As the US becomes a more diverse nation, the distribution of wealth also becomes more unequal creating a Racial Wealth Gap. Over the past four decades, wealth inequality has skyrocketed. White families accumulate more wealth over their lives than black or Hispanic families do, widening the wealth gap at older ages. Average wealth for white families is seven times higher than average wealth for black families. African Americans in the US make up just 14% of the population, and holds about. $1.2 trillion in buying power annually. All of which gets funneled to predominantly Caucasian retailers who capitalize on these opportunities. African Americans have acquired more money to spend since the 1960s, where sales have consistently increased in the following areas:
Tobacco $3.3 billion
Whiskey, wine, and beer $3 billion
Non-alcoholic $2.8 billion
Leisure time spending $3.1 billion
Toys, Games, and Pets $3.5 billion
Telephone Services $18.6 billion
Gifts $10 billion
Charitable Contributions $17.3 billion
Healthcare $23.6 billion
Companies and manufacturers are seizing the opportunity to create specific products to target diverse consumers. African Americans have dominated spending on the ethnic hair and beauty market, ringing up $54 million of the $63 million total industry spend in 2017. African Americans spent considerably more money in the general beauty marketplace last year. Black shoppers spent $473 million in total hair care (a $4.2 billion industry) and made other significant investments in personal appearance products, such as grooming aids ($127 million out of $889 million) and skin care preparations ($465 million out of $3 billion).
Some of the contributing factors to these spending habits are:
Black Americans are heavy users of social media and huge consumers of video content.
Black digital consumers are very receptive to advertising on mobile devices.
The Black consumer ownership rate for Smartphones grew from 33% to more than 54% and continues to grow.
African-Americans use their phones for texting, Internet access, receiving and sending email, downloading picture, downloading music and mobile video, accessing Twitter and Facebook more than other demographics.
Black women are huge users of e-commerce involving purchases of beauty products, clothes, healthcare products and groceries.
Black men and women are very socially connected to others. 72% of Black adults online have more than one social networking profile.
What can African Americans do to curb their spending and make smarter financial investments? Limit your spending only to essential items such as food, clothing, shelter, etc. and save extra money which can then be invested in the future. Invest in larger purchases like a house, education, and other financial business investments. Invest in lucrative business opportunities, stocks, bonds, enterprises, etc. Start investing in creating more products and business opportunities as opposed to only being a consumer. Invest in more Black owned business to invest money back into communities of color. Think about what is driving your financial behaviors and what you can improve on or change. Obtain free financial or credit counseling at www. nfcc.org. A great rule of thumb to follow: Spend Low and Invest High. For more information email us at firstname.lastname@example.org