The subject of Black spending has been increasingly present over the last few years. While there are stereotypes and cultural norms within the sector of Black spending, it’s no secret that Black spending habits could use reform. As a first generation Nigerian American woman, my experiences with money have been vastly different from that of my husband, a Brooklyn native, African American man. Over the course of our marriage, it has been clear that our experiences with how our parents spent money greatly affect the way we view and spend our own money individually.
Growing up in a divorced home, my husband watched his mother struggle to make ends meet while working and attending school. His concept of spending derives from seeing his mother spend money even while not having much to spare. Overall, there was a great lack of education on the subject of money and how it is to be spent and/or saved. I find that many of us view money with the lens in which we saw it used growing up. In more middle class Black households, [often times] money is saved, invested, and spent only when needed or when there is excess. Usually, these are households where the family has been educated, whether by family, education or research, on how to manage money effectively.
In an article written by Stacy M. Brown titled, “Big Spenders, Small Investors: Blacks Have Little to Show for Hard-Earned Dollars,” Ms. Brown writes,
“If Black America counted as an independent country, its wealth would rank 11th in the world. However, African Americans continue to squander their vast spending power, relegating Blacks to economic slavery instead of financial freedom.”
African Americans consistently outpace the total market population in overall growth, smart phone ownership, television viewing and annual shopping trips according to the new study, “Resilient, Receptive and Relevant: The African-American Consumer 2013 Report.”
Here are some alarming statistics:
Each year, Blacks spend more than $47 billion on Lincoln automobiles, $3.7 billion on alcohol, $2.5 billion on Toyotas, $2 billion on athletic shoes, and $600 million each year on McDonald’s and other fast foods, according to Target Market News Inc., a Chicago-based marketing research group.
The current homeownership rate reveals that 73.5 percent of Whites own homes while approximately 43.9 percent of Blacks are homeowners, according to the Harvard Joint Center for Housing Studies State of the Nation Report for 2013.
Sixty percent of Blacks have less than $50,000 saved in company retirement plans and only 23 percent have more than $100,000.
So the statistics continue on and on; showcasing that while most Blacks are not making a majority of the money, we are spending a large percentage on things that depreciate rather than things that appreciate.
There is slight speculation that Black spending habits are formed from the desire for social acceptance. As a young adult who desires to reach the status I’ve seen my parents reach, I often find myself striving to live outside of my means. The desire for nice things and comfort overrules the reality of a limited budget. There is no question that the very present racial wealth gap means families of color may not be able to give young members of their households gifts to invest in their future, similar to what their White friends are likely to receive. Lack of financial education in our school systems leaves many Blacks unaware of the most effective ways to save and spend their money.
The financial crisis in the community could quite possibly be a generational one. During the time where Blacks were majorly seen as inferior (and even still today), Blacks felt like second class citizens. When the opportunity became available to acquire what they never thought they could, it went from an open door to pure excessiveness and the desire for material items became a cycle in the Black family. All these factors directly and indirectly affect financial planning. Education and a strong discipline to change spending habits are needed for our Black spending to change.
Whether we’ve adopted a strict, stringent concept of money or a loose and excessive habit, it can be concluded that Black family does indeed affect Black spending.