June 21st 2023.
A new study has revealed that Black millennials are facing a much more difficult situation when it comes to building wealth and achieving financial stability than their contemporaries. With significantly more debt, lower incomes, and higher housing costs, these young people are at a serious disadvantage.
On average, African Americans carry over $11,000 more in non-mortgage debt than other millennials, with student debt constituting the largest portion. Furthermore, the average Black millennial has a salary of $67,802 and savings of only $42,026, both of which are lower than the respective figures for non-Black millennials. This means that 60% of Black millennials are struggling to cover their bills compared to 56% of all millennials. Additionally, 53% of African Americans have been denied a loan due to their finances versus 49% of white millennials.
Matt Brannon, the author of the study, noted that this combination of lower incomes, higher debts, and higher housing costs is a recipe for financial hardship in the future. He added that the disparity between Black and white millennials is particularly evident in housing, with 41% of African Americans having missed a housing payment at some point, compared to 34% of white millennials and 38% for millennials overall.
Brannon also pointed out that the low rate of homeownership among Black Americans has been a major hindrance to building wealth. This is because if parents are homeowners, they can pass down a valuable asset to their children. However, discriminatory policies in the past have prevented many older African Americans from being able to buy a home, leaving their children without the same head start as other children.
The study also provided some hope, as 19% of Black young people aren’t in any non-mortgage debt at all, and the percentage of Black millennials in credit card debt is lower than the national average. Brannon noted that this is a sign that Black millennials are on their way to bridging the wealth gap between Black and White Americans.
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