September 30, 2023

Building Generational Wealth

By: Chelsea Davis-Bibb, Ed.D.

CYPRESS-Generational wealth is defined as “any kind of asset that families pass down to their children or grandchildren in the form of cash, stocks, bonds, real estate, or even companies.” Generational wealth is important as it gives the recipients a financial advantage in life. Over the years, many Black people have struggled financially just to make it and get by. It has been hard for some Black people to save money for unexpected expenses, save money for retirement, and to pass assets to their children and grandchildren.

It has been recommended that 15% of an individual’s income should be saved for retirement, according to Forbes Advisor. It was also noted that more than one-fifths of Americans are not saving any money at all. With everything going on in the world today with COVID-19, unemployment rates, and inflation, it is getting harder for the everyday person regardless of color to survive.

However, when breaking down the racial inequities regarding Black people, there are many factors that contribute to why it is harder for Blacks to build generational wealth. For starters, Blacks continue to make less money than White people. According to the Economic Policy Institute’s Wage Report, in 2019, Black workers made 14.9% less than White workers. Sadly, education does not even help this wage gap with those who have obtained advanced degrees. According to Forbes Advisor, on every educational level, white workers were paid more than Black and Hispanic workers. In addition, Black women have it the worst because women in general are paid less than men, and Black women will already receive less pay because they are also Black. This is one reason why financial literacy is so important.

Jeremy Bibb, a native Houstonian who believes in financial freedom and passing wealth down to his kids stated, “I believe minority people are not financially educated and do not have the knowledge on how to build wealth and secure passive income for themselves. Instead, they get caught in the system that has them spending the majority of their time working only to make enough money to live check to check.”

Because of the racial wage gaps, this makes it harder for Black people to save and invest. The National Institute of Retirement Security noted that people of color who are close to retirement have an average savings of 30,0000 compared to Whites who have an average saving of 120,000. It is important that Black people not only save money, but to also find different ways to invest their money.

So how can Blacks build generational wealth? For one, Black people can start saving money. Go to the bank, open an account, and begin saving money. Whether it is $5 a week, or $50 dollars a month, any money saved is better than no money saved. Black people should also educate themselves about investment opportunities. There are other areas that can help build generational wealth such as keeping good credit and keeping your debt low. Having good credit will allow you to purchase different things that can be passed down like a house and keeping your debt low will allow you to save more money. Most importantly, Black people must educate themselves,

invest in themselves, and learn as much as possible since institutionalized racism will always be present. It is also good to be open with our youth and teach them good financial habits so that they can start saving and investing at a young age. This is why Bibb is working hard to not only build something for his children, but to teach them about financial literacy and how to become financially independent. Bibb stated, “I believe stock, Bitcoin, real estate, and true ownership can create a life for my kids, nieces, nephews, and loved ones where they can experience true freedom.”

Whether you are just entering the workforce, or close to retirement, it is never too late to start saving money. You never know when something unexpected will happen and you will need funds to support you. In addition, preparing for retirement should be a priority. Even though the future is unknown, it is always good to have a plan. Lastly, people should do what they can to pass something down to their children and grandchildren. Someone once said, “Build something that outlives you.” Build generational wealth!


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