by Sami Miller
The wealth gap is a significant issue in the United States. A recent report from the Institute for Policy Studies found that the wealth of the three wealthiest Americans is more than that of the bottom 160 million people combined.
Overall, women in the United States own 32 cents to every dollar owned by men. When you further segment this based on race, the gap widens: Black and Latinx women own one penny.
This massive divide between the rich and the poor is a significant contributor to economic inequality and must be addressed to create a more equitable society. What can you do as an individual to minimize the impact of the wealth gap?
Here are five ways to fight the wealth gap:
Become Financially Literate.
In order to close wealth gaps and shine a light on economic opportunities, financial literacy is critical.
One of the ways that the wealth gap gets more extensive is because we don’t understand the financial system: this could be stocks all the way to negotiating a salary. Having a knowledge gap means that women and minorities are already at a disadvantage in a system that has been predominantly designed by men. Most of us are at the catchup phase.
In general, when it comes to money, most people feel like they are in the dark. We are not educated in how other countries are: a financial literacy curriculum is only required in 50% of schools across the United States. Our literacy level also depends on our home lives: do our parents talk to us about money? Do our parents actively engage us with household finances? Our finances even spoken about between our parents?
Financial education differs significantly, but it’s a known fact that women and minorities are less educated about their finances.
So how does one become financially literate? Easier said than done, right?
Well, you are already off to a good start by reading this blog. Reading any and all financial advice you can is an essential first step. The second is filtering that advice against all of the bad advice out there because there is A LOT. If there is a particular topic you are interested in, seek out experts to help you understand. Interview these experts, like CPAs or bankers, to ensure they are the right fit for you.
Sounds like a full-time job, right? Unfortunately, for many of us financially undereducated, it might seem that way. But the opportunities that open up could change your life.
Talk about Money
Talking about money goes hand in hand with becoming financially literate.
Many women feel too intimidated to talk about money with their peers: it’s something that, like politics and religion, we just don’t talk about. Instead of sharing our knowledge and mistakes, women tend to keep money issues to themselves. This is especially true in the workplace: whereas men might freely speak about their salaries more on average, women don’t.
Talking about money isn’t easy, and we aren’t here to say that it is. It’s hard. It’s going to feel uncomfortable. But it’s one of the many steps that everyone can take to reduce the wealth gap among all generations.
Another way that you might already be talking about money but not realize it, is through your politics. Decisions that you make when voting in local, state, and national elections matter. Don’t have financial literacy in schools, but you think it should be? Start a petition or talk to your local city leaders. Want to see fair workers’ wages? Support policies that increase workers’ salaries.
Women invest less than men.
According to Nerdwallet and news outlet NBC12, 48% of women actually invest in the stock market, compared to 66% of men.
Most of that comes down to educating girls and boys about finances. Whether it’s in the home or at school, little and teenage boys are much more educated about how the stock market works and all of the math-related information. (How many of the women reading this shied away from this in school?!) Although this imbalance has been a focus of many schools, this education problem persists at home, depending on the family structure, investment in financial education, and much more.
One of the best ways that women can help themselves is to invest their money! Since most of us don’t have millions of dollars, it’s good to start small. Consider retail investing before getting into more hardcore investing. We tell you how to get started here.
Protect your legacy and get insured
Legacy planning is a financial strategy that prepares people to pass their assets to a loved one. If you can leave behind an inheritance to your descendants, that constitutes generational wealth. Your strategy for creating generational wealth is derived from your ability to implement a strategy where your loved ones lose as little as possible in the transfer of wealth.
Even if you’re on the path to building wealth – paying down debt, buying your first home, joining the company’s retirement plan – there are some basics for you to consider for the long term. It’s why we built an interactive checklist in the Nav.it money tracking app. In this checklist, we talk a lot about insurance.
Not having insurance costs more money in the long run.
Most people think that insurance means health insurance, but there actually many types, including:
- Auto Insurance (We really hope that you have this one since it’s the law!)
- Homeowners/renters insurance (Also a law in some places, strongly encouraged in others.)
- Identity Insurance (You might have heard of this.)
- Long-Term Disability Insurance (Some jobs offer this, which is why you may know it)
- Long-Term Care Insurance (Do I need this… I’m only in my twenties!)
- Term Life Insurance (What?)
- Pet Insurance (Yep, this is a thing and possibly a good thing to have.)
- Travel Insurance (This literally saved budgets at the start of the Pandemic.)
We won’t talk about each one here, but check out our breakdown here.
If you live paycheck to paycheck, another expense could be daunting. Or maybe the prospect of having to become educated about the different types of insurance gives you anxiety. Or both.
Having the right insurance and proper amount of insurance helps you to avoid a financial disastor. You pay monthly towards something like renter’s insurance that will pay for your stuff in the event of a fire. Or pet insurance will help you cover that expensive medical treatment to save your best friend. If you aren’t in a financial situation to pay for these events yourself, insurance is a bridge.
That bridge means fewer people fall below the poverty line because of events they can’t control. It also insurances that people who are below the poverty line don’t become homeless. Our financial system is a beast that doesn’t care what happens to you: insurance helps prepare you and preserve the wealth that you can accumulate.
Promote racial and economic justice
Being an advocate for policies that help close the wealth gap just makes sense.
There are no one sizes fits all ways to become an advocate for racial and economic justice, but it is necessary to close the wealth gap. Many women and minority groups are working every day to change the world, and one of those ways is through financial literacy, justice, and everything in between.
To start, here are two organizations and one person that are working towards racial and economic justice that you should know.
Global Citizen: Organization dedicated to fighting poverty, inequity, and climate change.
Jemar Tisby: Author of “How to Fight Racism.” a handbook of actionable steps to combat racism.
American Civil Liberties Union: Organization that takes liberty and justice for all straight to the courts.
There is no one-size-fits-all solution to the wealth gap, but by working together, we can create a more equitable society for all.
Wealth Gaps: Women aren’t the Only Ones Impacted
What Women Can Do to Close the Wealth Gap
Improving Your Financial Literacy
The Importance of Legacy Planning
What Investors Can do to Fight Racial Inequality
What Women Need to Know About Personal Finance to Overcome the Wealth Gap