Black families are more confident about achieving the American Dream than the general population. However, African Americans fall short on executing life-changing measures such as accumulating wealth, being better prepared for retirement and building up savings. Here are a few facts (and advice) about African American economics:

Some 84% believe the American Dream means financial security; 78% in not living paycheck-to-paycheck; and 77% in owning a home.

Still, based on a new State of the American Family Study by Massachusetts Mutual Life Insurance Co. (MassMutual), many African Americans don’t have tangible assets needed to make those goals happen now.

The study revealed a disconnect between African Americans’ financial situations and their hope toward the future. The report disclosed some pitfalls tied to African Americans’ personal finances including high debt, low savings and a lower likelihood of wide financial product ownership. In turn, the financial disparities and the wealth gap possibly explain why 31% surveyed are convinced the American Dream may be fading away.

Some key findings from the survey:

  • Outside of retirement accounts, only 37% of African Americans own wealth-building products such as stocks and mutual funds.
  • Only 35% believe they are doing a good job of preparing for retirement.
  • 33% have less than one month of funds saved for a crisis and less than 25% have amassed more than six months’ of emergency savings.
  • 58% are actively involved in educating their children on finances versus 48% of Caucasians. Forty-percent rely on family members for information

“The study shows African Americans want to improve their financial situations and are hopeful about the future,” said Evan Taylor, African American market director, MassMutual. “At the same time, it sheds light on the financial struggles and inequities that the African American community continues to battle. Those contradictions indicate a need for greater financial education and discipline for the whole family to achieve economic success. In fact, the biggest financial regret expressed by respondents was that they wished they had started saving and investing sooner.”

The State of the American Family survey consisted of 3,235 total interviews with Americans, including 482 African American respondents. The vast majority of these interviews (2,730) were conducted with men and women aged 25-64 with incomes equal to or greater than $50,000 and with dependents under age 26 for whom they are financially responsible. Respondents had to contribute at least 40% to decisions regarding financial matters in their household to qualify.

Shavon Roman, a financial adviser at Atlanta-based The Piedmont Group, shared how she overcame financial havoc. Her journey included becoming an entrepreneur in real estate and franchising, where she ended up hundreds of thousands of dollars in debt. To rebound, she created a debt reduction strategy and lived below her means. The result: Within five years she was debt-free. “You can accomplish anything with a plan,” Roman says.

Her experience with financial challenges—and now on the path to wealth-building—led Roman to help others professionally. Her clients at Piedmont mainly include women in their 30s and 40s, and pre-retirees working in corporate America. Piedmont is affiliated with Mass Mutual. She focuses on helping clients increase their net worth.

To help African Americans get on the right path to financial independence, Roman offers advice on the following:

  • Financial education: It’s imperative to have a savings and spending plan, allowing you to tell your money where to go and keep track of it. Consider working with banks that have online tools to monitor your spending and create budgets. Also, know your credit score. Roman says a helpful tool to do that is the “Credit Karma” app. If buying a home is an objective, look for a prime rate loan with a nonprofit homeownership organization like the Neighborhood Assistance Corporation of America.
  • Financial planning and execution: So what should African Americans do before investing in stocks or other asset classes like real estate or starting a new business? Roman’s first suggestion is to do your research. She advises knowing your risk tolerance, ask yourself if you can stomach a financial setback. Monitor the investment and its performance regularly. When it comes to achieving wealth-building goals, eliminate high-interest debt, reduce debt, and establish a savings fund.
  • Professional help as opposed to taking a do-it-yourself approach with finances: Seek advice from a financial professional equipped to help you establish and reach your financial goals. When looking for help with investment planning, retirement planning, or insurance purchases, partner with an expert. Check out their background, references, and makes sure they are licensed in the state they work in. A financial professional can guide you to the right solutions to help achieve wealth-building goals.

“As minorities, we have the ability to improve our economic positions using ideas that may seem so small,” Roman says. “My biggest lesson in life is that hope is not a plan. We have to put action with a plan and do the work. I did the work and I hope that my transparency inspires others.”

MassMutual also offered some “NEXT STEPS’’ to help black families secure their financial future:

MAKE FINANCIAL PLANNING A FAMILY PRIORITY. Teach the next generation about finances. Involving your children in discussions of family budgeting and monthly bills can help them understand what is involved in managing money.

PREPARE FOR THE UNEXPECTED. Protect your family with appropriate amounts of life insurance and disability income insurance. These precautions can provide a measure of security for your family should the unthinkable happen.

PAY DOWN DEBT. It’s a good idea to pay off the loans and credit cards with the highest interest rates first, then the smallest balances or the highest minimums. If you can make extra payments or pay more than the minimum, do so. This will reduce the total cost of the loan.

ESTABLISH SAVINGS. Open a separate savings account designated for your emergency fund and add to it every paycheck. Use an automatic deposit so you don’t forget. As a rule of thumb, target 3 to 6 months of salary for your financial cushion.

PLAN FOR YOUR CHILDREN’S EDUCATION. Create a plan for how you will pay for college. In addition to your income, there are opportunities to pay for college including 529 plans, Coverdell Education Savings Accounts, student loans, permanent life insurance loans, financial aid, grants, and work-study programs.

SAVE FOR RETIREMENT. The amount of income needed to maintain a standard of living in retirement varies from person to person and family to family. Think about your current and future expenses to see if you are saving enough right now. If you’re not, or if you’re not sure, talk with a financial professional.

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