Black Brits are poor! This is not me saying it; rather, the information is from data gathered by The UK’s Office for National Statistics. So, I thought today seems like a good day to slice through the economic pie to see how wealth is divvied among different communities in the UK—particularly within our own Black community. It’s a critical issue that’s more than just dinner table chatter; it’s about making informed decisions for our financial futures. The UK’s Office for National stats aren’t just numbers; they reveal eye-popping contrasts that deserve our full attention. Buckle up because we’re about to dive deep into a topic that might change how you spend your coins from this moment forward.
What’s the Big Picture?
So, here’s what the numbers tell us. The average household in Great Britain has about £286,600 in wealth. But when we start looking into the details, things get pretty eye-opening. For households led by someone from the Black African community, the average wealth drops to just £34,000. Compare that to White British households with an average wealth of £314,000. That’s a huge difference, right? Worse, things are not improving, according to the UK’s Runny Mede Trust.
“Black and minority ethnic people are disproportionately falling faster and further below the poverty line amidst the cost of living crisis.”
—Runnymede Trust UK
How is wealth measured in the UK?
Let’s discuss how wealth is measured and what that means for different community groups. When we look at a household’s total wealth, we’re talking about four main things: the value of property, financial assets like savings and investments, physical things like cars and gadgets, and private pensions (which is the money saved up that isn’t part of the State Pension).
Property Wealth
Property wealth is how much your property is worth, minus any loans or mortgages you still owe. So, equity. There’s a big difference between UK ethnic groups regarding property ownership. For example, Indian families have the most property wealth, around £176,000 on average. On the flip side, many Black African and Black Caribbean families find themselves with no net property wealth at all. There are many reasons, but two stand out:
- Black communities tend to live in expensive cities like London and Manchester, where property prices are out of reach, while the Asian population is more spread out across the UK, where lower house prices make home ownership accessible.
- Income also plays a significant role in all of this. For example, while 77% of White folks and 76% of Indian folks are employed, only 67% of Black individuals have jobs. Also, the type of jobs matters—Indians and White people often land higher-paid professional roles, whereas Black groups are more frequently in lower-paying jobs.
Only 20% of Black African families own their home, while 68% of White British and 74% of Indian families do.
Financial Wealth
Next up is financial wealth. This is the total of what you’ve got in the bank or invested, minus any debts like credit card balances or loans. Sadly, Black African households are more likely to have debts that outweigh their assets compared to White British families. Regarding debts, 44% of Black African families have more debt than savings. That’s a lot. It’s double the rate of White British households.
Physical Wealth
Black Africans tend to have a lot of their wealth tied up in physical items—about 51% of their total wealth—compared to just 20% for Indian-headed households.
That’s good! Yay! Finally, we are winning at something. Really! Are we?
Physical wealth includes stuff like furniture, cars, and other valuables. While owning a lot of this might seem fantastic, it doesn’t help in the long run because this asset class tends to lose value pretty quickly. A car, for instance, will lose 40 to 60 per cent of its value within 5 years, whereas homes tend to increase in value.
So, why do we accumulate assets that lose value?
To feel good—clothes, designer bags, cars, gadgets. Who doesn’t want to feel good? The struggle is real. It’s on all sides. It’s a way to handle the pressure of life. The downside? We spend more than we earn, which leads directly into debt.
We’ve also bought into creating the Illusion of Wealth: No one wants to think of themselves as poor. Appearing wealthy might feel great initially, but the burden of debt can make life miserable, even taxing our mental health.
Private Pension Wealth
Then there’s private pension wealth, money saved for retirement that isn’t the State Pension. Here, Black African groups often have the least saved up, which means even more challenges when we are frail, old and probably alone.
What? Give me a break, somebody! If we don’t turn things around now, reassess our priorities, and improve our finances, this sounds like poverty for life.
What Can We Do About It?
Knowing all this, we must discuss how to tackle these challenges. It’s about earning more, managing what we have smartly, investing wisely in assets that increase in value and planning for the long haul. Here are a few ideas:
Think Long-Term Before Making Purchases
It’s essential to consider the long-term impacts of your spending habits. Before making a purchase, especially a significant one, ask yourself if it’s a want or a need. Consider the item’s value over time and whether it contributes to your life goals. For instance, buying a car might seem necessary, but it could be worth reconsidering if public transport can serve the same purpose without the financial strain. This approach helps prevent impulse buys that lead to financial strain.
Avoid Debts like the Plague
Debt can be a significant barrier to financial freedom and growth. Prioritising debt repayment, especially high-interest debt like credit cards and personal loans, can save you a lot of dosh. Create a plan to tackle your debts, starting with the highest interest rates first. This “avalanche method” not only reduces the amount you pay in interest but can also help improve your credit score.
Click for a free debt repayment tool.
Prioritise Savings
Building savings is crucial for financial security, as it buffers against unexpected expenses and job losses. Start by setting aside a portion of your income regularly, no matter how small. Automating your savings can make this process easier and ensure it’s treated as a priority.
Invest in Your Future and Stuff That Matters Most
Investing isn’t all about stocks and shares—it’s also about investing in yourself and the things that matter most. Think about boosting your knowledge through education to up your earning game or maybe even starting your own business. Invest your money where it will not only grow but also enrich your life and community. Knowledge is a huge part of this. Taking time to learn the ins and outs of managing money can seriously change your financial game. Make sure to tap into resources designed for us and by us, like local workshops or books written by Black authors that address our unique challenges. And don’t forget, chatting with financial advisors or joining online forums can also be a big win for your wallet!
Community Support: Building Networks
Building strong community networks is another powerful tool. Whether it’s forming savings clubs, facilitating mentorships with seasoned business owners, or sharing opportunities for financial assistance, there’s immense strength in unity. These networks offer moral support and practical resources to help you thrive in entrepreneurship and homeownership.
By banding together and using these strategies, we boost our financial health and grow stronger. This is how we tackle those big, systemic barriers and stride towards economic equality in our community
Click here for resources and support tailored to the Black community.
Let’s Keep Talking
Want the latest updates and exclusive content from me? Be the first to know when I post by signing up for our email list below!
Exciting news! We’re launching a suite of personal finance courses, completely free of charge, tailored specifically for Black Brits like you. Join our waiting list now to get notified as soon as they’re available!
