"At the bottom of education, at the bottom of politics, even at the bottom of religion, there must be economic independence." Booker T. Washington, ca. 1903.
A healthy community has financially stable residents. So, what if a community's residents are lacking "wellness"; meaning they lack the financial resources that contribute to a stabile community? For example, most are aware of the economic disparity related to black vs. white income. However, regardless of ethnic background, community economic wellness indicators are the same; household assets, local business enterprises, home ownership and community involvement.
The time is now, according to many financial specialists, to strengthen the economic well-being of African American communities. Brooke Stephens, well renowned author and lecturer has a 7-step prescription creating economic wellness for African Americans and the communities in which they live. Following are her suggested steps and supporting data from the Bureau of Census and other publications:
1. Create a wealth-building plan. African-American households increased 32% in median income between 1993 and 2000. However, net worth of blacks is one-fifth that of whites. A wealth building plan is a financial plan in which the major goal is to increase your household's net worth. This means practicing good money and credit management, setting goals, and understanding the bottom-line importance of asset building.
2. Invest in your dream every payday. Planning and saving must become an immutable rule of life. Start small, and then grow. Have different savings vehicles (from a piggy bank, cds and savings accounts, to bonds) that are for different goals.
3. Own your home. Home ownership is one of the most powerful tools to creating wealth. It creates a stable community, grows personal assets, and creates leverage for seeking other economic opportunities. Forty-seven percent of blacks own their own home; compared to over 56% for whites. The value of whites homes are an average $26,000 higher than blacks.
4. Invest in the stock market. In order to increase net worth, blacks will need to understand how to select, invest and maintain a portfolio of stocks or mutual funds. It is really not that hard to understand and there are many experts ready to assist.
5. Insure yourself and your dreams. African Americans live an average of six years less than whites, illustrating the need for African Americans to understand how to protect their families and financial dreams. Plan for retirement, understand the need to make plans for long-term care, know the best of life insurance, and plan for death with a will.
6. Own a business or invest in a business. If African Americans want to participate in the great bounty of America's free-enterprise system then more will have to join the ranks of being an entrepreneur. Choosing a business that can give the greatest return. The number of Black-owned business grew more than all U.S. businesses. However, black-owned business represents 1% of the total receipts for all business; partly because these businesses are in the service industry, which traditionally reaps lower profits.
7. Maximize your human resources. Lastly, Ms. Stephens states, "For various reasons, African Americans have historically devalued and underused their intellectual, physical and spiritual resources." Blacks must understand how to maximize their human capital by improving their professional skills to increase their earning power, insisting that their children get a good education and becoming an active volunteer in their communities, places of worship and organizations.
There are many reasons why African-Americans may not be economically well and getting well is not an easy pill to swallow. However, trying at least some of the remedies offered by Ms. Stephens can create economic wellness for individuals, their household and their community.
University of Illinois Extension has many research-based educational resources related to financial planning and consumer management that are available through our website:
