Women of Color and Wealth – Looking at the Wealth Gap [Part 2] | Racialicious

Women of Color and Wealth – Looking at the Wealth Gap [Part 2]

by Latoya Peterson
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Because so many women of color have such little wealth other than the value of a vehicle, the rest of the paper uses the definition of wealth that excludes vehicles in order to capture the economic vulnerability experienced by women of color.

Excluding vehicles, single black women have a median wealth of $100 and Hispanic women $120 respectively, while their same-race male counterparts have $7,900 and $9,730. The median wealth of single white women is $41,500. To put it another way, single black and Hispanic women have one penny of wealth for every dollar of wealth owned by their male counterparts and a tiny fraction of a penny for every dollar of wealth owned by white women. With so little in reserve, half of all single black and Hispanic women could not afford to take an unpaid sick day or to even have a major appliance repaired without going into debt. The precarious financial situation of women of color is also evident when looking at those with zero or negative wealth, (negative wealth occurs when the value of one’s assets is lower than the value of their debts). Nearly half of all single black and Hispanic women have zero or negative wealth (see Figure 2).

Pre-retirement wealth disparities for women of color affect them drastically in their retirement years. According to federal poverty standards, poverty rates for people age 65 and over are highest for women of color. In 2007 16.7% of white women living alone were poor, but 26% of Asian women living alone, 38.5% of black women living alone, and 41.1% of Hispanic women living alone were poor. 21

What does it mean when we talk about the difference between wealth and income? These two terms are not to be conflated. Someone can be a high earner, but still have no wealth at all – it is as simple as spending more than you earn. It doesn’t matter what the money is spent on – it can go up your nose, on your feet, to your landlord or thrown in mass amounts on a stage. However, if you manage to make a million dollars a year, and you spend $1.5 million, you are not wealthy. Not even close.

This is why this median figure of $5 is so important to understand. At various points in the course of the report, the data for women of color (again, defined as black and Latina, unless otherwise indicated) tends to fall around zero or five dollars, depending on the unit of measurement.

It is also important to understand the difference between a median number and an average number. I emailed report author Mariko Chang to clarify why the median number was generally used in the report:

In wealth research, it is conventional to use the median instead of the average for the following reason: Because wealth is so unequally distributed, with a few people owning extremely large amounts of wealth and the rest owning much smaller amounts, the few very wealthy people pull the average higher. The median, on the other hand is a better indicator of the wealth of the more “typical” case. (If we rank people or households on a continuum from least wealth to most wealth, the median is the point at which half have more wealth and half have less.) Because the median is a better indicator of the more typical case, people and organizations that study wealth report the median (although some report both).

Since today is Friday, we are going to ease up on the data and instead take a moment to reflect: how did you learn your lessons about wealth, income, and money?

Monday: Differences in financial starting points and class mobility

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Comments

Eva wrote:

Good question. I learned from my father who grew up during the Depression who just said, ‘if you spend less than you have, you’ll always be rich.’

Now things happen in life that we have no control of, but there are a few things we do have control of and one of them is am I going to spend money on this thing that I WANT (not need)?

When I was a little girl and I saw something I wanted, if I didn’t have the cash, I couldn’t buy it, case closed. My parents never felt guilty for telling me I couldn’t have something and today I don’t feel guilty for telling that to myself. I’d love to live in a loft in SoHo or a penthouse on Park Avenue, but I can’t afford it, and that’s that.

Posted 12 Mar 2010 at 12:22 pm ¶
B. Durbin wrote:

My father is an engineer (NB: He did not work as an engineer, but the way of thinking is so central to his personality that it’s best to describe it that way.) Lessons on finance came from him and my mother, both children from families that were fairly poor in the post-war years— my father because he came from a large family, and my mother because she was raised by a single mother after her father died in WWII. There were definite lessons as to the value of items that went beyond brands, but there were also lessons as to long-term value— in other words, to not buy the cheapest item because it was the cheapest, but to buy the one that would last the longest for its price.

I also had an allowance and lessons as to how to save, some of which came from my barely-older brother. “If you can’t see yourself using it, why buy it?” was an important one along the way. My first “major” purchase was a statuette of a dragon that cost me $80 when I was twelve— I’d saved for the better part of a year for that one. (Still have it; still love it.)

In terms of wealth, I don’t think I ever learned any lessons about that specifically beyond “rainy day funds.” The level my parents were raised at meant that you didn’t have any wealth long-term, but they worked hard to make sure they had enough to get past the rough spots.

Two more things: I’m the youngest, so my family was better off by the time I was born. And when I was young, I thought we were “upper middle class” because many of my classmates were, and because my family made museums and art galleries of high importance. Then I visited some of my classmates’ homes and realized that no, five kids meant a bit of a drain on the family finances… (Wouldn’t trade my family for theirs for the world.)

Posted 12 Mar 2010 at 12:23 pm ¶
Thea Lim wrote:

This is really interesting, especially the stuff about difference between income and wealth.

“It doesn’t matter what the money is spent on – it can go up your nose, on your feet, to your landlord or thrown in mass amounts on a stage. However, if you manage to make a million dollars a year, and you spend $1.5 million, you are not wealthy. Not even close.”

Here’s my question: if you are spending more than you earn you don’t have wealth, but if how you spend this money doesn’t matter, than how does the level of poverty for women of colour become a social issue?

What I mean is, why would we be concerned about millionaires who spend 150% of their income – at a point wouldn’t the reason for their poverty be poor choices, and not systemic distribution of wealth?

Then again, how do we define choice? Choosing to spend a lot of money on a house for your mother is different from choosing to blow all your money at the casino. Then again even choosing to go to the casino might not be a total choice when you think about gambling addictions, or even how gambling can be a coping mechanism for some.

When is choice really a choice? From the thread on Part 1, I imagine we are going to hear more in this series about how cultural attitudes influence spending, meaning that women of colour have much lower levels of wealth.

Which makes me think of two things:
1) The fact that in Singapore, where I grew up, it is expected that you give your parents a large fraction of your monthly income. This can also sometimes extend to other family members. This is the absolute norm, and I cannot imagine how North American society would be different if this was true here.

Does this mean that we have to be more selfish to be more wealthy, and if that is true, how does that rule intersect with attitudes towards family and community that often form the backbone of a culture?

2) Should we be handing out copies of Suze Orman books?

Ok #2 is a joke.

Posted 12 Mar 2010 at 12:28 pm ¶
Latoya Peterson wrote:

@thea -

Ah – yeah, I should mention this series is getting syndicated over to Jezebel, and some folks didn’t seem to catch the difference between income and wealth, quoting things like “I saw a study and black women are earning more than ever!” Sorry, should have marked that a bit more clearly.

How you spend the money *does* matter, and that’s what a good amount of this will focus on. Material aspirations aside, women (as a whole) have less wealth than men (as a whole) and a lot of common factors are not having enough income coming in to cover necessary expenses and how women are highly likely to use their funds to assist extended family.

Posted 12 Mar 2010 at 12:40 pm ¶
atlasien wrote:

“how did you learn your lessons about wealth, income, and money?”

Rambling long answer (in two parts)…

I had a strange but pretty thorough financial education growing up.

My dad was, and still is, a hardcore penny-pincher. He grew up in a very economically uncertain period (rural postwar Japan). His attitude towards money is totally adversarial. Use everything until it runs out, bargain at top volume about everything, never get the nicest choice but only the cheapest that will last the longest, never go into debt. He used to make his own shoes.

My mother had a much more relaxed attitude toward money. They fought over it a lot. She wasn’t particularly extravagant, she just wasn’t obsessed with penny-pinching.

Neither of them stressed the importance of material things… education and achievement were more important.

I never wanted to grow up to be like my dad… the way he lives his life is too extreme. But I also think my mom suffered financially for following her dreams instead of chasing a paycheck. She’s at retirement age now, but with almost no retirement savings.

When I went to college I did notice several things that were different about me compared to other people my age. I was a lot freer talking about money, I didn’t feel as much stigma about saying how much money my family did or didn’t have. I also didn’t have the same reservations or shame about job choices. The middle-class people I went to college with — and this seemed to be true for both white and black people — stayed away from low-status jobs.

I used to work at Dennys as a waitress on the graveyard shift, and drunk college students would come in all the time, some of them recognizing me from class. But a friend of mine pointed out one day that some were actually looking down on me for working there… not that he did, but they did. I’d never thought of it that way, I didn’t care and I didn’t feel particularly humiliated. I was making more money than most college students who were working higher-status, cleaner, easier jobs, so as far as I was concerned, I was making the smartest choice.

I was definitely the only young college student working there… everyone else on the graveyard shift was middle-aged and African-American, except for me, and a Pakistani immigrant who used to be an engineer and was now studying to be an HVAC technician….

Posted 12 Mar 2010 at 1:19 pm ¶
atlasien wrote:

…

Having to work throughout college made me realize how deceptive the labor market is, and how easy it is to get screwed over. A lot of jobs attract people with emotional and intangible benefits, or outright lie to you about how much you’ll be making. After college I learned the same lesson several times over… if you trust people to keep giving you money for giving them your work, you’ll get screwed over. Again and again and again. Don’t go for the intangible benefits or the status, look for the cash.

Other lessons I learned either from direct experience or through watching friends/family:

- Amway/MLM doesn’t work (family members tried that, it was very embarrassing)
- don’t buy a cool car (I broke this rule once by buying a used Acura Integra, & ended up spending way too much money on it)
- pretending you’re rich so that you’ll eventually become rich is counterproductive, but extremely popular
- women: don’t be a princess; don’t expect to get taken care of. I’m privileged in that I was raised with a lot of feminist principles… I see other women including some in my family who weren’t, and have a lot of issues regarding father figures / other men in their lives, and have really suffered for it in the long term.
- women: don’t be a doormat, and if you have to be an ATM for your boyfriend/friends/relatives at least keep an eye on the receipts. This is tougher than it sounds because women are always expected to be the ones who take care of everyone when they get older… kids, and aging relatives (the sons/brothers usually scampering off) and this dynamic is often unavoidable even if you’re totally aware of it and see it coming right at you…
- 99% of the people giving financial advice are grifters. E.g. Robert Kiyosaki.
- There’s no such thing as “casual” cocaine use when it comes to your bank account… and don’t leave any valuables or cash unattended around “casual” cocaine users.
- people who grow up poor are either extraordinarily pragmatic about money, or else clueless, because they’re so psychologically insecure about not being seen as poor… it seems like they tend to extremes.
- people who grew up with a lot of money don’t have that insecurity, so they’ll often be happy to take low-status jobs, but they don’t hold on to them for long… they also have less self-knowledge, but more confidence, and since confidence is probably the most important quality to make more money, they generally do pretty well. The more money you’re raised with, the more likely you are to make it, and hold on to it.

Posted 12 Mar 2010 at 1:20 pm ¶
inkst wrote:

I am very interested in hearing more from this series.

Growing up mixed race in a white town, it actually wasn’t my race that I felt like set me apart from my classmates, but our relative wealth. I am the oldest of four and when I was little, we didn’t have a very big house, my mom was stay-at-home, and my dad was a surgeon just coming off of his residency. I don’t think that our income was that high at the time, but my parents were always very careful with savings and spendings, so our wealth increasingly grew (a bigger house later on, new vehicles, vacations, etc). I never remember there being arguments about money or even much of “we can’t afford that.”

The lessons were sometimes subtle, sometimes not-so-subtle. I distinctly remember that when I was in 1st grade, my mom took me to Kmart with her to buy clothes for someone she told me “needed them and couldn’t afford them.” She had gone to the secretary at the elementary school who she knew personally and asked about a child who could use some extra help around Christmas, she got a name, clothing size, and some stuff the girl had said she liked. Anyway, I remember not really processing the who we were shopping for thing until a couple weeks later in class, I saw DS (I definitely remember her name even though she left a few years later) wearing the pink sweatsuit I had watched my mom buy. It was weird. I didn’t know how to feel and my feelings about it were really complicated; shame, embarrassment, confusion (even though I was only 6). To this day, I continue to process that moment as a lesson in wealth, income, and money. I even recently chatted with my mom about it.

Throughout the rest of my childhood, issues around wealth always took the forefront over race. That was what I thought about more back then.

Posted 12 Mar 2010 at 2:54 pm ¶
Just A Thought wrote:

I learned my lessons about wealth, money, etc. in two ways:

1. Lack of education
2. School of hard knocks

Growing up, my family was very poor, and I was always stressed about money. I remember saving any money I came across not to purchase things that I wanted, but to make sure I could “loan” my mother and stepfather (mostly my mother, because I refused to give THAT man ANYTHING) to help out with groceries and the occasional bill. While my grandmother and grandfather espoused fiscal conservatism, saving, and living beneath your means, the more immediate example was spend it as soon as you get it, and blow any extra before another bill comes along.

Once I went to college, I thought I was pretty good about finances, but I knew nothing about credit, savings, investments, or balancing a checkbook. After years of frivolous and foolish financial behavior (I guess being physically distant from the stress of my mother’s household loosened the bad behavior I’d pick up as a child) I finally educated myself because I was tired of paying a premium credit wise, and not having savings available. Also, I wanted to be wealthy, not just appear to have a bit of money. There are occaisional temptations to break away from my new frugal habits, but I want to be able to actually retire instead of working until I drop.

Posted 12 Mar 2010 at 3:46 pm ¶
Melissa wrote:

This is all so interesting to me because it is such a huge difference between white women and women of color. The factors at play here have to be big.

I did have one question, do you know how they are defining “single” in this study? Is it women who are living alone or women who have never been married?

I ask because, as a never been married white gal, I’m right around that $5 figure when you add in my student loans. On the other hand (and this is anecdata, I know) my divorced friends of many races seem to much higher than that. Being part of a two income couple, even for a few years, allowed them to pay off debt and they were encouraged to take part in things like home ownership and investment plans (things which aren’t often marketed towards single women).

Again, just from my own experience I don’t know how that 41k figure for single women can be the median for never married women. On the other hand, if we includ divorced women (who may own a home, have equity in it, or have 401k and other investments) I can totally belive it.

Posted 12 Mar 2010 at 4:59 pm ¶
TenaciousZ wrote:

Forgive me if I am reading this sloppily, but why are there two median wealths for black women listed here? In the first excerpt of the article, it states the median wealth for black women in the study is $100, but in first part of the series (and the fourth paragraph in this post) it states that the median wealth is $5. Am I missing something?

Posted 12 Mar 2010 at 5:31 pm ¶
Lola wrote:

My mom was the custodial parent, what I learned from her:
1. Always pay your bills on time
2. Pro yard sales and thrift stores
3. Home ownership is important (preferably an older home, we don’t like new construction in our family)
4. Don’t buy cars new
5. Do your job with dignity and pride, even if you are a janitor or fast food worker both of which my mom has been

I admit I haven’t done much of yard sales/ thrift stores but I’ve done well using Craig’s List for furniture, I did buy a car new but won’t do it again and will drive my current car as long as possible. I have a better credit score than most of my peers because I’ve always paid bills on time.

What I didn’t learn:
1. Retirement savings, I’ve had to pressure her to do this, before she had barely any benefits, now she is with a company that offers 401k and has increased her % when her income increased, still she waited until age 40 to start, I started at 28. would have started sooner but did not have stable work

My Dad rented and always owned multiple cars and had the latest gadgets, now he doesn’t have much to show for it.

Basically I grew up working class, my mom earned just enough not to qualify for medicare/welfare/food stamps. Most of my childhood we did not have health insurance and dental visits were irregular.

Posted 12 Mar 2010 at 5:51 pm ¶
Sultana wrote:

I had a really strange upbringing when it comes to money, to say the least.

Both of my parents came from India in the eighties from socially and economically privileged Indian Muslim families. At the time, discrimination at home forced them out in search of better opportunities. They still retained their mindset as a result of their upper-class upbringing– dress, etiquette, mannerisms–so I was raised almost as if I was wealthy, too- but without any of the money.

Once they came here though, it was a lot harder to climb up the corporate/economic ladder, and my family suffered financially as a result. My father was layed off numerous times and we could barely afford to live in an apartment. It was only when my mom started working could we afford to rent- not buy- a house. I remember living pretty close to having nothing for much of my childhood.

So what lessons did I learn?

1) To be a ridiculous penny-pincher–but to spend on very few, certain nice things–a nice haircut, a good business suit, travel, a good computer. On other things- I aim to get everything as cheaply as possible.

2) A women should never be financially dependent on a man. EVER. If my mom hadn’t had her own career, I’d have grown up in a cardboard box.

3) Wealth and privilege are as much performance as it is actual money. I can’t tell you the number of times my mom and I walked into jewelry stores and were shown pieces nearly 10 times what we could afford. It’s all a smokescreen!

Posted 12 Mar 2010 at 6:05 pm ¶
Latoya Peterson wrote:

@TenaciousZ – There’s median wealth by household, which is one chart, and then median wealth of single women (who may not be head of household). This gets aggregated down even further later to single, never married, married, divorced, widowed.

Posted 12 Mar 2010 at 6:49 pm ¶
nicepebbles wrote:

Most of what I learned was more observation than anything. Until I was 15 or so, my mom was single/never married AfAm. (Currently, a divorced homeowner with a retirement plan.) For the majority of my childhood years, we lived on our own or with my grandparents. Once I hit middle school, we lived with them permanently until my mom got married. (She moved out so I wouldn’t have to change schools again.)
My mom owning her first home at 25 taught me that I could do that. I observed this as a child. She only has a high school diploma and was making significantly less than what she earns now (fed job). It wasn’t until I got older did we discuss the importance of home ownership.

We when lived on our own, we would probably be considered poor. When I got older, my mom told me how one night she crying in the bathroom about money to my grandmom over the phone. She was making very little money but had a mortgage, childcare, utilities and whatever else. I had no idea. My basic needs were covered. I got extras but it was never getting what I wanted because I wanted. It was never my mom spending money she didn’t have. (That’s where the grandparents came in who had federal jobs.)

I was taught about being smart with your money and saving in much the same way. My mom didn’t have a lot of debt. We always had food in the house. Our utilities were never cut off. We also had a nice car, nice as in good condition, nothing flashy or beyond my mom’s means. She was just smart about her money. There were hardly any talks about it until I got older.

When I got older, the talks were about how I can be smart with my money, saving period for whatever comes up and for retirement, and buying a house. My mom told me about her IRA when I was in high school. I came into some money after my dad died. My mom tells me people said to her, ‘Why don’t you spend that money? It’s yours.’ My mom always said, ‘It’s not my money.’ She put it in an IRA for me. A lot of mothers in her situation would’ve spent it whether to bill (which is unstandable) or on frivolous stuff (which totally not).

I definitely needed these talks because my grandmom hasn’t been smart with her money. If I had grown up in her house without my mom’s example and talks, I would’ve learned that it’s okay to spend on what you want when you want it even if you can’t really afford it (like buying most things on credit) or won’t use it. All that matters is you want it. (To this day she maintains, I was earning it therefore I could spend it. Her house is full of stuff she’s never worn/used. Ridiculous.) My grandmom also let my grandfather handle all the finances. You want to get my mother started on a rant, bring that up.

My mom thinks it’s the dumbest thing for any spouse to just let the other handle it but it’s especially stupid for a woman to do it. We know the stats. Both spouses should know how much money is coming in and where it’s going when it goes out. My grandfather died last year and my grandmom is floundering both won’t let anyone help her. (I also heard a story of a family friend who didn’t know her house was being foreclosed on until the last minute because her husband took care of the finances. He never volunteered info and she never asked. That was a WTF moment for me back in college.) I swore that wouldn’t be me.

So now I own a home with my husband. I have my own retirement accounts. We save at minimum 10% of our income. (Mass media influence since that’s been pounded into our heads.) I handle the finances and discuss it with him. We pay our bills on time. (That’s the other thing my mom stressed once I got older, good credit. To this day she still stresses it.) We do have debt because of college (trying to live on what financial aid and part-time jobs didn’t cover) and it wasn’t until a two years ago did we have jobs that paid enough so that we could cover our bill. (Tying living in FL where they don’t pay you anything really, during the housing bubble, rising gas prices, and lack of affordable housing due to condo conversions. Murder.) We buy mostly what we need a lot of times after we do comparison shopping. If we do get stuff we want, most of the time we comparison shop or it’s not a big purchase.

When my mom and I talk about money today, she says she’s proud of me. The next time I should tell her thank you.

Posted 12 Mar 2010 at 7:11 pm ¶
Restructure! wrote:

Stuff I learned:

- Being a penny-pincher (from watching my parents). I whip out my cell phone calculator to compare dollars per unit, or dollars per weight, of different packages of stuff. I buy grocery items on sale and then hoard them. If don’t need something right away, I wait until the next time I’m in the cheaper store. I try to “cook”/make my own food at home and bring lunch to work. I collect junk like plastic grocery bags and food containers and reuse them. (I’m sorry, I’m a bit of a racial stereotype because I penny-pinch, but hey, it works.) It may sound annoying to think like this all the time, but if you keep doing it, it’ll become automatic.
- Never have credit card debt. If you have other debts, pay them off as soon as possible before you buy nice things for yourself. (Learned from my parents through them stressing this to me over and over again when I was growing up, even when didn’t know what credit cards or debt were.)
- Do not gamble or play the lottery. The odds are against you, and you will end up losing money in the long term. This was really hammered into my brain when I took a course on probability.
- Never depend on a man for financial stability. When you depend on a man, he has power over you, and he can abuse you, and you can’t leave.

Posted 12 Mar 2010 at 8:46 pm ¶
jen* wrote:

My ideas about wealth and spending/saving were strongly influenced by how I grew up. Before I was about 13 or 14, I believed we were poor. We always lived in nice houses, but as kids we didn’t have the trendy toys/clothes/music/tv channels/snacks, etc.

In fact, my sister and I were just talking about this last week. She says she remembers that the only new toys she ever got were as gifts from other people – everything else she had was a hand-me-down from me. What she apparently hadn’t known until I told her last week was that [even though I'm the oldest] the same was true for me. I remember the day that my dad came home with two big trashbags of toys from a family who had kids who I suppose had outgrown the entire set of Weebles and all the accessories. We had toys – but the new ones we had were gifts from other people. Our parents got us useful things, like clothes and shoes.

My parents – esp. my dad – stressed that investing is preferable to spending. He started buying real estate when he was young because he found it to be a dependable way to make money if you’re willing to do some (hard, sometimes) work. One thing he talked about was investing in our education. He sent us to the best elementary and prep schools he could afford because it was an investment. Thankfully, it was a truly Christian school, and we weren’t teased because of the K-Mart shoes and clothes we wore, even though everyone else was wearing Banana Republic stuff when there wasn’t even a BR in our town.

The number one thing that my dad did that helped my financial well-being more than anything else? I think it was the rule he made when I got my first job and was living at home. I was allowed to pay minimal rent as long as I put the max amount in my 401(k) [16% at that job], and saved an additional 6% divided into a car fund and a savings fund. This allowed me [the spendthrift of the family] to get used to missing that much of my paycheck, and actually develop some savings.
Eleven years later, I thank my dad probably about once every other month. It’s made a lasting impact on my life, and my retirement, and if I ever have kids, I’ll be able to pass the same thing along to them as well.

Sorry I went so long, but I could write pages and pages about this (maybe I will at my blog…hmmm) – I am so glad this discussion is taking place.

Posted 12 Mar 2010 at 9:37 pm ¶
socgrad wrote:

I mentioned some of this in my comment yesterday about this topic. I’m pretty fanatical about money management. I’ve been reading and keeping informed on savings, investment, debt management, etc ever since college. I have a pretty anti-consumerist attitude, a serious aversion to debt, and I save money like a squirrel storing up nuts for the winter. Atlasien’s father has a kindred spirit in me; I do my own hair! (BTW, I’m a black woman.)

The real catalyst for me was seeing many people in my immediate and extended family work hard all of their life and never get past the “struggling or just surviving” stage. I decided early on that I wanted to do more than just “get by” financially. I wanted to be financially secure. At first this meant to me just being in a place financially where I didn’t have to worry about how I would pay my bills this month or take care of myself in the near term. At this point, I’m frankly thinking more in terms of *accumulation*.

Unfortunately, my mother was a terrible role model for money management. Nearly all of the nuts and bolts of what I know I had to learn on my own. One thing I do give my mother much credit for is instilling in my sister and me the understanding that we would have to be able to take care of ourselves financially as adults. More than that, my mother taught us that we should take pride in being able to take care of ourseleves financially. I think that learning from her that I should, am able to, and can be proud of taking care of myself was really the starting point for me to say “no I’m going to do more than just get by”.

Posted 12 Mar 2010 at 11:48 pm ¶
Keith Creech wrote:

From what I gather women outnumber men in the work force, which is even more evident in communities of color.

Posted 13 Mar 2010 at 2:18 am ¶
Raquel wrote:

I grew up, as one woman mentioned, surrounded by the rich. I received an excellent education, and also did not realize how broke my parents were until I visited my classmates’ houses. It wasn’t fun, just having one dress and a school uniform, no TV, no quinceanera, no pocketmoney, etc. But it didn’t kill me.
My father was the lazy son of a rich entrepreneur and “worked” for his father. He spent most of his salary at the races.
Every Saturday I would see him asking my grandfather for money.
I was ashamed for him.
But I made up my mind when I was ten that I would never ask anyone for money. And I never have!
I have worked since i was 14 tutoring in English, etc.
However, when I came to America I did fall into the credit card trap, spending mor than I had. Being a professional created the expectation that I could have whatever I wanted, and that I “needed” a bunch of expensive crap. I should have saved like the devil because most of my career was spent in SS jobs. My Social Security check now? $548!!!
Why so little? Because I’m not a politician, so I am punished for also having a small teacher’s pension. Regan called it “double dipping.”
If you live in Illinois and see what our pols do to get extra bucks from the taxpayers it wd. make you sick. Never mind pay to play, etc.

I never declared bankruptcy, but it was tough getting out of debt. I now have a fantastic credit score, credit cards, etc.
But I have wised up.
One thing I know is that if you are greedy and expect to receive an absurdly high return, you will lose your money.
AIG, Maddoff, etc., and all the cheats who stole people’s money were capitalizing on their GREED.
I have my pensions in AIG and lost a little money, but not much because it was mostly in fixed mutual funds.
Thank god, because it was all I had.
Sorry for the ramble—but if I didn’t have a husband, I’d be living in an SRO or a room
in someone else’s house with my pathetic retirement pensions from 3 systems and the magnificent check I get from SS.
If those bastard politicians who oppose a public health plan could experience my health plan instead of their Cadillac plans, they might support our President.
Final word: learn to save and be realistic about returns on investments.

Posted 13 Mar 2010 at 2:50 am ¶
Restructure! wrote:

I learned from a teacher that it takes one million dollars to raise a child. I don’t know where this number comes from (or whether it’s accurate), but part of my financial strategy is to never have any children.

Not everybody can do this, but when society holds women responsible for raising children, I’m not surprised that single women have less wealth than single men.

Posted 13 Mar 2010 at 11:39 am ¶
octogalore wrote:

Great post!

My experiences as a WW aren’t relevant to the racial wealth gap issue. Although I didn’t have certain wealth advantages (my parents never owned real estate; I had to take out full loans for college), we were not poor and I was given many educational/cultural privileges.

But I can respond to your question “how did you learn your lessons about wealth, income, and money?” from the standpoint of decisions women make, and having made a decision not to emulate some decisions my mom made. (Of course, my dad made them too, but has had things easier after divorce in ways men generally have things easier).

My mom never invested — in real estate, stock, a business. (Granted, she didn’t have the money to do it, most of the time).

She chose to leave jobs that weren’t fulfilling, without having another job lined up.

She gave up jobs to move to different states for relationships that weren’t solid.

She felt more comfortable going into additional debt for another degree, but didn’t feel comfortable accumulating debt to do anything entreprenurial.

She didn’t want to do anything sales-oriented or commercial and instead chose to do things that didn’t pay but that she felt were contributing to society. But when the bills had to be paid, she ultimately had to fall back on more practical things — only now more desperate and without as much ability to maximize their effectiveness.

She had more kids than she could support without the kids working through college and taking out full loans.

I love my mom, and in most ways besides these she’s made great decisions. But these decisions did give me a sense of things that I didn’t personally want to do. I didn’t figure any of this out before falling flat on my face, though.

After following the family tradition of “accumulate six figures of debt for fancy degrees” I was boxed into a career I hated — big law practice — and burned out after two years. I was foolish to rely on glossy TV programs and didn’t bother (or even consider) to ask real practitioners what it was really like, and because of that, wasted substantial money (that I didn’t have) and time.

Getting desperate turned out to be cathartic for me, forcing me to focus hard on getting out of debt and saving up. I took a sales-oriented job (involving poles and stages) that didn’t require formal education and realized, despite academic pretensions, that perhaps my strongest suit was sales. I lived simply and saved up, then invested in a commission-based placement job that I would previously have never considered, and that took six months before any commissions would typically be earned.

Now more used to embarrassing rejection, I was able to get past months of having people whose firms I used to practice at slam down the phone when I called. It got easier. That was ten years ago.

During my first year in this job, still before earning any commission, I met a man who wanted an equal partner, not someone to support. We agreed to keep spending low and try to retire early and do something more difference-making than helping rich people get richer (or in his case, film distribution). But in the meantime, we work long hours and don’t take much time off.

We have one daughter — and if I have anything to do with it, she won’t be majoring in anything ending in “theory” and will start working as a teenager, learning what people really do in their jobs. I throw out any books we are given in which princesses (or girls generally) are rescued. She figures out tasks to earn extra money and pays for extras out of her piggy bank.

One day at the strip club, a Hollywood customer volunteered to “take you away from all this” and it was frankly quite tempting — for about ten seconds. Taking all this (wallet contents) away from him was much more lasting. It was a good lesson — although, not one I’d publicly recommend.

Posted 13 Mar 2010 at 5:28 pm ¶
mute wrote:

One of the biggest discoveries I made in college was that the impetus for everything I had done with my life thus far was to address this wealth issue. It was also in college–where I assumed a fair amount of debt–that I realized that “doing better” than the generation before me would be a lot easier said than done. It is my thinking at this point and time that it probably won’t be done at all. Given what I do and how I like to work, I probably won’t be going above the economic class of my mother. Sometimes it amuses me to the point of tears that I once thought it as easy as just being “smart” and going to good schools.

So I suppose that’s where my education came in. I didn’t get much of a financial one as a child. My mother was a (college educated) single black woman and had her credit problems on top of that. What I learned from her was to make sure to save something in case of emergencies and to stay away from American Express. That was about it.

So far the little bit I know about finances, wealth and investing have come from jobs and sociology classes. The lessons I’ve gained from these places simultaneously empower me and torture me. I hate thinking about any of this shit at all.

Posted 13 Mar 2010 at 6:58 pm ¶
B. Durbin wrote:

“99% of the people giving financial advice are grifters.”

I worked at a bookstore for several years, and the Business section is almost exclusively hardback books. The only books that ever made it to paperback were the older ones such as “The Millionaire Next Door.” That tells you something, doesn’t it?

Proper food storage is an absolute must if you want to save money.* One of our first purchases when we got a house last year was a chest freezer. (The weirdest thing we keep in there is cat food, after an invasion of ants took out two bags in close succession.)

My father had a wonderful garden— fresh salad all summer long. I didn’t realize until I was a teenager that most people consider lettuce an essential part of salad— it didn’t grow well, so we didn’t have it. That was one way my parents stretched the budget. My dad also did sun-dried fruit which he would then freeze. It looked horrendous (no sulfites to preserve color) but even my grade school classmates said it tasted good.

*One of the first apartments that we had contained a freezer that leached flavor from food. That influenced our purchases in a negative way. And badly-designed kitchens will make it hard to cook as well. It’s amazing how much we started cooking at home once we had a usable kitchen.

Posted 14 Mar 2010 at 12:45 am ¶
khinky wrote:

I started to earn my first salary in january, after years of studying (which my parents paid for). Not much of it goes towards building my own assets because there is an expectation that I “pay my dues” to a large extended family and community. I feel resentful sometimes but it seems ungrateful not to give back, even if the money is going to individual people who might just stash it under their mattress forever… I also feel that women are expected to “invest in people” more than men, and that white people rarely have this kind of obligation.

Posted 14 Mar 2010 at 1:58 am ¶
Meg wrote:

My parents alternated (as in so many things) between extremes. Either we were eating nothing but lentils and rice for a month or my mom was buying herself $1000s of dollars worth of craft supplies that she then never used. Most of what I learned was that needing money always led to stress and probably not getting it.

I did learn how to feed myself well and cheaply, and where money tended to go, but needless to say what I really learned was that relying on anyone ever was more trouble than it was worth. It was actually my grandmother who taught me what good habits I picked up.

She too bought old houses and did the work to fix them up herself, while living in whatever house she was fixing up and working as a nurse. When it was done she’s buy a new fixer-upper and start renting the old one; at the time of her death (age 45) she had 4 houses. She also went around to garage sales and good wills and would refinish furniture herself. She taught me about potential value versus current price, the importance of saving and encouraged my saving for one thing I really wanted instead of buying lots of little things I didn’t (which my mother encouraged).

She also taught me about government programs; she’d become a nurse in part because of the tuition assistance available. “It’s like money just lying on the ground,” she’d say, “why make your life harder than it needs to be?” Years later, right after college, I was barely covering rent waitressing and unable to find a better job, I was able to get food stamps that let me eat chicken with my lentils and rice. It was a huge pain in the ass, but I was immensely grateful that I’d had someone who taught me that it was okay to use the safety net available when you are falling; I watched other friends in similar situations not do so, or be ashamed when they did. I can see why, but I also think given the instability of capitalism the sigma isn’t at all justified. I try to “come out” as a one-time welfare recipient as frequently as possible, especially now that I’m making good money.

Posted 14 Mar 2010 at 3:18 pm ¶
AC wrote:

The lesson here is: try to live below your means. Don’t spend every cent you bring in – save (or invest) a good portion of your post-tax net.

I have neighbors that are working themselves to death to afford ’status’ cars that nobody really needs, or funding home ‘improvements’ that add little to the value of their homes (but are obscenely expensive – in time, inconvenience, and money). Other neighbors spend every cent they make just treading water (they would be better off in an apartment, with a used car).

Poor impulse control is the root cause of these disparities – many well educated, otherwise intelligent people, have extremely poor impulse control.

Posted 14 Mar 2010 at 3:44 pm ¶
AJ wrote:

A more interesting statistic would be to relate the generation separation from place of origin to these statistics.

Woman and man who were not born in the country and do not speak English in their home country are disadvantaged in general but their children should gain advantages.

I do not disagree with research but I think for those with European ancestries get lopped together unfairly in these studies.

Woman and man from long standing families that were in the US in the early 1800’s should not be considered with those who immigrated in the 1920-1930’s.

African American’s are obviously the antithesis of this thesis.

Posted 14 Mar 2010 at 4:13 pm ¶
AJ wrote:

That should have said “I do agree”

Sorry.

Posted 14 Mar 2010 at 4:14 pm ¶
James wrote:

I think this article is missing a big piece of the puzzle. The biggest financial burden of all is raising a child. Not simply because of the expenses they incur, but the time that is taken away from pursuit of career, education, and other opportunities. To take this responsibility on as a single parent is financially devastating.
The responsibility of child rearing still largely falls to women, and hence single parents are far more likely to be women. Correct me if I am wrong, but I’ve read that a much larger percentage of black/latino mothers are single parents. Wouldn’t this represent a huge financial drain on these groups? Perhaps the wealth number is just a symptom of already documented problems of family structure? Clearly families need help, whatever the cause, we are in the situation now. The Question remains, why as a society are we not helping and choosing to bailout Banks and not parents?

Posted 14 Mar 2010 at 4:28 pm ¶
mel wrote:

Single white women might have more money than single women of color, but look to married white or Asian men if you want to see where the real wealth is – especially married white men. I suspect you will see at least 60% of your billionaires in that category. I also would have liked to see stats on the wealth of single women of all ethnicities (you forgot East Asian, South Asian, Persian, Jewish, etc) not just black, white, Latina. Or maybe this is because I live in California, where we have more Asians than African Americans.

Posted 14 Mar 2010 at 4:47 pm ¶
La Lubu wrote:

The first lessons I learned about wealth, income and money were from my family (immediate and extended)….typical working-class and/or immigrant values of working hard, saving money, using cash instead of credit, DIY to save money (home repair, car repair, home cooking, stuff like that) whenever possible. Also—home ownership. That you should buy instead of rent as soon as you can. Female relatives (especially my mother) always stressed earning your own money—always. That relying on a man to support you was foolish. Having your own money wasn’t just support in case of him leaving you—it also provided power within the relationship.

When I became an apprentice, older journeymen (my father’s age or a little older) would offer their advice, mostly about keeping your home mortgage doable on unemployment—that if you could do that, everything else was gravy. That, and voting to put money in the pension at contract time, and how we (the younger generation) really need to start an annuity or 401k plan to save even more (at that time, my Local didn’t have one—we do now, and I’ve been contributing 10% ever since).

Reading Thomas Shapiro’s The Hidden Cost of Being African-American really illustrated for me why I felt like I was busting my ass and saving, yet not getting any real stability (though I’m Sicilian-American, not African American). Wealth is generational, and it’s very hard to build wealth from scratch, even if you do all the right things: getting an education, saving money, living frugally. Shapiro had an excellent example in that book, a compare-and-contrast between two families that were very similar in age, income, and education levels….with one family white and the other black. The white couple had a bedrock of financial stability that was borne from generational wealth; the black couple was trying their damndest to build that wealth from scratch.

The white couple had the down payment for their house given as a gift from one set of parents. Their children had their private-school education paid for by the other set of grandparents. They graduated from college with no student loans, because their parents paid for their schooling. The black couple had none of those advantages—they had to spend more years renting (and less building equity) because they had to come up with the down payment themselves. They had to take out student loans in order to complete college. So, even though these two families were similar in income, the wealth gap was amazing. While the white couple had the financial assistance of four other adults when it came to raising their children, the black couple were raising their children while also assisting other extended family members financially.

Same values. Same practices. Two different worlds with two different results.

My mom never invested — in real estate, stock, a business. (Granted, she didn’t have the money to do it, most of the time).

Hi, octogalore! I’ve said this before on octogalore’s blog when financial issues were discussed—in our mother’s generation (I’m 42), women were far more limited in the careers we could realistically get. That no doubt played into her mother’s decision to pursue the avenues she did, with the result that she didn’t really have much to save after making the ends meet (my mother grew up loving science, and in her day that meant one thing—becoming a nurse. Not a poverty-level occupation, but not very lucrative in those days either).

Vehicles for investment that were doable for people with working-class incomes were more limited at that time, too. They didn’t have interest-drawing checking accounts, mutual funds, 401k plans, IRAs, Roth IRAs, etc. They had savings accounts, U.S. Savings Bonds, and home-ownership. Stocks were usually out of reach for people of average income; they couldn’t afford the price of admission.

All that plays into the lack of generational wealth.

Posted 14 Mar 2010 at 5:03 pm ¶
Matt wrote:

There are a lot of factors. One that is often overlooked is college. It costs a lot of money and should bring you a higher income. Most parents who are white pay for their daughters to go to school. Even assuming cheaper prices of education/living during that period it’s an extra $50,000. If you don’t go to college or your parents don’t pay you’re already that far behind. Another is if your family has education you’re much more likely to be successful. That’s just because it’s easier to be successful if your parents have that middle or upper class mentality. Whites have more money and are more established than the other races it makes sense that they will continue to be that way for at least a couple more generations.

There are a million factors and they don’t apply to individuals. But as a general group in the US whites have a much easier path to success today. Just like a child of a black or hispanic college professor is going to likely be a lot more successful than the child of a white meth dealer. Anyone can be successful but it takes a lot more drive, natural ability and luck to outpace people who had such an elevated starting point.

Posted 14 Mar 2010 at 5:15 pm ¶
Latoya Peterson wrote:

@Mel –

We didn’t forget anything. As I mentioned in part one, the analysis is limited by data available, which is why we are hosting a separate discussion on data and the Census. If someone is not listed, it is because there is not enough data to create a realistic portrait.

Posted 14 Mar 2010 at 6:53 pm ¶
eclectique916 wrote:

Mother always said to live below my means. Timing is everything. I can’t imagine paying back a student loan today. I’m talking loans the size of mortgages.

Posted 14 Mar 2010 at 7:59 pm ¶
Egalitarian wrote:

LaLubu: the thing is, not all white families are well off. My parents and my dad’s siblings were the first ones in their families to go to college and claw into the lower middle class. They did not choose high-paying careers. There is no money in my immediate family; I will never inherit anything. I never got a nice free car for graduating college, or a paid condo for grad school.

I went to a very good school undergrad on a large scholarship and made up the difference with a loan. My parents had a hard time of it just flying me home for holidays.

I feel the disadvantage of being a non-monied single woman quite keenly at my current job. My place of employment is lovely, but everyone is married or inherited money or something, so a low-ish salary is the tradeoff for a congenial workplace. I may have to go corporate for a few years just to establish the nest egg of wealth that other people take for granted.

(The reason why I think my parents’ families had no generational wealth built up — they were alcoholic peasants.)

Posted 14 Mar 2010 at 9:45 pm ¶
V Terry wrote:

I think one thing missing from this dialogue is that poverty persists generation-to-generation not because of “bad personal choices” but often because of lack of knowledge about how to navigate the system.

I listen to those financial management dial-in programs on the radio, and I hear people who… well, that was almost me.

I grew up in a middle class household, with “nice things”, but it was all bough on credit. My parents have pensions but no savings or investments at all, because nice furniture and clothes were more important to them at the time.

When you grow up in a middle class environment in a middle class school district, people assume you know how things are “supposed to work”, that you’ve been raised with identical values. But I knew as a teenager I wouldn’t have money help for college and the loans scared the hell out of me; I ended up not finishing. My mom wanted me to be a secretary or get a government job, because they were “stable”, there was no thought of law school or anything which would have actually resulted in a higher salary later, because of the expense and time I would have had to incur to get there.

So while I was raised in a middle-class milieu, it really didn’t HELP, because my parents were raised during the post-depression era and instead of this leading to frugality, it sort of went in the other direction, where having nice things and enough money to pay the credit card bill (barely) were more important than planning.

I’ve done all right for myself in the long run. I work in a creative field and have a decent income, a house and savings, but I had to figure it out on my own.

Posted 14 Mar 2010 at 10:27 pm ¶
La Lubu wrote:

LaLubu: the thing is, not all white families are well off.

Yeah, tell me about it. Melissa, octogalore and myself all touched on that with our experiences. But the fact is, white families statistically hold more wealth than black families and Latin@ families. And how they use that wealth serves to further increase and emphasize the racial wealth gap (white flight, the price of higher ed combined with cutting grants, gated communities, housing covenants, etc.). To be blunt, white families that don’t hold generational wealth are the exception, not the rule. There’s a lot of us, but we are still the exception. It’s probably also worth mentioning that we tend to come from certain white ethnic groups as well (and I’ll end on that before launching into an epic derail on Southern/Eastern European immigration, job stratification, the Rust Belt….I think you get the picture).

I think one thing missing from this dialogue is that poverty persists generation-to-generation not because of “bad personal choices” but often because of lack of knowledge about how to navigate the system.

I agree. I think it also persists becauce people are forced into choosing between conflicting responsibilities. The standard trope is “poor choices” or “lack of personal responsibility”, but it’s more often the impossibility of balancing the conflicts in responsibility that prevents people from being able to build personal wealth (and thus, generational wealth for their descendants).

Posted 15 Mar 2010 at 8:37 am ¶
B. Durbin wrote:

“Also—home ownership. That you should buy instead of rent as soon as you can.”

While this is true, the concept was vastly abused during the housing bubble. It’s going to most likely be decades before another housing bubble happens, but please, please understand that building equity does you no good in a bubble situation because of the inevitable crash. (How do you know a bubble? Rent should be roughly equivalent to your monthly nut in a house within a certain amount. If it costs twice as much to buy half as much space, you’re in a bubble and you can get into trouble.)

On college— we grew up knowing that we would have to pay for college ourselves. My sisters got to declare themselves financially independent after two years, but then they changed the rules, so I didn’t get to do that. The way I worked it was to work my butt off in high school (which I will freely admit was a private school— we got financial aid from them as well) and applied for every scholarship I could get my hands on. According to a HS senior I know now, those scholarships are harder to come by these days. But it ended up that it was cheaper for me to go out of state to a private college than it would be for me to go to a state university because the former offered me more scholarships.

One more thing I will say about college— don’t fret if you have to delay it for a few years. A lot of the better colleges (and I mean those that teach well as opposed to “name” schools) appreciate student applicants with a bit of the “real world” under their belts, and will do more to assist them. Plus there is the fact that your financial aid will be reviewed based on what you make instead of what your parents make.

Meg— there is nothing wrong with using the safety net. That’s what it’s for. We never did, but we honestly hadn’t realized we were eligible until after the fact.

Posted 15 Mar 2010 at 12:58 pm ¶
miga wrote:

@ mute: you mean…that’s not how it works? Noooooooo! (I’m coming to this realization myself, and it’s scaring me to death)
@LaBu: word. Every time my parents start to save up a bit of money, something happens (the oven breaks, someone gets really sick, mom gets laid off), and then it’s paycheck to paycheck again. And they’re both teachers (first generation college kids as well, and children of at least one parent who spoke little English, if that makes any difference).

Posted 15 Mar 2010 at 1:29 pm ¶
little mixed girl wrote:

I never got specific lessons on money.
I just observed and listened to my mom’s tales of hardship as a youth.

The problem was that while my mom would tell us these things, she would then spend a lot of money on random things to make me and my little sister happy.

We grew up in a upper-middle class city, and my of my peers got what they wanted when they wanted it. I always wanted.
My mom wanted to give us the life she couldn’t have as a child, but at the same time she resented having to try to keep up with the doctors and professors around us.

A lot of times she was of the “buy now, pay later” mindset. “It’ll be better when I get a better job”, “It’ll be better when I get a job”, “What the heck, I’m already in debt, I might as well do something to make myself happy”.

There were no lessons about saving, because as soon as we got money, it went to bills.
I couldn’t save, because when I held onto money, I was called “selfish”.
She taught me about sacrifice, but her actions and words didn’t match up.

What’s frustrating is that this is a person with a masters.

I’m currently struggling with money.
I have to send money to take care of my mom, and the money that I send every month (if saved) would be so much. I always feel like I’m just throwing money away, and watching the people around me splurge because they don’t have to worry about taking care of others.
But on my end, if I lived an even more frugal life, I would have more…however, I’ve spent my whole life budgeting down to the last dollar.

There are so many “if only if…”s that run through my mind *sigh*

Posted 18 Mar 2010 at 12:11 am ¶
tiffany wrote:

the hard way: racking up debt. my parents did. not. teach. me. an. effing. thing. about money. in fact, they give *horrible* advice about money. listening to their advice landed me in the most debt i have ever been in, and i resent them immensely for it. (this is why i no longer listen to them.)

in my defense: much of my debt was student loan related and healthcare-related, but the biggest chunk is my mortgage. oh, but thanks to the housing market meltdown, my net worth is twice as negative as it was.

but perhaps the saddest part is that in terms of income and wealth, i am still way better off than a lot of black women. but if i lose my job tomorrow, best believe i will be at my mama’s house the day after.

Posted 18 Mar 2010 at 1:57 pm ¶
miga wrote:

@little mixed girl: I feel you.

Posted 19 Mar 2010 at 1:31 am ¶
malted_tea wrote:

I’m reading these posts backwards (from Part 5) and note that the discussion drops off from this point.

Why? We need to talk about this, ladies!

So, how did I learn your lessons about wealth, income, and money?

Not really from my parents although they were both serial entrepreneurs.

Dave Ramsey (syndicated financial talk show dude with a Christian slant) clued me in a few years back and my wealth has benefited since then.

It’s not much, I mean come on, I’m a single mom. But it’s not dire, but this report has me thinking about my wealth goals and whether I’m aiming high enough.

Thanks for the insights. Hard to read but good to know.

Posted 24 Mar 2010 at 10:28 pm ¶