The Power Of Building Generational Wealth In Black Families – Unlocking Financial Prosperity

Written by: Deilen Michelle Villegas, Executive Contributor

Executive Contributors at Brainz Magazine are handpicked and invited to contribute because of their knowledge and valuable insight within their area of expertise.

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Generational wealth is a powerful tool that can create opportunities, secure futures, and break the cycle of poverty. However, historical and systemic barriers have disproportionately hindered Black families from accessing and building generational wealth. This article will explore the importance of building generational wealth in Black families, strategies to overcome obstacles, and how to empower future generations to thrive economically.

To address the wealth gap, it is crucial to understand the historical context and systemic factors that have perpetuated economic inequality for Black families. Centuries of slavery, segregation, discriminatory practices, and limited access to education and employment opportunities have hindered wealth accumulation. Recognizing these challenges is the first step toward empowering Black families to break free from the cycle of poverty.

The disparity in Black families being able to generate wealth can also be attributed to the lack of opportunity and examples in the Black family dynamic. Families who have had members who were able to attain higher education and build a solid foundation for themselves are more likely to pass on the knowledge gained through their experiences to teach those who came after them how to make progress. Unfortunately, for many Black family households, their children would be the first generation to attain higher learning. First-generation students come from families where previous generations did not graduate from a higher education institution. According to statistics, one-third of all college attendees are first-generation students. Of the first-generation college attendees who come from black families only 21% go on to graduate, versus 60% who go on to graduate when they come from families where at least one parent holds a bachelor's degree. It is found that individuals whose parents don’t have a degree are less likely to finish school due to a lack of proper support, lack of money to pay for tuition, and familial obligations.

First-generation students face a unique set of additional challenges than their college peers who come from families who have continuous generations of college education, including balancing several identities, working one or multiple jobs, and managing family obligations — all while trying to get an education to further their career. Individuals who come from low-income households are often expected to take on some of the financial burdens of the family because their parents are not able to provide for themselves, so they are required to make getting a job and helping pay bills a priority. They may also become primary caregivers for any additional family members in the home.

Education And Financial Literacy

Education is key to building generational wealth. Encouraging academic achievement, providing access to quality education, and promoting financial literacy are essential components. By equipping young Black individuals with the knowledge and skills to make informed financial decisions, we empower them to break free from financial constraints and build a solid foundation for their future.

According to Bankrate.com, households headed by high school graduates earn about 31 percent less a year than those who have an associate degree and 56 percent less than those who have a bachelor’s or another advanced degree. Based on the 2020 Median Household Income– a Head of Household who attained a high school diploma had a median income of $47,705, an associates degree holder had a median income of $68,789, and a bachelor or higher degree holder had a median income of $106, 963.

The unsettling fact of these numbers is that black individuals are paid less than their white counterparts for the same job and education, meaning that these numbers are significantly less in Black Households. This would further pose a challenge for Black families who are trying to make progress in their lives. Homeownership is a powerful tool for wealth creation. Encouraging Black families to become homeowners and invest in real estate can significantly impact generational wealth. The median household income for graduates who have at least one college-educated parent was $135,800 as of 2019, compared to $99,600 for graduates whose parents didn’t attend college — a 36 percent difference. Again remembering that these numbers are often less in Black family households, this financial disparity further exacerbates an already complicated and unfair system, holding Black families back from being able to become homeowners and real estate investors that would help establish wealth creation. Programs that provide affordable housing options, financial assistance, and homeownership education can help overcome barriers to entry and create opportunities for wealth accumulation through property ownership. In today’s economy becoming a homeowner is difficult due to high-interest rates, and increased prices for the cost of living, childcare, gasoline, and other necessities. According to the U.S Department of Health and Human Services, families would need to make between $60,000 and $80,000 if they live in the midwest part of the country and between $120,000 - $160,000 if they live in a big city or either coastline for a family of 4. More than half of the Americans living in these areas live below these means financially. Based on the majority of individuals living on minimum wage, the federal minimum wage is $7.25. The minimum wage will vary by state based on the cost of living, at the lower end averaging about $5.15 an hour and on the higher end $15 an hour due to how expensive the cost of living in the state is. According to Newsnationnow.com, to be making a livable wage, both parents in a household working would each need to make $24.16 before taxes for a family of four, to afford to live in most of the United States to cover basic expenses. For individuals who live in New York City, that number is $30.16, and in San Francisco $35.56.

Entrepreneurship And Business Ownership

Promoting entrepreneurship and business ownership within the Black community is another avenue for building generational wealth. Encouraging and supporting Black entrepreneurs through mentorship programs, access to capital, and business development resources can create pathways to financial success. By fostering an entrepreneurial spirit, we empower Black families to create their own wealth and economic opportunities. During 2020, there was an explosion of small businesses created by individuals to make some income due to the limitations of job availability due to Covid restrictions. That allowed many individuals especially in the Black community to create businesses that tapped into an underserved market often forgotten by big industries. Most Black people are not aware of the many programs available to get them started on the path of Entrepreneurship and Business Ownership, which provide funding, grants, and loans, training for you and employees, marketing and business development, and import and export opportunities to help small businesses and minority owners. Understanding the power of investing and wealth management is crucial for building generational wealth. Encouraging Black families to invest in stocks, bonds, real estate, and other assets can provide long-term financial growth and stability. Promoting financial planning, retirement savings, and responsible money management practices is essential in empowering Black families to make informed investment decisions. Lack of available open knowledge and gatekeeping surrounding investment opportunities have also played a big part in why Black families do not have access to programs available to become investors. Many people in the Black Community are unaware that for the same amount of money spent on takeout a month, they could become real estate investors which helps them build a real estate portfolio but also make passive income through quarterly dividend payments. Websites such as Robinhood, Webull, Vanguard, Stash, and Betterment are all great for beginners interested in investing in stocks, and bonds, and building an investment portfolio. If you aren’t sure how to invest or where to begin, your local banks have financial advisors available to answer any questions, and before choosing to invest you can look up any broker on the FINRA website which is free to make sure they do not have any misconduct or regulatory fines.

Collaborative Economics And Community Support

Building generational wealth requires collaboration and community support. Encouraging Black families to support Black-owned businesses and participate in cooperative economics strengthens the economic foundation of the community. By creating networks, fostering partnerships, and supporting local initiatives, we can collectively uplift the community and create opportunities for wealth creation.

Establishing mentorship programs that connect successful Black individuals with younger generations is vital for intergenerational wealth transfer. Mentors can provide guidance, share knowledge, and pass down valuable financial lessons. By nurturing solid mentor-mentee relationships, we ensure the continuation of wealth-building strategies and empower future generations to carry on the legacy of economic prosperity.

Building generational wealth in Black families is an essential step towards economic empowerment and breaking free from historical cycles of poverty. By addressing systemic barriers, promoting education, homeownership, entrepreneurship, investing, and community support, we create a pathway for economic prosperity. Together, we can create a future where Black families have the tools, resources, and opportunities to build lasting wealth and unlock the full potential of future generations.

For more information regarding how to build generational wealth by investing in real estate, becoming a homeowner for low-income and low-credit families, or available resources for black-owned businesses, click the links below:

• Arrived Homes

• NAC

• U.S. Black Chambers, Inc.

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Deilen Michelle Villegas, Executive Contributor Brainz Magazine

Deilen Michelle is a Holistic Health Practitioner and Holistic Life Coach. An advocate for bringing awareness to the mental health and physical well-being of underserved communities. She specializes in Trauma Recovery, Behavioral Health, Mindset Transformation, and Somatic Healing with over 15 years in healthcare. Founder of The Shamanic Goddess, LLC, a Holistic Health and Wellness Consulting business, she has chosen to use her knowledge, experience, and platforms to address the importance and need for Holistic Health and Wellness in the Medical Industry and also the impact of trauma and adversities on the BIPOC and LGBTQIA communities. She is an interdisciplinary Complementary and Alternative Medicine practitioner focusing on the Mind-Body-Spirit connection, currently working on her Ph.D. in Natural Medicine and has obtained a Master of Science in Complementary and Integrative Medicine. Deilen created her own modality named The H.E.M Experience, which she uses with her clients to create effective positive change in all areas of life to achieve their full potential in Body, Mind, and Soul, guiding them to be more intentional and conscious about how they move in the world.