Black Canadians face several hurdles to generating financial wealth. In many communities, Black individuals usually make much less than their white counterparts. A study conducted by McKinsey Global Institute revealed that today’s median annual wage for Black workers is approximately 30 per cent lower than that of white workers in the United States.
Given the vast disparities, how can you ensure that your hard-earned dollars are working for you and that you have enough money for your children in the future? Consider a few strategies to ensure that every dollar counts.
Become Adept at Financial Planning
Studies suggest that Black individuals are 50 per cent less likely to have a will compared to other ethnic groups. Many Black Canadians do not have an estate plan or a will that ensures the financial security of their loved ones once they pass. In our day and age, it is important to have an estate plan that shows how your assets can be distributed if something happens to you.
Estate planning encompasses more than just money; it includes your belongings and even your digital assets. If you don’t have an estate plan ready yet, you can start by creating a financial plan for the next 5 to 10 years. This is a great way to familiarize yourself with your assets.
Start a Business or a Side Hustle
A wise way to generate wealth is by starting a business or a side hustle. Not only does this allow you to invest in your talent, but it is also a great way to familiarize yourself with your own finances. It can teach you the importance of balancing the books, managing projects, and the true value of investing in yourself. When you learn the ropes of financial planning, you will be adept at transferring these soft skills to the younger generation, which in turn allows you to transfer bigger entities like other businesses, firms, and limited liability companies (LLCs).
Invest in the Stock Market
Saving money as a liquid asset, or cash, will only get you so far. Investing in the stock market, on the other hand, pays dividends. A study conducted in the United States revealed that many Black Americans only started to invest in the stock market in 2020 after the pandemic hit. Unlike others, many Black individuals are not familiar with investing in the stock market. Having a registered retirement savings plan (RRSP) is another way to ensure that you have some funds saved for the future for a rainy day; it can also spell the difference between having a great retirement or one filled with struggles.
Become Fluent in Your Finances
Financial literacy is the key to taking ownership of your finances; it can mean the difference between building generational wealth and getting stuck in debt. One of the best ways to become financially literate is to familiarize yourself with your finances, which can be easier said than done. Nevertheless, there are several online resources that you could use to help you along the way. Financial literacy is an ongoing skill you need throughout your life, so never underestimate its value.
Be Proactive in Reducing Student Loan Debt
A college degree can open doors to more work opportunities with higher pay. Student loans are the key to making that possible. Once your loan term ends, you need to make payments to your lenders or the educational institution to repay the loan. Many Black students struggle to pay their student loan debt. As a Black student, you can choose to refinance your student loan. You can also reduce debt by choosing to open a college savings account. This secures your child’s future and allows you to contribute to their education throughout different stages of your life. Making conscientious decisions and investments now will help you secure your financial stability for the future and that of future generations.
It is no secret that Black communities face obstacles to building generational wealth. By putting these strategies into action, you can take charge of your own future and help close the racial wealth gap.
David Messiha | Staff Writer
