The pandemic has been a rough year for everyone, including African Americans due to COVID-19, lockdowns, and many racist incidents that has galvanized the country to fight racism. This post takes a look at the average income for African Americans today.
African Americans account for roughly 17% of the United States population. Below is a more detailed racial breakdown by the Census Bureau from 2010 and 2000. As you can see, the percentage of African Americans has grown by almost 5% since 2010.
Average Net Worth For African Americans
According to the Urban Institute, African Americans have on average $19,049 in liquid retirement savings, compared to $130,472 for Whites, and $12,329 for Hispanics.
Average Income For African Americans
Now let's look at the Economic Policy Institute data for median and average wealth for Whites and Blacks. The average wealth for African Americans is $95,261 and the median wealth for African Americans is just $11,030.
Now let's look at the income by race data provided by the Census Bureau. African American income is the lowest at roughly $38,000 and Hispanic income is at roughly $45,000 which correlates with the retirement savings by race chart and wealth charts above.
A 100% difference between the highest income from Asian Americans ($78,000) and the lowest income from African Americans ($38,000) is significant. Why do African Americans make the lowest?
It is clear from the latest data that African Americans earn less that most races in America. This is largely due to systemic and endemic racism that has occurred for hundreds of years.
Racial Makeup Of Personal Finance Readers
Based on my survey of roughly 3,000 readers of Financial Samurai, one of the largest personal finance sites in the world with over 1 million pageviews a month, there is roughly a 30% overrepresentation of Asian readers (35% FS readers vs. 5% of US population). There is also a 5.3% underrepresentation of African American readers (7% FS readers vs. 12.3% of US population).
Then there is a 11.3% underrepresentation of Hispanic readers (5% FS readers vs. 16.3% of US population), and a 15.7% underepresentation of White readers (48% FS readers vs. 63.7% of US population).
Black and Hispanic Financial Samurai personal finance readers appear underrepresented and correspond with Census Bureau-provided lower income and wealth figures. Asian readers appear overrepresented and correspond with higher income and wealth figures. Therefore, it seems clear there's a correlation between higher income/wealth and reading personal finance articles.
The Solution To Improving The Financial Health Of Our Country
My main recommendation for African American people and people of every race is to read more personal finance sites. It's that simple since everything can be learned and read for free online nowadays. I worked in finance for 13 years, got my MBA, and achieved financial freedom in 2012. You might as well sign up for my free newsletter and keep abreast of what's going on.
Anybody who started reading Financial Samurai since its 2009 beginning has probably crushed the average American in terms of wealth creation. We've been talking about investing in the stock market, bond market, and real estate market all this time. Hispanic American readers have been more active in investing their savings, thereby growing their wealth faster than non-personal finance readers.
Readers of Financial Samurai learned about the proper asset allocation of stocks and bonds by age. Readers also learned about investing in real estate and getting ahead in their careers. As a result, there's no wonder why the income and wealth figures of personal finance sites are so much higher.
Yes, we can hypothesize that those who are already financially savvy care more about financial information than those who aren't. But we should also conclude that over time, those who read personal finance websites tend to get richer than those who do not.
This website stays on top of current events and challenges everyone to improve their finances. For a classic post, see: The Average Net With For The Above Average Person
Education Will Improve Financial Health
You don't have to be rich to get a great education because access to information is now free. Soak up as much information as you can and share your favorite articles with as many people as possible. I'm absolutely positive we'll see a tremendous improvement in our finances over the next generation.
Once you have your finances sorted out, you can focus your attention on more important things such as family, health, and happiness. And when your finances are really good, you can even spend your time and money helping other people. Let's get the average income of African Americans up!
My strong hope is that more Black Americans come to free financial sites like Financial Samurai to learn everything they can about saving money, making money, and building wealth.
Wealth Building Recommendation
The best way to build wealth is to get a handle on your finances by signing up with Personal Capital. They are a free online platform which aggregates all your financial accounts on their Dashboard so you can see where you can optimize.
Before Personal Capital, I had to log into eight different systems to track 33 different accounts to track my finances. Now, I can just log into Personal Capital to see how my stock accounts are doing. I can check how my net worth is progressing and where my spending is going. You also get your net worth amount sent to your inbox weekly.
One of their best tools is the 401K Fee Analyzer which has helped me save over $1,700 in annual portfolio fees I had no idea I was paying. You just click on the Investment Tab and run your portfolio through their fee analyzer with one click.
They’ve also come out with their incredible Retirement Planning Calculator. It uses your linked accounts to run a Monte Carlo simulation to figure out your financial future. You can input various income and expense variables to see the outcomes. Definitely check to see how your finances are shaping up as it’s free.
Boost Income And Wealth Through Real Estate
Real estate is my favorite way to achieving financial freedom. It is a tangible asset that is less volatile, provides utility, and generates income. Further, there are no gatekeepers besides a lender for owning real estate. Therefore, as an African American or a minority, you can be more confident in building wealth through real estate.
In 2016, I started diversifying into heartland real estate to take advantage of lower valuations and higher cap rates. I did so by investing $810,000 with real estate crowdfunding platforms. With interest rates down, the value of cash flow is up. Further, the pandemic has made working from home more common.
Take a look at my two favorite real estate crowdfunding platforms.
Fundrise: A way for accredited and non-accredited investors to diversify into real estate through private eFunds. Fundrise has been around since 2012 and has consistently generated steady returns, no matter what the stock market is doing. For most people, investing in a diversified eREIT is the way to go.
CrowdStreet: A way for accredited investors to invest in individual real estate opportunities mostly in 18-hour cities. 18-hour cities are secondary cities with lower valuations, higher rental yields, and potentially higher growth due to job growth and demographic trends. If you have a lot more capital, you can build you own diversified real estate portfolio.
About the Author: Sam worked in investing banking for 13 years at GS and CS. He received his undergraduate degree in Economics from The College of William & Mary and got his MBA from UC Berkeley. In 2012, Sam was able to retire at the age of 34 largely due to his investments that now generate roughly $250,000 a year in passive income boosted by his investments in real estate crowdfunding. Financial Samurai was started in 2009 and is one of the most trusted personal finance sites on the web with over 1.5 million pageviews a month.