Top 10 Reasons Why Financial Literacy Is CRITICALLY Important For Black Americans [2021]

 Living without financial literacy leads to several pitfalls, such as poor credit, bankruptcy, and foreclosure. Thankfully, Black Americans no longer must go through the dark and treacherous world of money without help. The Culture of Money is here for all Black Americans who want to educate themselves and achieve financial success. Before I share the reasons why financial literacy is important for your life let’s first define financial literacy.

Financial literacy is the foundation of your relationship with money. It is a lifelong journey of learning, and it can give you the tools to make better financial decisions.

To have financial literacy is to KNOW MORE. It is a skill that can make a huge difference in your life. Financial literacy means to know more about household budgeting, managing and paying off debts, evaluating the tradeoffs between different credit and investment products, and understanding key financial concepts such as compound interest and the time value of money.

The importance of finance in modern society cannot be overstated, and lacking financial literacy can damage an individual's long-term financial success. Sadly, the number of financially illiterate people is staggering, with research from FINRA showing that 66% of Americans are financially illiterate. There's an even higher percentage of Black Americans who are financially illiterate. 

Now, let's look at the ten most critical reasons for increasing financial literacy in Black Americans.

Top 10 Reasons Why Financial Literacy Is CRITICALLY Important For Black Americans

Here is a list of commonly observed grounds for increasing financial literacy in Black Americans with reasons and statistics. If you identify any of these in your life, you must be conscious about your financial success.  This list will help you understand what factors are associated with a higher risk for poverty and take the necessary actions and improve your chances for financial success. 

1. Black Americans set the culture of everything except money, but the narrative is changing! 

Culture is the customary beliefs, social forms, and material traits of a racial, religious, or social group. W.E.B. Dubois and others had a sense that the future of Black America relied upon the sacrifices of what was then their present Black America. We need to future-proof Black culture. 

Black Millennials and Gen Z's want more from Black culture. While they feel like they're fighting an uphill battle when it comes to achieving financial success. Black Millenials and Gen Z's are driving the new focus on financial literacy to achieve financial success.  

2. The deck is systematically stacked against Black Americans.

Even Black Americans who find themselves well above the poverty line are often unable to invest for the future due to systematic discrimination, crazy student loan debt, the rising cost of living, and often poor financial literacy and money behaviors. 

3. Black Americans have lower incomes.

Black Americans also live in a tension between "I want to do better" and "but ……". This internalized struggled can't be overlooked! The "but" on the minds of Blacks Americans would include the battle against widespread racial discrimination in the workplace. In 2019, Bloomberg magazine reported that the average Black woman in the US would have to work an additional eight months to make the same salary as the average white man. The importance of Black women and the role of provider they often play in Black American households can never be understated. Thank you, Queens!

4. Redlining and predatory lending practices are hurting the ability of Black Americans to achieve financial success.

 Likewise, middle-class Black Americans looking to obtain homeownership consider "but" when they are maliciously targeted for sub-prime mortgages and other predatory lending practices. Banks make it difficult for Black Americans to create wealth and only drive them deeper into a cycle of debt-slavery. 

5. There are too many poor Black Americans. 

According to talkpoverty.org, over 9.0 million Black Americans were living below poverty in the United States in 2017.

That's a staggering 21.2% of the Black population. 

6.  Black money habits are the result of too many negative childhood influences. 

Most Black Americans are raised in financial hardship and in communities where the person with “the most” money usually wears their wealth on their back and has minimal assets. 

Research shows that our childhood experiences shape us as we transition into adulthood and into people that develop "money scripts." People develop one of these scripts, which auto-plays and becomes the predominant attitude which most influences their financial behaviors.

Through experience and watching how others managed, most of what we've learned are money gimmicks. Most of what we saw were people hustling to make ends meet, sometimes by any means necessary. We default to a money script based on how we were raised and what we were exposed to, and therein lies the problem for Black Americans.

Download my free workbook to discover the mental reason why you can’t make money work for you. This incredible free resource will teach you to identify your money scripts which auto play every time you make financial decisions.

7. Budgeting advice is broken, and Black Americans know it! 

Most books about money, personal finance, budgeting don't resonate with us because they miss the point and are tone-deaf to our situation. Many of them provide the same advice, which is right in principle, but honestly, they don't know what we go through. Some of us may be able to adhere to their wisdom, and others can't. 

Many financial experts claim "you must save more money and live on a budget" while they ignore that Black Americans are still last hired and first fired. This is not an excuse, just a reality.

 I believe Black Americans have more of an income problem than a budgeting problem!

So, listening to the White privileged advice of Susie Orman or Dave Ramsey to start by building an emergency fund equal to three months of your salary is ludicrous and tone-deaf when you need to create more streams of income to turn your life around. Then talk to me about a budget! Black Americans’ financial success is tied to increasing income streams not cutting expenses.

8. The economy is just different for Black Americans after Covid-19. 

Prices have risen faster than incomes. Covid-19 made it worse. We have worked more hours than any other racial group since the founding of this country, and yet we have the least amount of wealth and the lowest per capita incomes! This is a critical time to start taking our financial success more serious.

The result of the ever-widening chasm between income and prices has dramatically decreased the net worth of most workers, but especially for Black Americans. This decrease has broadened the racial wealth gap, lowered the standard of living for most people, and increased the masses' debt.

Most Black Americans are not trying to have more -- well, not always, anyway. Our problem, by and large, results from trying to have what is needed to live. 

9. Black Americans need more than reparations and corporate responsibility to secure their financial success!

Black Americans can't wait on repartitions or good corporate citizenship to bring us financial success. We must take ownership of the one area where we have all the power – our level of financial literacy. 

We need to KNOW MORE!

Without better financial literacy and increased financial literacy, there will be no chance of Black Americans overcoming the racial wealth gap.

My argument is simple; it doesn't matter the amount of money a person inherits, earns, or is given. Without good financial literacy, they won't be able to maintain or grow their wealth.

History proves the financially uneducated usually lose most of what they gain, and they usually do so quickly.

10. Black Americans pass down very little wealth.

I can't say it any plainer than this: Asians and Whites have assigned assets and planned ahead to provide a legacy for their children with money, businesses, homes, and then some. Meanwhile, Black Americans and Hispanics are not planning for legacies or leaving their money or assets for their children. This is the wealth gap in its purest form.

The wealth gap will only increase if this no-legacy-planning trend continues.

We can argue all the factors and public policies and make all the prayers we want, but nothing will change until we change. The struggle is real for every Black American family.

Reasons 1-9 are behind why we don't Pass Down More. Every Black American, who can, should leave money. Every Black American must leave values that set others up for financial success.

How Black Leaders Can Improve Financial Literacy In Black Communities

It's clear that despite how far Black Americans have come, we still have a long way to go to reach financial health and true financial success. However, the good news is the sentiment for financial literacy and financial success is rapidly changing. Books like The Culture of Money are leading the movement for financial literacy to build Black wealth. My goal is to help as many Black Americans as I can to achieve financial success.

As I wrote The Culture of Money, I thought long and hard about providing better financial literacy, especially to Millennials and Gen Z's. We must find ways to keep them from falling into the same predatory traps that trapped Gen Xers like me. 

The three principles I teach in The Culture of Money are progressive: Know More, Own More, and Pass Down More. You can't pass down what you don't own, and you can't own when you don't know. 

Financial literacy, ownership, and legacy are everything right now. This is the pathway to achieve financial success. 

We start with KNOW MORE because financial literacy is true power. When our people are not being taught healthy financial practices, we will continue to fall into the same pitfalls. 

To change the narrative that people aren’t good with money, first, we must reach Black Americans where they traffic.

Where are the safe places where Black Americans gather? 

Where are the places of protection and refuge for Black Americans? 

Where are the places of healing for Black Americans?

What institutions act as guardians that are best positioned to help shape Black America into being the culture of money?

If you are looking for Black Americans that will benefit the most from solid financial literacy, you will find them in churches, salons, and at HBCUs. 

I've highlighted these institutions because they are the pillars of the Black community. These are the places where you can find our people. 

Now imagine a world where Black Americans are empowered through churches and local businesses to become financially educated? What would happen?

Not only would Black America Know More, but it would also begin to Own More and then Pass Down More. These more financially successful Black Americans would invest in those churches, businesses, and schools, which would spur immeasurable economic growth in Black communities. 

Secondly, we must reframe the field for Black leaders. A more robust financial literacy can only happen if leaders are equipped with financial literacy to be better shepherds and guardians of Black America.

That's right, pastors, hairstylists, and university deans are the leaders best positioned to positively impact the Black community and help them improve financial literacy. These institutional leaders are whom The Culture of Money seeks to activate and empower to help their congregants, customers, and students to KNOW MORE.

Imagine if All Black Americans Were Driven To KNOW MORE And Increased Their Financial Literacy

Let's dream a little bit together. 

Imagine if a trip to the barbershop included a brief lesson on entrepreneurship and generating passive income. 

Imagine if our HBCU's required financial literacy classes for a degree. Imagine if they offered more opportunities, like business incubators and cooperative arrangements, to pay off student loans aggressively.

Imagine if, after church on Sunday, you could attend a financial literacy class on Monday. 

Imagine if your church could offer a series of classes, give a certificate affirming your new financial literacy, and the church CDC invests in your startup or micro-business idea.

How many more Black Americans would achieve financial success?

That is my vision for Black communities. 

Our team is building out a step-by-step plan, classes, and programs for how The Culture of Money can better equip Black churches, business leaders, and institutions with the tools they need to offer financial literacy to Black Americans. We will provide a roadmap for how your church, business, or institution can spread financial success into your communities. 

On October 18, 2021, we will announce an influential new initiative that will bless so many people

I hope that you better understand why financial literacy Is CRITICALLY important for the financial success of Black Americans.

Are you ready to change that narrative?

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