One of the good things to come out of the pandemic is the increased awareness of the injustices and racism African Americans and Blacks face. Unfortunately, the average net worth and average income for African Americans remains below most racial groups.
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 2022, 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 (Blacks)
According to the Urban Institute, the average net worth of African Americans is $19,049 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 net worth for African Americans is $95,261 and the median net worth for African Americans is just $11,030.
Average And Median Income For African Americans
Now let’s look at the latest income by race data provided by the Census Bureau. The average income for African Americans is about $45,000. The average income for Hispanics is at roughly $56,000 which correlates with the retirement savings by race chart and wealth charts above.
Asian median household income leads the way at roughly $98,000, or roughly 30% higher than White median household income of $76,000.
A 100% difference between the highest average income ($98,000) and the lowest average income ($45,000) is significant.
The reasons for the huge income by race discrepancy is likely due to decades of systemic racism, educational attainment differences, and household structures (single parent or dual parent).
Median Income For Black Americans
Here’s another chart from Statista that shows the median income for Black Americans is about $48,000. The data is from 1990 to 2021. The median income for Black Americans was lowest in 1992, when they made about $35,500 a year.
Median Annual Earnings For Black/African Ancestry Groups
Here’s another great chart that shows the median annual earnings for full-time, year-round Black/African ancestry groups in America as of 2019.
It’s interesting how Ghanaian, Nigerian, West Indian, Barbadian, Trinidadian/Tobagonian, and Jamaican African-Americans her more than the median Black or African-American in America.
Racial Makeup Of Personal Finance Readers
Let’s start with education data using this site, which gets over 1 million visitors a month. Financial Samurai was started in 2009. Here are the results of a survey about race filled out by over 3,000 people.
- Financial Samurai’s readership is 35% Asian versus 6% for the US population as a whole.
- There is a 5.3% underrepresentation of African American readers (7% FS readers are Black vs. 12.3% of US population),
- There is a 11.3% underrepresentation of Hispanic readers (5% FS readers are Hispanic vs. 16.3% of US population),
- Finally, there is 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. Perhaps one of the reasons why Asian American income is highest is due to the strong emphasis on financial education.
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. It seems clear there’s a correlation between higher income/wealth and reading personal finance articles.
If you care more about money, you will likely spend more time learning more about how to earn more money and grow your wealth through passive income investments.
A Solution To Increasing The Average Net Worth And Income For African-Americans
One solution to improving the average net worth and income for African Americans is to read more about personal finance. Engage in a community that challenges each other to get richer every week.
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.
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.
Financial Education Is Key To Building More Wealth
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.
Not only do I think reading and learning daily about personal finance will increase the average net worth and income for African-Americans, it will also help all Americans.
You can sign up for my weekly free Financial Samurai Newsletter here. It’s free and will help you stay motivated to build more wealth. I’ve been helping people boost their net worths since 2009.
Obviously I’m biased, but I highly recommend you purchase a hardcopy of my instant Wall Street Journal bestseller, Buy This, Not That. It will be the most in-depth and education personal finance book you will eve read.
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. Family, health, and happiness are what matter most. And when your finances are really good, you can even spend your time and money helping other people.
Achieve Financial Freedom Through Real Estate
Whether you are Black, Asian, White, Hispanic, or Native American, I highly recommend investing in real estate to boost your wealth. Real estate is a tangible asset that is less volatile, provides utility, and generates income.
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. Both are free to sign up and explore.
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.
Manage Your Finances Carefully
Despite a low average net worth for African Americans, this can change through better wealth management. 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. This way, you can see where you can optimize.
Before Personal Capital, I had to log into eight different systems to track 33 different accounts. Now, I can just log into Personal Capital to see how my stock accounts are doing. I can see 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. It has helped me save over $1,700 in annual portfolio fees I had no idea I was paying. Click on the Investment Tab and run your portfolio through their fee analyzer. Out come the results.
Personal Capital also has an incredible free 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.
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. The Average Net Worth For Black Americans is a FS original post.