Financial Adulting. Ashley Feinstein Gerstley
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Название: Financial Adulting
Автор: Ashley Feinstein Gerstley
Издательство: John Wiley & Sons Limited
Жанр: Личные финансы
isbn: 9781119817314
isbn:
Financial education is important and we'll get into why and what that needs to look like, but until we see real significant changes from the top – I'm talking changes in government and corporate policy – financial literacy can't and won't solve our problems.
Mehrsa Baradaran, author of The Color of Money and professor at UC Irvine, shares, “I wrote my book to debunk the myth that you can leave the systems of credit, banking, and federal policy intact and you alone or your community can accumulate wealth, work hard, save your money, and close the wealth gap. Of course it works in individual cases but we take these individual cases and exceptions and make rules of them.”
In our interview, Dasha Kennedy, financial activist and founder of The Broke Black Girl, shared about the link between politics and personal finance:
When people say leave politics out of money, there's no way to do that. When how I pay taxes is decided through policy, how much I'm going to pay in childcare is decided through policy, how my kids’ schools are funded is decided through policy, and how much I'm going to be paid is decided through policy, we can't leave that out. And to even think that that's possible comes from a place of privilege. If you have an overflow of money and access to capital, policy probably really doesn't matter to you because you have your saving grace. But for me, I have to care about those things because it impacts my money.
That's why when people say they educate about personal finance but “stay out of politics,” it's complete BS.* Policy is critical and completely intertwined with our financial lives.
Financial adults understand the smart money moves they can make, but they also understand and advocate for the changes that need to be made at the top.
I am a white, upper-middle-class, cisgender, heterosexual, nondisabled woman. And as a financial adult, I'm going to use that privilege to bring all other women up with me. I can't call myself a feminist or anti-racist if I don't believe and care about equality for all women.
Not to mention (and this is just icing on the cake), it's what's best for all people: our wallets, our planet, everything. As Sallie Krawcheck, the co-founder and CEO of Ellevest, says, “Nothing bad happens when women have more money.” And I bet she wouldn't disagree with me taking it a step further and saying, the world changes for the better. Much better.
The Racial Wealth Gap
Farnoosh Torabi, financial expert and host of the So Money podcast, calls the racial wealth gap a “wealth chasm,” because that's more reflective of the size of the gap.
So what is this wealth chasm? Mehrsa explains that “across every income and education level, there's a massive racial wealth gap.” The average white family has a median net worth of $188,200 compared with $24,100 for Black families, $36,100 for Hispanic families, and $74,500 for groups of all other races/ethnicities.5 Dasha shares that the richest 400 Americans have more wealth than all the Black households in the United States combined. That's the chasm.
Let's break it down in numbers.
Disparities in Wealth Gap by Race and Ethnicity
*Other families – a diverse group that includes those identifying as Asian, American Indian, Alaska Native, Native Hawaiian, Pacific Islander, other race, and all respondents reporting more than one racial identification – have lower wealth than white families but higher wealth than Black and Hispanic families.
Source: Federal Reserve Board, 2019 Survey of Consumer Finances.
Because the “Other” category includes such a diverse group, it's important to note that there are large wealth disparities within the Asian American Pacific Islander (AAPI) community. A 2016 study of Los Angeles showed that while Japanese, Asian Indian, and Chinese households had a higher median wealth than white households, Koreans, Vietnamese, and Filipinos had 15×, 6×, and 1.5× less wealth, respectively.6 As of 2000, American Indian households had a wealth gap to white households of 11×.7
These numbers were taken before the onset of the COVID-19 pandemic, which disproportionately impacted communities of color financially, so these numbers are most likely worse than the study indicates. Reports say that with current policies in place, it will take 228 years to close the gap.8
A Very Quick History Lesson (That We Missed in School)
The racial wealth gap in our country dates back to enslavement, when white America built its economy (and wealth) with the free labor of people who had been kidnapped and enslaved and when Indigenous People were forced and displaced from their land, which was a tremendous loss of community wealth.
I didn't learn about most of this important history in school and I can only include a small glimpse in this book. To better understand the true scope of how policy after policy excluded and exploited BIPOC communities, I've included more resources in the Financial Adulting toolkit.
The 1862 Homestead Act
Through the Homestead Act, more than 270 million acres9 of land (10% of the United States),10 previously inhabited by Indigenous People, was sold (but really gifted for an extremely discounted price) to citizens and intended citizens for $1.2511 per acre (equivalent to about $3412 today!) in 1.6 million 160-acre plots. While there isn't much data on the race/ethnicity of homesteaders, it's believed that the overwhelming majority of plots went to white people. In the year 2000, the wealth of more than 46 million adults (25% of the United States) could be traced back to this policy.13
Freedman's Savings Bank
After the Civil War, in 1865, Freedman's Savings Bank was created by the U.S. government for those previously enslaved to deposit money and receive financial education. It's important to remember that previously enslaved Black people were starting with nothing, while white Americans had been building wealth for hundreds of years.
Henry Cooke, a white financier on the board of directors of the bank, used the bank's money to make speculative investments in railroads (Mehrsa calls it the “subprime market of that time”) and the bank eventually went under. More than 61,000 Black Americans lost $72 million14 in today's money (over half the Black community's accumulated wealth) that was never recovered, despite the bank being protected by the federal government. This incident starts a distrust of the financial system that gets reinforced and lingers for hundreds of years.