What To Do About The Wealth Gap Reported By The Pew Research Center

How To Close The Wealth Gap: Step 1

The problem with Black people is not money. It’s what Black people do with their money. –Dr. Dennis Kimbro

The only thing worse than not having what you need is not using what you have. –Rev. Deforest Soaries Jr.

That’s right. Closing the wealth gap does not start with the White House or Congress. It doesn’t start in corporate America or Wall Street, or even public schools or higher academia. It starts with you and me. Step 1 of closing the wealth gap: Make better, more responsible decisions with the money we have.

As I said in an earlier post, “How Badly Do You Want Financial Freedom?”, the definitions of poverty and wealth do not change:

  • Wealth is spending less money than you make, saving and investing the difference in things that increase in value and/or pay you interest, thereby increasing your assets and net worth.
  • Poverty is spending more money than you make, spending on things that decrease in value and borrowing to cover the difference, paying interest to others, thereby increasing your liabilities and decreasing your net worth.

The truth is, we are in a much better position to narrow the wealth gap than our ancestors ever were. The poverty experienced by previous generations of African Americans was based on lack–lack of assets, legal protections, political power, educational opportunity, career options, you name it. With the possible exception of the roughly 25% of African Americans living below the poverty line, the poverty experienced by the rest of us is increasingly a result of poor stewardship–doing stupid things, including things we know from experience and observation that we should NEVER do with our money–not lack. The power to change what we do with our income, our credit habits and our spending decisions lies not with the government or corporations, but with us. To put it bluntly, we must do better.

If you don’t read Black Enterprise and other financial magazines every month, why not? Why aren’t you regularly visiting BlackEnterprise.com and similar Websites to make better choices with your money and boost your own financial literacy? And if you do both, why are you not challenging everyone in your family and network to follow suit?

Have you made reading books about money, such as Rev. Soares’ dfree: Breaking Free of Financial Slavery, a monthly habit? Why not? And if you have, what steps have you taken to share what you’ve learned and get such books into the hands of others?

Are you still spending money you don’t have, using credit to buy the things you don’t have the cash for? (Credit was not created as a substitute for cash you don’t have, but to help you avoid having to carry around excessive amounts of the cash you do have. Any other use constitutes credit abuse.)

When are you going to stop living beyond your means? And if you refuse to create and follow a spending plan or stick to a budget, how will you ever know whether or not you are?

When are you going to stop making excuses for not putting cash aside for emergencies and saving for your own retirement?

When are you going to take insurance and estate planning seriously? How can we close the wealth gap if you refuse to protect your assets so that they can be transferred to future generations? What are you doing to teach your kids about money so that they can be wise stewards of our legacies?

These are tough questions, ones I’ve been forced to ask myself. The truth is, I’ve fallen short and I have to do better–and so do you. The person responsible for what happens to the money in your pocket is not President Barack Obama or Rep. John Boehner. It’s not Timothy Geithner or Ben Bernanke. Step 1 in closing the wealth gap is our responsibility.