Financial Literacy in the Black Community

Closing the Wealth Gap

African Americans have struggled for decades to build wealth in America. Historical injustices — including slavery, systematic inequality, employment discrimination, racist housing policies and other barriers — have stymied economic well-being and harmed retirement confidence for the community. Today, the average white family has eight times the wealth of the average Black family, according to the Federal Reserve’s 2019 Survey of Consumer Finances. Closing the racial wealth gap in the United States is a complex issue with no one-size-fits- solution. But expanding financial literacy, education and job training efforts can help, experts say.


In 2019, white Americans had a median family wealth of $188,200, while Black Americans had a median family wealth of just $24,100.

Source: U.S. Federal Reserve

Lawrence Gonzalez is an auditor for the U.S. Department of Treasury Office of Inspector General in Washington D.C. who says healthy conversations about personal finance often don’t exist in Black culture.

“People never wanted to discuss money, understand it, or grow it,” Gonzalez told “There’s almost a mysticism around it because not enough people understand the concepts.”

Raised in Port-au-Prince, Haiti with Brazilian roots, Gonzalez excelled at math at an early age. He came to the United States when he was 11 years old and graduated with a degree in accounting from the Florida State University.

After starting his career, Gonzalez wanted to give back to the Black community. In 2018, he started a financial literacy platform called the Neighborhood Finance Guy to share practical knowledge about eliminating debt and building personal wealth.

Gonzalez says leveraging experiences common to Black culture can help break down barriers to financial literacy.

“My friends love basketball, so I use that as a metaphor to explain investing,” he said. “You try to use anything to trigger an idea, a concept that clicks and stays with people.”

Drawing on family ties is another strategy.

“Remember what your parents and grandparents did. They were always performing financial literacy principals around you, from meal prepping to side hustles to buying in bulk at the grocery store,” Gonzalez said.

The Internet has also made financial information more readily available over the last 20 years. Mobile banking, investment apps and online resources have helped level the playing field, according to Gonzalez.

“This information is more accessible than ever,” he said. “Now it comes down to someone’s personal motivation to pursue it.”

What Is the Racial Gap in Financial Literacy?

In 2018, just one-third of Americans could correctly answer at least four out of five financial literacy questions on concepts such as mortgages, interest rates, inflation and risk, according to a 2018 study by the Financial Industry Regulatory Authority (FINRA). The disparity is greatest among African Americans. According to the 2021 TIAA Institute-GFLEC Personal Finance Index, African Americans answered an average of 38 percent of the study’s financial literacy questions correctly, whereas white Americans answered an average of 55 percent of questions correctly.

Other findings from the TIAA study include

  • A lack of financial resilience was more common among African Americans than white Americans.

  • Insurance tends to be the greatest knowledge gap among African Americans, followed closely by comprehending risk, investing and identifying reliable sources of financial information.

  • Debt management is the area of highest personal finance knowledge among African Americans.

  • Among surveyed African Americans, financial literacy is greater among men, older individuals, those with more formal education and those with higher incomes.

Minority financial experts agree that strengthening financial literacy — the ability to use skills to effectively manage money and resources — can be the key for African Americans to achieve a lifetime of financial well-being.

Educating Early

Raising public awareness is important — but so is teaching students financial literacy in public schools. Yet a patchwork of state laws, coupled with funding issues and limited training for teachers, has made financial literacy education in schools inconsistent at best and nonexistent at worst. Twenty-one states required students to complete a personal finance course prior to high school graduation as of 2020, according to the Council for Economic Education. However, the size and scope of mandated high school personal finance classes vary. Only six states require students to complete a semester-long, standalone class. Other states offer a shorter course or fold curriculum into a different class.Research indicates that mandated education requirements make a difference.

College students who undergo state-mandated financial education in high school are more likely to apply for financial aid, more likely to borrow fewer private loans and less likely to carry a credit card balance, according to a study from the National Endowment for Financial Education.

Almost 70 percent of high schoolers graduating in 2019 had at least some access to personal finance, including the option to take at a one-semester elective, according to research from Next Gen Personal Finance, a nonprofit group that creates free curriculum and funds professional training for high school teachers.

However, major gaps in access exist between higher and lower income students, particularly in states where there is no required one-semester personal finance course.

In schools where at least 75 percent of students were eligible for free and reduced lunch — a common measurement of low income — only 3.9 percent of students were required to take a one-semester personal finance course. Another 52.4 percent were at least given the option.

In contrast, wealthier school (where less than 25 percent of students were eligible for free or reduced lunch), students were nearly three times as likely to be required to take a one-semester personal finance course (10.5 percent). Another 61.6 percent were at least given the option.

“It’s a huge gap,” said Tim Ranzetta, co-founder of Next Gen, to “To say the numbers are disappointing is an understatement.”

Next Gen and other organizations are trying to narrow the financial literacy gap by focusing on schools in underserved communities.

"It’s a huge gap. To say the numbers are disappointing is an understatement." — Tim Ranzetta, co-founder of Next Gen Personal Finance

Last year, Next Gen launched a pilot program providing grants to some of the nation’s largest school districts, which historically have more minority students. The three-year grants help districts cover salary for a personal finance education specialist for three years, Ranzetta said. Of course, teaching kids about personal finance can take place outside the classroom, too. Podcasts, YouTube videos and free online resources can help teach students — and parents — valuable lifelong lessons about money. Keeping an open dialogue at home is important, too. Ranzetta said everyday discussions — like how to save money at the grocery store or how to use an ATM — can spark interest in personal finance for children and teens. “Talking about money is still seen as a taboo subject in many households,” Ranzetta said. “But it doesn’t need to be a ‘big talk.’ It should just be a part of day-to-day conversations.”

How Financial Literacy Impacts the Black Community

Financial literacy is made of several components. The 2021 TIAA Institute Index study assess financial knowledge in eight key areas.

8 Areas of Financial Literacy

  • Earning

  • Consuming, such as bud