Black America And Banking
For as long as banks and black people have interacted in America, the relationship has been marred by discrimination, failure, and misfortunes, this is one very reason why black people have had a problem trusting banks and would rather go to a check cashing place than have an account. This mistrust in the banking system has created a lot of mistrust and a lack of wealth in the black community.
Even though much of the banking system has been discriminant against the black community, black people still need the banking system in many areas if they are going to actually be wealthy. For example, we need banks for cars, mortgages, stocks, insurance, and much more. Which means avoiding banks is inevitable. Therefore, there has to be a way we can use banks and benefit from them, right? While redlining used to be “more overt,” it continues today in subtler ways.
One example happened recently as the government distributed loans to small businesses for pandemic-related relief through its Paycheck Protection Program (PPP). Rules related to supplying loans to sole proprietorships—a category of businesses that overwhelmingly encompasses black and brown owners—came out last. Putting these demographics last in line for needed aid. “Things like that are the new version of redlining.
Most people in the black community are leery of banks because for centuries they were used to STOP black people from getting ahead financially. When black people went to white banks, they were redlined, and put through hoops just to open accounts. When they needed loans, they were denied for bogus reasons and because of that, black people had to resort to other ways of being able to become financially stable.
In the interim of that, placed in the black community were check cashing stores, short term high interest loan offices that would in many cases trick or steal property and possessions from black people using exorbitant interest on what people borrowed. However, black people would rather trust a check cashing place and a title loan before a bank because at least they could get what they needed without being hassled. This now poses a problem within the black community because these sorts of places suck the life out of the black community and keep them from being financially free.
This is our time and things are changing and it’s time that black people start looking at the power behind their money and begin to consider that there are black banks out there that want to help them. Click here for a listing of all black banks in the United States.
There are some things that we as black people need to know about banking. If we arm ourselves with education about banking, we will be in a better position to make our demands and get what we need in order to be financially stable. We have to go into banking with the idea that we have a plan.
As minorities, we have the ability to improve our economic positions using ideas that may seem so small, our biggest lesson in life is that hope is not a plan. We have to put action with a plan and do the work.
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 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.
In addition, we need to make sure we know how certain aspects of banking work. These are some areas that we need to work on when it comes to banking. Click on the links below to get a better understanding of each area in banking.
If we get these areas of banking down, we can improve how we come out financially.
