By Rodney A. Brooks
I never had a conversation about money with my parents. Never. Even when I applied to colleges I don’t remember talking to my mother about the costs and how I would pay. We knew she couldn’t afford to help me pay college tuition. I figured it out – I made it through four years of college with a combination of scholarships, financial aid and income from summer jobs.
I went off to college without ever knowing what things cost, like the mortgage or a car note. I didn’t even know how to open a checking account. But I had to learn – fast.
Please don’t think I’m blaming my parents or any Black parents for their lack of financial literacy or not talking to their five children about money. It was almost taboo back then to discuss such things, even with children. It still feels taboo today for many Black families. But if you are not sitting down with your children and talking to them about money, finances and what things cost, you are making a big mistake.
Let’s start with a couple of startling statistics.
- The average Black family has a net worth of $17,000, one-tenth of the average White family.
- Only 34% of Black Americans own stocks compared to 61 percent of White Americans, according to the Federal Reserve’s last survey. Stocks and retirement plans are the primary way Americans build wealth, so that accounts for a big part of the racial wealth disparities.
- • Only 44 percent of Black Americans have retirement accounts with an average balance of $20,000 vs. 65 percent of White Americans who have an average balance of $50,000.
There are many reasons for these wealth disparities, and financial literacy only plays one part. Racism and discrimination have played a major role. But we must do a better job of preparing our children for a financial journey that we know will be difficult at best. And the best way to do that is to sit down with them and talk about money.
The finan¬cial lit¬er¬a¬cy gap begins early in life, according to The Annie E. Casey Foundation’s report, Financial Literacy for Youth. “White and Asian 15-year-olds, on average, have sub-stantially higher financial literacy scores, while Hispanic and Black
students have substantially lower scores when compared to their general population peers, as reported in the 2020 U.S. National Strategy for Financial Literacy.”
We know that some parents need classes in financial literacy themselves. But the basics of financial literacy is understanding the basics of money. And for children that might include understanding how much their parents earn, how much they pay for the mortgage or rent, what the gas and electric bill is or what they pay monthly for those family cell phones. The more we talk to our children about money, the better they will understand life.
A friend who is a financial planner and who teaches financial planning in an urban high school said he asked his class what things like cable television and utilities cost their parents, and they had no idea. Another friend who is an entrepreneur said not only did she know how much how mother earned, but her mom also made her write out the checks to pay the bills. That way she knew there was nothing left at the end of the month.
You may not be able to talk to your children about stocks and bonds, but you can talk to them about money. And do what you can to ensure that they take advantage of the financial literacy classes in high school or church.
If they learn about money, they will want to learn more. And the more they learn, the more they can teach their parents.
Rodney A. Brooks is a Texas Metro News Columnist and Senior Fellow at Prosperity Now. The author of Fixing the Racial Wealth Gap: Racism and discrimination put us here, but this is how we can save future generations, he has written for USA TODAY, The Washington Post and National Geographic.
