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7 Actionable Ways to Increase Black Wealth in America

Black History Month provides an opportunity for continued engagement with history. Beyond the stories of racism and slavery, it allows us to celebrate and honor the contributions of African Americans to the US. 

Notable figures often highlighted include Dr. Martin Luther King, Jr., who fought for equal rights during the 1950s and 1960s. Also,, Mae Jemison, the first female African-American astronaut to travel to space in 1992…

Apart from spotlighting Black achievements, there are other ways to honor Black History. These include supporting black-owned businesses, purchasing, reading, and sharing books by Black authors, and donating to charities that support anti-racism, equity, and equality.

However, this month and all year round, you can celebrate Black history by taking actionable steps to increase Black wealth in America. 

What is wealth?

Wealth is the total financial value of an individual, household, or community’s assets, less all the debts or liabilities. In simple terms, assets are anything of weight you can convert to cash, such as your home, retirement savings, and other financial investments like stocks and bonds. Liabilities include all your debts, including mortgages, student loans, credit card debt, and other additional money owed. 

Wealth differs from the income you receive from working (salary or wages) or as a return on investments. However, through saving and investing, you can turn income into wealth. 

So why is wealth important? First, wealth offers you stability and more choices concerning housing, education, nutrition, and so much more. Second, it gives you a cushion for dealing with an unexpected loss of employment or other unforeseen emergencies, such as medical expenses. Third, it offers a buffer against the unpredictability of life. 

However, most Black Americans face an uphill task in building wealth. Some of the reasons why building wealth is challenging include systemic inequalities, employment discrimination, and redlining which limited access to mortgages and homeownership. These have also led to a racial wealth gap that needs to be bridged.

What is the racial wealth gap?

The racial wealth gap represents decades of accumulated institutional and systemic racism, which bear significant responsibility for income, health, education, and opportunity disparities. 

The typical white American family has about ten times as much wealth as the typical African American and Latino families. In other words, while the median white household has almost $100,000-$200,000 net worth, Blacks and Latinos have $10,000-$20,000 net worth.

There is an ongoing conversation about reparations programs and other expenditure-based approaches to close the racial wealth gap. However, any program to close this gap has to contend with the reality of wealth concentration in contemporary America. The 400 wealthiest American billionaires have more wealth than all 10 million Black American households combined. Black households have about 3% of all household wealth. In comparison, the 400 wealthiest billionaires have 3.5% of all household wealth in the US.

As the racial wealth gap keeps growing, so do the gaps in educational resources and learning opportunities between high- and low-income families—also, the residential and educational segregation by income. Lower levels of wealth also make it harder to access credit. 

Different measures are being considered, including developing policies and programs to help bridge the gap. However, no single action can help close the racial gap or undo decades of systemic racial injustices. Here is what you can do to help increase Black wealth.

Increase Black wealth in America by fighting the wealth gap and promoting racial and economic justice

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 three 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.

Actionable steps to increase Black Wealth in your own home

Many societal, governmental, and individual factors affect wealth creation. For example, because of a lack of generational wealth, Black families are less likely to invest or have the financial support they need to put a down payment on a home. However, there are steps you can take to turn this around. They include:

Develop a financial plan: A financial plan provides a roadmap to get you from where you are to where you want to be. For example, if your goal is to own a home in the next 5 – 10 years, how do you intend to go about it? Once you set your goals, it’s easier to budget, reduce impulse buying, and make better financial decisions. The starting point to building wealth is to have a plan.

Start saving: Savings is one of the crucial aspects of building wealth and having a secure financial future. And you don’t have to start big. You can start saving as little as $10 every week and build this up with time as you get a better hold of your finances. 

Once you save a substantial amount, you can direct it towards different investment instruments, ensuring you maximize the return on every dollar saved. Thus, your money will start working for you, earning you a passive income. Automate your savings to make the process more seamless.

Build emergency savings: 

An April 2020 Pew Research survey indicated that 73% of Black adults had insufficient emergency funds to cover three months’ expenses compared to 47% of whites. However, emergency funds provide a cushion to help families deal with unexpected expenses or disruptions to income without falling back on debt. 

For families working on building wealth, these funds prevent them from tapping into their high-return assets to finance financial emergencies. Instead, you can choose to save this money in interest-earning savings accounts. Although the interest on these accounts is usually minimal, these funds will help you avoid costly borrowing or missed payments when unexpected events arise.


 Market participation is also crucial to building wealth. All investments carry an element of risk. However, you can mitigate this risk by diversifying your portfolio among different investment instruments such as shares/stocks, bonds, mutual funds, index funds, exchange-traded funds (EFTs, and options.

Also, while the stock market isn’t perfect, it is one of the least racist institutions. The market provides an equal opportunity: Blacks and Whites invest in the same stock, and the outcome is the same for all.

Taking advantage of tax advantaged retirement accounts

Retirement accounts and plan participation are essential channels through which families can build wealth and provide financial security in retirement. Retirement assets include individual retirement accounts (IRAs) that do not depend on the employer and employer-sponsored plans. Employer-sponsored plans include defined contribution plans and (DC) such as 401(k) and 403(b) plans and traditional pensions or defined benefit (DB) plans.

IRA and DC accounts are subject to preferential tax treatment, while DB plans guarantee a stream of income in retirement. Also, IRA and DC plans can only provide financial security in retirement if you accrue sufficient balances in the programs through investment contributions and subsequent returns on those contributions.

Buy a home

 According to Habitat, housing inequality is one of the significant contributors to the enormous racial wealth gap between Black and white household in the US. 

Housing is one of the most important components of increasing Black wealth in America. After all, home investments yields high financial returns on average and is a primary channel for building wealth and financial security in the US. Increase in Black homeownership is an excellent way to bridge the racial wealth gap.

However, the ability to purchase a home has built in obstacles created by the wealth gap. A significant amount of funds is required to make the down payment and cover the closing costs.

Consider starting a business or side hustle:

Black business ownership is vital in closing the racial wealth gap and increasing Black wealth in America. A study found that Black business owners have 12 times more wealth than Black people who do not own businesses. 

However, according to McKinsey & Company, there are less Black-owned businesses. Also, they are concentrated in sectors with challenge growth and profitability prospects. They also have limited access to capital, making investing and withstanding shocks very challenging. 

President Biden has pledged to reduce the racial business gap by increasing federal spending for Black-owned businesses. Also, his administration plans to commit an additional $100 billion to small disadvantaged business owners. So, if you have a hobby that you can turn into a side hustle, this is the time.

Increasing Black wealth in America

Other ways to overcome the racial wealth gaps include increasing your financial literacy to make better financial decisions. Increase your income by upskilling and improving your qualifications. Also, network to increase your visibility to help your career progression. Negotiate higher pay because the more money you make, the more you will have to save and invest.

The racial wealth gap is a complicated issue with no easy remedy or solution. Black households may undoubtedly feel like the world’s weight is on their shoulders. Contemplating history and the opportunity to change the future and how it affect their descendants is no easy task. However, taking steps to build your wealth is an excellent place to start in narrowing the wealth gap. So, start small and keep going; it will eventually make a significant difference.

Related Reads

What is a Wealth Gap?

5 Ways to Fight the Wealth Gap

Let’s Demand a Better Future

Black Women Equal Pay Day: What You and other Investors Can Do to Close the Gap

What Women Need to Know About Personal Finance to Overcome the Wealth Gap

Image of the author of this article, Nyamonaa Agata.

Nyamonaa Agata is a content writer specializing in creating value-based, search-engine-optimized content for informational and marketing purposes. With over five years in the banking and financial services industry and an MBA, she has an extensive background in writing on personal finance, investment, fintech, B2B, and B2C topics

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