Challenging misconceptions and stereotypes in class, household income, wealth and privilege

“It seems to me that in general white people are content to eat soup and sandwiches if it means buying a house instead of having the latest fashions, and driving the fanciest car.”

First of all, I hope the opening quote didn’t offend you. It was a part of an actual discussion with my father – one of many, and you’ll see its relevance later on. The first principle of my blog is “Creating Ecosystems of Success” which in short means showing others how to be successful, keeping in mind that what’s considered successful varies from person to person. The second piece I published on the Examiner titled, Challenging misconceptions and stereotypes in academic achievement, revisited one of my earliest lessons about academic success. In short, my father pointed out that academic success was merely a function of priorities and time invested, not the inherent ability or genetics of a particular race – something which helped me become a stronger student later on.

With two other principles of my blog being “The teaching of Financial Literacy/Wealth Building”, and “Long-term thought”, I’ve crafted a similar piece discussing how our ideas and misconceptions shape our financial lives, and how we see the financial lives and privileges of other ethnic groups/races. Relatively recent data shows that while black families still have half the average median income/net worth of white families, Asian families seem to have caught up to those same white families and have even surpassed them. As a black man myself, I’ve wondered if Black-Americans should look around at all of the other ethnic groups in the United States, as opposed to solely focusing on White-Americans, in terms of financial success and all that comes with it.

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“All of that state and federal money is going to those white folks. The black folks aren’t getting anything.” I’ve heard these and similar discussions frequently growing up during holiday dinners, and even today from my elders in my mother’s generation when discussing current events in my home city of Buffalo, N.Y. For some, Buffalo is a segregated, “non-progressive” city as described in the story of my blog, and it forever shaped the outlook of my mother and her peers.

Actually, many discussions with my father, who is from Harlem, were also peppered with broad brush discussions of “white people”, “them”, or “they” in unflattering ways – usually about the oppression of black people, and white people having unfair competitive advantages in life. The opening quote of this post was from a discussion he and I had about spending habits and race. Are my parents, grandparents, aunts, and uncles racists? No, I don’t think they think black people are superior to other races, but they did experience segregation and Jim Crow causing a residual level pain, a distrust of white people, and arguably some bigotry of their own. Yes, even if only to a small degree, I do think black people can also be bigoted.

In hindsight, we never discussed how or what Arabs, Asians, and Hispanics were doing – only white people. We knew that most of the stores in our neighborhoods were owned by other ethnic groups, but we mostly talked about the, “white folks.” It was a singular focus which compared black and white, mostly talking about black people being disadvantaged and powerless. It seldom, if ever, came up that there were multiple classes of black people – some which were winning in life, had been doing so for a long time, and had some privilege of their own.

There were, in fact, affluent and privileged black people, though my family didn’t affiliate with them much. It wasn’t until I went off to college that I started to see that there were alternate realities. Lawrence Otis Graham’s Our Kind of People: Inside America’s Black Upper-class periodically pops up in my writings. Highly criticized for celebrating America’s black upper-class, it was an important work for me personally because it let those of us who didn’t grow up in that class know that it existed – something as a black person you encounter and must reconcile in cities like Washington, DC, where I now reside. Some of these people were born into the upper class through generational wealth and inheritances, while others climbed there through digging in, sacrificing, and doing some things that other ethnic groups had done – things that were considered in some circles to be “white.” The children of these black families had privileges I didn’t have.

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“The person who wrote this, are they white?” my godson asked me.

As described in my post titled, We should have bought Facebook and Bitcoin Stock, a mentor gave me a copy of the book How to Turn $100 into $1,000,000: Earn, Invest and Save. I started giving copies of the book to the younger people in my circle so that they could have a head start on some of the important concepts I only started learning in my late twenties – “Compounding Interest” for example, covered in Chapter 8. One of the lucky recipients was my godson.

I had just read a passage to him from the end of the book. The subsection was titled, “You made a million dollars? Great. Now Zip it”. The section warned against, “playing the high roller to impress people,” which could, “make you look like a fool” and, “invite theft.” I didn’t anticipate his question, but it was very telling about my godson’s world view – a teachable moment which I’ll return to with him in the future.

After asking him about his question, he told me that the passage I read to him sounded like a, “white way of thinking.” I first told him that it seemed that at 14 years of age, he’d started recognizing that there were differences in the value systems of different ethnic and racial groups – in this instance black people vs. white people. In terms of values, our people are known for frivolously spending their resources, flaunting their wares (many only depreciating) – signaling to one another as described by Dr. Boyce Watkins. I then cautioned my godson that not all white people are wealthy and that some were in fact poor. There were also some black people who were wealthy from things other than athletics and entertainment.

What was my godson growing up seeing in Prince Georges County, Md., the wealthiest black county in the United States? I’ll just say that earlier that day, I watched as many of the people at his house gushed over his blue and white Air Jordans – the ones with the shiny colored toes. They were enamored with name brand sneakers, clothing, and other symbols of money and perceived power – again many which only depreciate in value. I’ll stop there. In short, the values he was experiencing daily didn’t dictate keeping any material prosperity he would achieve quiet as it was a white way of thinking.

* * *

I first thought about Asian-American wealth last year when someone on Twitter shared an infographic stating that Asian-American wealth has steadily grown, while their voter participation had stagnated. The point of the tweet was that while Black-America has been one of the more vocal groups during elections, and in civil rights/social justice arenas, we haven’t significantly closed the wealth gap with White-America (as a group). The implication of the tweet was that black people as a group were focusing on the wrong things.

I found some interesting data in a report by the Pew Research Center titled On Views of Race and Inequality, Blacks and Whites are Worlds Apart. While the report mostly compared black people and white people, it also included some data on Asians and Hispanics. I’ll start with the figure titled “Whites are more likely than blacks to have a college degree”. It showed that 36% more white U.S. adults ages 25 and up had college degrees versus 23% of blacks in 2015. Interestingly 53% of Asians-Americans had college degrees – a greater number than whites.

A subsequent figure titled “Racial gaps in household income persist” showed that in 2015, blacks and Hispanics had median adjusted average household incomes of roughly $43,000. Whites had a median adjusted household income of $71,000, and surprisingly Asian-Americans had a median adjusted household income of $77,900. According to the report, Asian income has been on par or exceeded White income since 1987. Asian-Americans weren’t tracked in the report prior to 1987 so it’s not clear where exactly they started as a group. The gap between blacks and whites has steadily widened since the 1970s.

The figure titled “Blacks are twice as likely as whites to be poor, despite the narrowing of the poverty gap” showed that in 2014 the percentages of blacks and Hispanics in poverty was double that of whites and Asians. The next figure showed that whites have 13-times more wealth (net worth) than blacks in terms of household – $144,200 versus $11,200 for blacks. No data were presented on Asian-Americans. The figure titled “Homeownership is more common among whites than any other racial group” showed that whites led in homeownership, followed by Asians and then Hispanics and then blacks. Further data showed that blacks led in unemployment, versus the other three groups. Lastly blacks led in non-marital births, children under 18 living in single-parent households, and finally declining rates of marriage.

There was an interesting 2014 article from CNBC, written by Hailey Lee titled, How Asian- Americans are transforming the face of U.S. wealth. The article cited data from the Federal Reserve showing that Asian-American wealth had changed dramatically since 1989, growing to 70% of that of whites – $91,440 vs. $134,088. A subsection of the article titled “What came first: Wealth or education?” discussed whether or not the increased attainment of education could account for this gain in wealth.

The article stated that, “In 2013, 73% of Asians aged 35-39 held a degree beyond high school. That percentage was 54% for whites, 36% percent for blacks, and 23% for Hispanics. The disparities grow when looking at individuals with at least a four-year college degree: 65 % (Asian), 42 % (white), 26 % (black), and 16 % (Hispanic).”

In the section titled, “The wealth effect”, the article further stated that, “When Charles Emmons narrowed the data set to examine Asians younger than 62, both levels of median income and median wealth surpassed whites. This implies that younger Asians tend to be financially stronger than older Asians. And older Asians compared to their white counterparts, are weaker financially.”

“There’s a huge population of hardworking, educated Chinese who look to the U.S. for real estate investment,” said Elizabeth Schwartz in the Washington Post’s article titled Wealthy Chinese buyers are a growing force in U.S. real estate markets. “But they come to this market (New York City) not with money to just throw around, but rather to make informed, well-reasoned investment choices.” I looked up this article because I’d heard in recent years that there were lots of foreign investors buying up U.S. real estate in the aftermath of the great recession. One of the most prominent groups being Chinese Nationals whose average home price in 2015 was $831,800 compared with $499,600 for all other international buyers according to the Rosen Consulting Group.

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So, what does all this data mean? First, as Black-Americans our measuring stick is often White- America, but the data out there suggest that the time has come to start looking around and tracking other ethnic groups, and inquiring about how they’ve gotten to where they are in such relatively short periods of time. In my hometown of Buffalo, N.Y for example, on the eastside where I grew up, none of the stores are owned by the black people who live there. The owners are from the Middle East, and they’re able to effectively run their businesses and coordinate with one another – all while growing steadily wealthier.

I didn’t know that Asian-Americans had made such strides in income/wealth. With all of the talk about white wealth and privilege, I thought whites would have been the leaders in these areas. As described in my Challenging Stereotypes and misconceptions post, Asians are perceived as an extremely hardworking group. Malcolm Gladwell dedicated a whole chapter to their work ethic in Outliers. Their attainment of college degrees in comparison to other ethnic groups is noteworthy, but it’s also important to consider what their degrees are in – probably the STEM fields.

They also seem to be very entrepreneurial, and I’m not speaking exclusively about their restaurants. Again, if you look in many black communities you also see an abundance of beauty supply and nail shops. Lastly their spending habits and marital rates are probably also important factors.

In closing, stereotypes and misconceptions are very dangerous in that they can enforce false narratives and world views. Those false narratives and views can lead whole groups of people in the wrong direction over long periods of time, setting them back for generations. Lastly, they can create false targets and goals to emulate and pursue – hence the power of political groups and the media.

Thank you for taking time out to read this blog post. If you’ve enjoyed this post, you might also enjoy:

Challenging misconceptions and stereotypes in academic achievement
Your net worth, gross salary, and what they mean
We should’ve bought Facebook and Bitcoin stock: An investing story
The differences between being cheap and frugal
Mother’s day 2017: One of my mother’s greatest gifts, getting engaged, and avoiding my own personal fiscal cliff
Father’s day 2017: Reflections on some of dad’s money and life lessons

If you’ve found value here and think it would benefit others, please share it and/or leave a comment. To receive all of the most up to date content from the Big Words Blog Site, subscribe using the subscription box in the right hand column in this post and throughout the site. Lastly, follow me on Twitter at @BWArePowerful and at the Big Words Blog Site Facebook page. While my main areas of focus are Education, STEM and Financial Literacy, there are other blogs/sites I endorse which can be found on that particular page of my site.

Your net worth, your gross salary, and what they mean

Note.  The subject matter of this blog post is not new.  It has been known for years by those who learned about it in their families, or who have discovered it on their own.  It’s simply a discussion from my personal perspective which I think is worth visiting.  The pictures displayed throughout this post are from the eastside of my hometown of Buffalo, NY.  My first money lessons started there – a lot of what not to do, and they capture the essence of some of the money challenges facing my brothers and sisters in my hometown and across the country.

Life is literally a lottery and regardless of your color or nationality, one of its immutable truths is that you can’t control the family you were born into.  You can’t control the parents you are born to, which likewise dictate the privileges and advantages you have access to.  We often think of privilege in terms of black and white (White Privilege), but there are also black families that have privileges over other black families.  The family you are born into in large part guides your start in life, the information, and the values that will dictate your early life choices – good or bad, though they don’t necessarily shape all that comes afterwards – a good thing for some.

Neither of my parents talked about what a Net Worth was when I was growing up.  As described in the Big Words Blog Site Story, my mother and her siblings were first generation college students – descendants of parents who were a part of the Great Migration.  My father’s situation was similar.  They were children of the Civil Rights Era, and thus the big goal for them was earning college degrees and then securing stable jobs on equal footing with their white peers.  That for them was winning and it was also a surpassing of their elders.  For those of us born from their generation (Generation X), going to college was also expected, but what would be the next level for us?  What was winning for our generation?

These days I have a lot of discussions with via text messaging with my brother Amahl, and three close friends from Hutch-Tech High School in Buffalo, NY: the twins Alim and Raheem Gaines and our other buddy, Hestin Brown.  All week long we discuss topics including sports, politics, and some of the silly stuff we see in the media, on Black Twitter and on Facebook.  We discuss social issues as well, particularly as they relate to the black community.  We’re a “Black Male’s Support Group”, or even our own little “Think Tank”.  Recently in a group dialogue that started out with a controversy regarding Tyrese Gibson’s spouse and whether she was actually black, something else much more important came up; the concept of one’s net worth.

Alim cited something he heard about listing what black men in the United States earn in terms of average gross income.  I responded wondering what the breakdown was for black women and Alim on cue cited the 2010 study by Mariko Chang describing Black and Hispanic women having average net worths of only $100 and $120.  I quickly pointed out that there was a difference between one’s gross income and their net worth.  My brother, the eldest in our group, asked what a net worth was.  For perspective, we’re all just above the age of 40.  Alim and I both knew the answer and gave it.  I shared that I was first introduced to the term in my late 20s, but didn’t completely grasp it until my mid-30s – very, very late in the game.  I pondered the fact that my brother still hadn’t grasped it yet – not a knock on him by any means, just our life’s circumstance.  I then wondered how our own life decisions would have been different had we known this important concept in our teens.

Just briefly, your net worth is the numerical difference between what you own and what you owe – your savings and your assets minus your debts and obligations.  Your savings are self-explanatory – the amount of liquid cash you have available and can access quickly.  Assets can be anything from securities such as stocks, gold or silver, real estate investments, equity in your home, or profitable businesses.  If you’re an employee, a major contributor to your net worth is your retirement savings – that’s if you’ve been disciplined enough (and able) to steadily set money aside.  Debts are self-explanatory as well.  Common forms of debt are: credit cards, car notes, mortgages, home equity lines of credit, loans against your retirement savings, etc.

I only started learning about what a net worth was in my late 20s, out of curiosity and chance.  Books like the Rich Dad Poor Dad talked about it, in addition to the Millionaire Next Door.  In Dave Ramsey’s Financial Peace University (FPU), the term is not explicitly addressed, but FPU’s ; ‘Baby Steps’ ultimately lead to a steadily increasing net worth.

Okay, so what’s the big deal about this somewhat abstract and nebulous term that only few understand?  The answer is that your net worth is a metric of your wealth which is very, very different than your gross salary.  This is a critical distinction because a high gross salary doesn’t necessarily translate into a high net worth.  A person or a couple can have high gross salaries and still have a negative net worth(s).

In Black America we’re often enamored and impressed with individuals who make six figures.  Similar to one’s occupation, making six figures by itself can be deceptive.  You would assume that a medical doctor, a lawyer, or a news anchor would be very comfortable, but not necessarily – the same is true for someone who makes six figures.  Imagine if a person has a gross salary of $100,000 and their expenses are $95,000.  They’re still essentially broke right?  Beyond a certain point, your gross income is what Malcolm Gladwell in his book, Outliers, calls an ‘Entrance Criteria’ – an attribute that allows you entry into a club, though it isn’t a predictor of greatness.  ‘Excellence Criteria’ is what separates the great from the average and the underachievers.  These are the things that allow one to become wealthy in this case.

Contrary to the images we’re bombarded with in the media, the excellence criteria for building your net worth don’t necessarily involve a lavish and high consumption lifestyle, but instead being frugal and careful with one’s money.  Dr. Thomas Stanley wrote extensively about this in his Millionaire Next Door series.  This means that many people are chasing after the wrong things in life and not knowing it until it’s too late.

What are some keys to growing your Net Worth?  Some of them include:

  • Budgeting one’s money and controlling costs – learning to run a surplus vs. a deficit;
  • Saving money gradually in an emergency fund, retirement and then potentially for investments and;
  • Carrying the least amount of debt possible.

What are some keys to keeping and maintaining a low/negative net worth?  Some of them include:

  • Spending more than you earn – spending everything you earn;
  • Not saving anything and;
  • Carrying large amounts of debt – particularly on the things that lose value or don’t justify borrowing the money – cars, sneakers, and degrees which don’t lead to well-paying jobs.

In his Rich Dad Poor Dad series, Robert Kiyosaki actually defines wealth as the amount of time one can go without working while still being able to cover expenses.

But what are the greater implications of growing your net worth and wealth?  They can position you to do things like build businesses.  They can be used to donate to charities, and to give other students, for example, the chance to go to school to better themselves – something sorely needed in Black America.  This is the importance of organizations like the United Negro College Fund for example.  They can be used to fund political candidates and campaigns, and have a true seat at the table when national and local policy decisions are made.  At the end of the day, politics is all about money right?

In Black America right now discussions, like the ones my buddies and I have, are actually taking place about the differences between having a high net worth and having a high salary – again two things which don’t necessarily correlate.  One gentleman on Twitter, a Nigerian I think, who regularly beats the net worth drum often rebutting people who think they’ve made it because they’ve attained a high gross salary and have luxury items like Mercedes Benzes and BMWs.  While these are prestigious toys, they gradually lose value and deceptively don’t translate into wealth.

The interesting thing about one’s net worth is that it can’t be negotiated with one’s employer – it’s something that must be decided and acted upon by the individual once they understand it – like choosing to eat healthy or choosing to continue to eat an unhealthy diet.  It can’t be legislated or forced upon groups of people, nor should it be.  It’s a personal choice just like practicing a religion or choosing a spouse.  Speaking of which, I’ve read that judges actually consider a couple’s net worth during divorces and usually just split everything down the middle – a source of tension particularly when one of the spouses hasn’t earned the assets being split.

“Tasha and Ron are living large.  She’s a School Administrator and he’s a Fireman,” my mother said about couple in their 40s who are friends of the family.  She was looking at their professions and what she thought their salaries were and concluded that they were winning financially.

“Actually you don’t know that, Mom,” I said in reply.  “People can look like they’re making it on the outside, but without knowing their savings, their bills and their debts are, you don’t really know how they’re doing.”  My response echoed Robert Kiyosaki’s books where he stated that an individual’s financial success is actually dictated by their income statement and balance sheet – two things you can’t see by looking at someone – but things banks weight highly when qualifying individuals for mortgages or business loans.

What prevents individuals from growing their net worths?  Several things actually.  One is ignorance.  If no one ever tells you about it and you don’t stumble upon the information, you’ll never know.  Secondly, personal choices prevent one from doing it.  It takes discipline and drive, and many individuals lack those.  As a man, if you’ve recklessly had a bunch of kids and are bogged down with child support payments, you’ll probably never get there.  If you’re a single mother also with many kids, you’ll also have a hard time getting there as well.  It’s not impossible, just exponentially more difficult.  In one of his videos, Dr. Boyce Watkins stated that the average cost of a child is $250,000 up until it turns 18 years of age.  The other piece is that in some instances, particularly in Black America, only a handful of people in a given family get educated and earn a decent salary.  Those individuals are often looked upon to take care of everyone else – a potential, “Siphoning off of the wealth,” as Dr. Michael Eric Dyson said, partially joking, at the 2015 Congressional Black Caucus Annual Legislative Conference.  That day he was leading a Wealth-Building panel.

Growing a high net worth doesn’t necessarily involve going to get a Ph.D., an M.D., a Pharm D., or a J.D.  You actually don’t necessarily need a college degree to do it.  It simply requires a steady stream of income, understanding debt, and priorities.  This is what Dave Ramsey meant when he said, “Money is 20% knowledge and 80% behavior.”  This is also one of the key principles in Robert Kiyosaki’s Cashflow game where players must choose their profession before playing.  One would think in the game that it would be easier to get out of the “Rat Race” by being one of the higher income professionals like the doctor, lawyer, or the airline pilot, but it’s actually easier as the web designer or the janitor.  While they generate less gross income, they also carry less debt and have fewer bills.  Their cost per child is also less than the higher income professionals.

Understanding what a net worth is and then making the decisions to grow it is a paradigm shift and a powerful one.  As with most things, we all have lives and everyone’s situations are unique.  We all have relatives and friends who may not necessarily understand the decisions and temporary sacrifices being made, and thus it’s important to know your own motivations – you have to know your ‘why’.

Again, a net worth is not a salary that you make every year.  It’s a result of spending habits and specific money choices.  How often should it be calculated?  One of my mentors told me that it should be calculated quarterly.  If you haven’t been paying attention to it, your initial assessment may not look pretty, but it gives you a place to start from – kind of like a doctor’s checkup.

So what’s your net worth?  Don’t answer that.  From experience, just like your gross income, it’s best if you keep it to yourself and only share it with a trusted few if anyone at all.  Money does different things to different people, and when people think you have it, it can do strange things to your relationships – your relatives and friends.

Thank you for taking the time to read this blog post.  If you’ve found value here and think it would benefit others, please share it and or leave comments.  To receive all of the most up to date content from the Big Words Blog Site, subscribe using the box in the right hand column in this post and throughout the site.  Lastly follow me on Twitter at @BWArePowerful, and on my Big Words Blog Site Facebook page.  While my main areas of focus are Education, STEM, and Financial Literacy, there other blogs/sites I endorse which found on that particular page of my site.