Financial literacy is an important tool that will allow anyone to gain a handle on their finances and their lives as a whole. But unfortunately, there are many Americans who have little to no financial literacy at all.
This issue is especially prevalent among the black community. For that reason, we have created this article to highlight that disparity and explore a few ways that this situation could improve.
Current State of Financial Literacy in the Black Community
As is the case with many quality of life factors, members of the black community are disproportionately affected by a lack of financial literacy. This shortage of economic knowledge is one critical factor that prevents individuals and families from improving their financial well-being.
Financial literacy is what allows a person to understand, manage, and plan their financial lives. A test called the Personal Finance Index is one way of determining an individual’s competency in this area.
Today, black Americans continue to exhibit low scores on this metric. For example, African Americans scored an average of 38% correct answers on the Personal Finance Index. What is even more discouraging is that only 28% of black Americans got more than half of the questions correct on that test.
There are a multitude of reasons for these outcomes. The next few sections will explore some ways that the situation can change.
A Few Ways to Improve Financial Literacy in the Black Community
While financial literacy in the black community remains low, there is some hope. With the right resources and habits, anyone can alter their financial life for the better. Here are a few reliable ways to do just that.
Healthy Personal Finance Habits
One of the most hands-on ways to improve financial literacy is to immediately begin adopting healthy financial habits. While that may seem like a tall order for some, achieving this is a bit more straightforward than you might expect.
An easy place to start is a personal budget. Setting a simple monthly budget will help you keep track of the money you have coming in and the money you spend. Sometimes, simply seeing these figures on paper is enough to motivate a person to change their financial lifestyle entirely.
If you don’t know where to begin when it comes to financial literacy, education is what you need. However, you don’t need to go to an academic institution to learn how to manage your finances. Instead, financial education resources are far more accessible than that.
There are countless books on the market that will help people learn how to take care of their personal finances. Any of those books is likely to set you on the right track towards financial literacy.
However, if books are not accessible to you, you can use an alternative means to understanding finances. Nowadays, there are many online resources that will give you the same information. Search for financial literacy groups on social media platforms or visit Youtube to find a video that will walk you through the process.
Occasionally, the best way to learn anything is to talk to someone who already has experience. Since finances are at the core of our lives, that means there are many people who are well-qualified to share their knowledge on the topic.
If self-guided education is not ideal for you, reach out to a financial professional for some guidance. The one-on-one nature of these encounters can help drive home the most important aspects of financial literacy. And while such services often come with consultation fees, the information you gain can be invaluable.
Without a solid understanding of finances, it is nearly impossible to advance in the world today. Addressing this issue is important among the black community. If you are a member of that community and wish to increase your financial literacy, following the advice in this article is a great place to start.