Financial Challenges for Black Community

Every day, Payactiv works to level the playing field for all Americans struggling to make it between paychecks. The struggle is even harder for African-American and all people of color.

This is Black History Month. The United States has a lot of work to do to create a financial experience where every American has the opportunity to equally succeed.

Here is a look at economic challenges facing Black Americans and advice from Black leaders in the online financial community.

Chasm So Wide: The Racial Wealth Gap

The racial wealth gap is huge:

• Black families are twice as likely as Whites to have zero or negative wealth.
• Black college graduates face nearly 50 percent more college debt than their White classmates.
• In 2020, the average Black worker earned about 20% less than the average White worker, according to the Bureau of Labor Statistics.
• White households in the United States hold far more assets than Black households. According to a Center for American Progress report, 75% of White households own a home compared to just 44% of Black households.

And then there is Covid:

• Covid decimated many Black communities, and it hit African-American employment (hourly and shift workers) harder than any other racial group; in the worst months of lockdown, Black unemployment exceeded 25%. It’s now taking the Black workforce far longer to recover.

Fighting to Reach Payday

We support Americans on their journey to financial livelihood.

We see challenges – and U.S. financial inequality is one hell of a challenge – and we build solutions. It started with us inventing Earned Wage Access (EWA) nearly a decade ago.

We now have our Lively app, the first all-in-one digital wallet designed to support hard-working adults earning less than $50,000/year.  We now have a Direct model, supporting anyone who wishes to join Payactiv.

Many of our users fight every week to make it to payday without an overdraft or a visit to a payday lender. They’re choosing between buying groceries and paying for daycare.

To solve, we have to listen. We talk to Payactiv users every day. This month we also spoke with several Black leaders in the online personal finance community for insights into financial struggles unique to Black households.  In the week’s ahead, we will bring you exciting conversations with Michelle, Wilson and Sandy.

Meantime, here are some initial thoughts about financial struggles in the Black community and ideas for solving:

The Challenges of Equal Financial Opportunity

Michelle Jackson. Michelle is a financial podcaster focusing on helping millennials get out of debt (visit Michelle is Money Hungry).

• “One of the challenges building wealth for Black and Brown communities is the lack of understanding around the established financial systems and practices in place that have impeded building wealth.”
• “Many Black people have purchased homes. What a lot of people don’t know is that there are many people who have been tricked into mortgage contracts where if they miss one payment, they lose the home. (Be aware) of those kinds of practices, so you can avoid them.”
• “With payday loans, not understanding how interest is accrued puts you into a trap.”
• “A family member who is a high earner may be someone people go to for help. It does impact this person’s ability to grow their wealth. It’s not a bad thing to help your family. The challenge is helping your family without harming your finances.”

Wilson Muscadin. Wilson is a financial coach and Accredited Financial Counselor®  (visit The Money Speakeasy).

• “There’s a saying that ‘when white America catches a cold, black America catches pneumonia.’ The impacts of Covid have impacted communities differently. Black Americans are only in the second generation of full civil and economic rights. It’s like starting a marathon three or four hours after everyone else. Comparing where they are at the same time is not necessarily an ideal comparison.”
• “Money growing over the span of time has helped families generationally. They are able to pass down financial assets, resources, and knowledge for generations when other communities were intentionally denied opportunities to get the same trajectory of compound interest. It’s important to understand that detrimental effect. You’re not just starting at zero. You’re starting at a deficit.”
• “There are many new opportunities to build a sustainable income that didn’t exist 20 years ago. You used to have to go through the educational system and corporate America to build wealth. (Now) there are other routes if those gates are not open. The diversity of opportunity for wealth accumulation gives us opportunities to do that more than ever.”

Sandy Smith. Sandy is a blogger focused on personal finance, frugal living and debt reduction. (visit Yes, I Am Cheap).

• “There’s still a lot of gatekeeping within homeownership. We’ve seen institutionalized discrimination in banking and finance. Banks have been found offering subprime products to customers of color, even when they had the same financial background. These households were offered more expensive products than white households.” Knowing this prior to starting the purchase process ensures you won’t be taken advantage of.

Working Every Day to Elevate the Black Community

At Payactiv, we’ve found our app and services reach Black Americans and other minorities at a higher rate than white Americans. That’s an unequal number we’re proud of, and we plan for that trend to continue as we work hard every day to help our community live the life they’ve earned.