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Black Americans often have greater wealth-building opportunities than previous generations now.
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First-generation Black wealth builders might not have been exposed to the value of financial advice.
It can be stressful to be in a higher financial bracket than your friends and family.
Your family’s bad experiences with money may make you hesitant to make certain financial decisions.
The Black community has had limited access to building wealth for many generations. Fortunately, there are more opportunities now for Black professionals to start building wealth than ever before. For many Black wealth builders, they are the first generation to have access to a higher income.
However, there are many hurdles to overcome when you are blazing your own trail. Without the proper planning and resources, it can be very challenging to overcome these hurdles on your wealth-building journey.
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1. Lack of access to financial professionals
For many Black people, it is very likely that our parents, grandparents, and great grandparents did not have access to a financial advisor or CPA. Because of many discriminatory policies, slavery, and more, many of our ancestors did not have the opportunity to build significant wealth and connections. This created a sense of self-reliance that has continued for many generations.
This may result in first-generation Black wealth builders making financial mistakes and not being as proactive with their finances. For example, a first-generation Black wealth builder may be stashing all their savings into a checking account at a brick-and-mortar bank that offers an interest rate of less than 0.5%.
This person would be missing out on some significant wealth-building opportunities, as they could be earning a significantly higher rate of return by investing this money or placing it into a high-yield savings account. Without the proper knowledge and resources, they may be missing out on many opportunities to enhance their wealth.
2. Isolation from peers with different economic statuses
When you reach a certain level of success, you may notice some distance between you and family members or friends. This may be because of your new hobbies and interests. For example, you may choose to splurge on high-end vacations or other luxury items while your family members may not be able to fit these items into their budget. This may cause you to feel isolated from some family members and friends.
It’s important to have a community of individuals who are of a similar status. You can still enjoy some activities with your family and friends while enjoying new hobbies and interests with those of similar status.
This could also affect your personal finances. For example, if you want to eat at an expensive restaurant with family members who earn less income than you, you may end up paying for their bill. If this is something you are comfortable with, just make sure that you include this as a line item on your budget. You do not want this to get out of hand and hinder your wealth-building capabilities.
3. Negative association with money due to upbringing
Money is a taboo topic for families across all income levels. If you come from a family that may not have had significant wealth, your viewpoint on money may be from a scarcity standpoint. Many first-generation Black wealth builders tend to sit on a lot of cash and have a fear of the stock market because of their upbringing.
The racial wealth gap can be partially explained by a lack of financial literacy in the average Black household. This creates a significant barrier to building wealth. Now that first-generation Black professionals are starting to build wealth, they must learn how to make informed and effective financial decisions.
4. Pressure to support others before securing your own financial future
Often, first-generation Black wealth builders find themselves trying to balance financially supporting others while building wealth and progressing in their careers. They may feel pressure and guilt to take care of the family members or friends that cared for them during their journey to success. As a first-generation Black wealth builder, family members may expect you to support them financially.
If taking care of your family is important to you, create a solid financial budget that supports that. However, take care of your personal financial household first. This includes building an emergency fund, automating savings for retirement, purchasing life insurance, and more. It is all about managing your life while taking care of your family in a way that supports your goals.