficient. This put the black professionals at a socio-economic disadvantage and prevented them from building generational wealth. Today we see this at all levels of income in the black labor force. It can be especially stressful for those with more modest incomes. This stress can impede one’s ability to save, invest or borrow money.
Some argue that the black tax pays for White Privilege in terms of education, job opportunities, and lower interest rates. The origin of the term White Privilege was originated in the 1980’s to describe the benefits the White race had, that were not afforded by others. It stems from systemic policies created by those in power to afford benefits that acquiesced to their lifestyle. Systemic public policies live within the foundation of the Juneteenth holiday, examples of this would be the 13th Amendment to free slaves that added an exception for convicted felons or the more recent challenge to student loan debt relief.
The Black tax is a blessing and a curse at the same time. Our desire to help our loved ones through rough patches is often the reason why some Black adults have difficulty saving money and building wealth. Below we offer 5 suggestions on how one can begin building generational wealth:
1. Save a little first.
Although your first instinct may be to assist a family member in need, you must always pay yourself first through savings or investments. In the event you lose some or part of your income, you should always have something to fall back on.
2. Understand your finances and share financial literacy with your circle.
Ev
ery situation is different, but the solution begins with understanding your finances and planning.The support you provide to others should be stabilizing as opposed to enabling.It involves hard conversations about the long game. The long game should be a resolution of independence or close to it. Go further than just loaning money. Having conversations with family members about managing their finances can go a long way towards making sure your inner circle is on the path to generating wealth.
3. Understand who your politicians are.
Building generational wealth also involves understanding how changes in public policies can impact our lives. Tax codes, student loan debt and the judicial system have negatively impacted black households’ ability to build wealth. For instance, home ownership accounts for 50-75% of household wealth in America. Although volatile at times, its value appreciates 3% –5% on average per year. It can be a source of forced savings. The homeownership rate for Blacks is about 44% compared to 73% for Whites. We need to support politicians that create policies that provide incentives and opportunities for increased Black homeownership.
4. Consider public service loan forgiveness programs.
One way to manage student debt is to find a job that allows you to access programs that forgive debt. The Public Service Loan Forgiveness (PSLF) programs provides forgiveness to public servants that serve in roles such teachers, nurses, firefighters, or public service employees for non-profits (501-C3). After 10 years qualifying student loan debt can be forgiven.
5. Encourage Entrepreneurship.
Entrepreneurship creates the ability to lift oneself out of poverty and begin building generational wealth. Being self-employed can be both rewarding and challenging at the same time. Developing a strong business plan helps to attract capital. Financial institutions are rated on how well they meet the credit needs of the communities they serve and are required by law to have the facts, data and analytics that support the rating, available to the public upon request. As an entrepreneur, you can inquire with financial institutions on ways your business can assist in meeting their goals to reach the community and small businesses. By supporting small businesses, we build stronger communities, so make sure to join More Than Three Fifth community to help you grow your business.
In these difficult economic times, many of us may wonder whether the black tax is a blessing or a burden. However, at More Than Three Fifth, we feel that it is a window of opportunity to help our community begin building generational wealth. This window may seem somewhat cloudy at times but sometimes adversity breed’s progress.
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