Despite the global pandemic and the tens of millions of unemployed people unemployed in America as a result, the one good thing to come out of 2020 is the increased awareness of the injustices and racism African Americans face.
Racism is systemic and endemic in America. As a result, African Americans have been a a disadvantage when it comes to accumulating wealth compared to caucasians.
As of 2020, 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 And Income 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.
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. Asian median household income leads the way at roughly 30% higher than White median household income.
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 ($78,000) and the lowest income ($38,000) is significant. What is going on?
Racial Makeup Of Personal Finance Readers
What’s interesting to note is that based on my survey of roughly 3,000 readers of Financial Samurai, one of the largest personal finance sites in the world with over 1.5 million pageviews a month, there is roughly:
- A 30% overrepresentation of Asian readers (35% FS readers vs. 5% of US population)
- A 5.3% underrepresentation of African American readers (7% FS readers vs. 12.3% of US population),
- A 11.3% underrepresentation of Hispanic readers (5% FS readers vs. 16.3% of US population),
- A 15.7% underepresentation of White readers (48% FS readers vs. 63.7% of US population).
A 30% overrepresentation of Asian readers on Financial Samurai is startling. But since 70%+ of Financial Samurai’s traffic is from search engines like Google with traffic coming from all over the country and the world, and only 5 out of 1,397 of my article’s have titles with “Asia,” “Asian,” or “Chinese,” one can assume a smaller percentage of the 30% overrepresentation is due to the site’s name and my race.
Feel free to peruse my most popular articles and see for yourself. The most popular articles relate to retirement savings, investing, and earning more money. These topics are relevant to all races.
As Black and Hispanic Financial Samurai personal finance readers appear underrepresented and correspond with Census Bureau-provided lower income and wealth figures, and as Asian readers appear overrepresented and correspond with higher income and wealth figures, 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
Read more personal finance sites. It’s that simple. I’ve been publishing 3X a week on Financial Samurai since 2009 an won’t stop in order to help as many people reach financial freedom as possible.
Anybody who started reading Financial Samurai since its 2009 beginning has probably crushed the average American in terms of wealth creation because we’ve been talking about investing in the stock market, bond market, and real estate market all this time.
Even as the stock market rebounds to a new record high, everybody needs to stay diligent. Start building your passive income portfolio to give yourself more options versus others who just rely on a day job income.
Instead of freaking out and selling all your stocks during the mid-March 2020 stock market meltdown, you could have read a logical article about predicting a stock market bottom and bought stocks and profited instead.
You can also learn about buying real estate curing the COVID-19 pandemic and how you could profit over the next several years.
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.
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.
Wealth Building Recommendation For African Americans
Manage Your Finances In One Place: 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 (brokerage, multiple banks, 401K, etc) to track my finances. Now, I can just log into Personal Capital to see how my stock accounts are doing, 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 of the button.
They’ve also come out with their incredible Retirement Planning Calculator that 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.
About the Author: Sam worked in investment 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.