Financial literacy is a tough subject for any college student, but especially for those who didn’t learn about it throughout their childhood or schooling. DIFFvelopment, a Black-led nonprofit organization, is working to change that. Their workshops centering around financial literacy as part of their Black Generational Wealth program are just one small piece of that puzzle.
DIFFvelopment began in response to the chronic underemployment and financial strain young Black people face. According to their website, their mission is to strengthen the “global Black community through historically centered re-education that empowers aspiring Black visionaries to develop their world differently.”
Nneke Lumengo Baye, DIFFvelopment’s programs administrator, hosted a workshop on March 9 to pass on the knowledge to Ramapo students for their post-college lives.
Employment and Education Disparities
Baye started by discussing socioeconomic status and sharing data that depicts the disparities between Black and white students and employees.
“The Black-white wealth gap is a historical global issue that was a direct result of the exploitation that took place during the joint institutions of slavery and colonialism, where Black people were literally taken out of the wealth-building equation,” she said.
She shared that according to a 2021 McKinsey & Company report, the median Black household has about one-eighth of the wealth that the median white household has: $24,000 compared to $188,000.
In the education sector, 90% of those who receive Federal Pell Grants — awarded to students who display “exceptional financial need” — come from families with incomes below $20,000.
According to the National Center for Education Statistics, in the 2015-2016 school year, the highest percentage of recipients who received loans from any source was Black students at 72%. The lowest percentage was white students at 34%.
Baye emphasized socioeconomic status as the main factor that college students must pay attention to. Thinking about one’s lifelong financial situation, support from guardians and responsibilities all play into a student’s current socioeconomic status — and their starting point when building wealth.
Stages of Wealth-Building
Baye played a clip from the film “Generation One: The Search for Black Wealth,” where wealth coach Deborah Owens explained the difference between working-class and wealthy people’s behaviors. She said that while impoverished people manage their finances day-to-day, wealthy people do it generation-to-generation.
“When you really think about what’s the difference between a poverty-minded person and a wealthy person… it’s the ability to make decisions long-term,” Owens said.
This led Baye to her discussion on generational wealth. Attendees took DIFFvelopment’s Wealth Status Survey to gauge their place in their wealth-building journey. Baye broke her advice down into five stages: indebting, saving, growing, securing wealth and building wealth. She gave attendees personalized tips depending on their scores, ranging from paying off debt faster by paying more than the monthly minimum to investing in stocks and setting up life insurance.
Baye shared two pieces of advice to everyone, no matter their stage: use discipline and make sacrifices to save money, and treat all assets with care.
“The reality is that regardless of where you stand right now, you can easily move in and out of every wealth-building stage as where we end up directly correlates to the decisions that we make,” she said.
Afropreneurship
Baye introduced entrepreneurship as a viable career alternative that can allow Black people to gain a second stream of income in the face of underemployment and unemployment.
She shared that the Black unemployment rate has remained twice as high as the white unemployment rate, according to the U.S. Bureau of Labor Statistics. Additionally, educated Black people are more likely to be unemployed and work jobs below their education level.
“A bachelor’s degree, even one from an elite institution, cannot fully counteract the importance of race in the labor market, indicating that both discrimination and differences in human capital contribute to the economic inequality,” she said.
This is where owning a business comes in. Baye cited from the Association for Enterprise Opportunity that while white non-business owners are 13 times more wealthy than Black non-business owners, the gap shrinks to three times between white and Black business owners. Additionally, the median net worth of Black business owners is 12 times higher than that of Black non-business owners.
Baye acknowledged the challenges that come with owning a business but the fear shouldn’t stop anyone from taking the leap. It’s better to persevere through those hardships and use the success to better oneself and give back to society.
rgatherc@ramapo.edu
Featured photo by Rebecca Gathercole
