How Poor Black People Can Get Out Of Poverty

Wealth, the measure of an individual or a family's financial net worth holds greater value and opportunities in the world today, most especially in the American country. In America, wealth has made it easy for someone who is not too conducive with his or her job to transition seamlessly from one job to the other. It makes it easy for people to respond quickly to situations and also move to their choicest neighborhood. With wealth, one can make decisions that would not only benefit the present moment but also generations to come.

Unfortunately, the wealth of a nation is not evenly distributed among its citizens. Therefore, that poverty is more prominence among blacks in America or African Americans is a fact that cannot be disputed. The reason for this is partly because black Americans fare far worse economically than whites. Another reason is that once poor, getting out of the state is extremely difficult because most of the conditions attached to being poor require money. As a result, the cycle of poverty keeps increasing among poor people. 

Poverty itself is the state of not having access to some social and economic benefits because of the lack of resources to access this. 

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African Americans have just a little fraction of the wealth of the American country today. This has subjected them to less chance for economic mobility and insecurity. Among the factors that exacerbate the uneven distributions of wealth among the  African American and the white are less access to tax-advantage, poor saving system, lack of investment, fewer employment opportunities and many more. This is partly a product of the long history of employment distribution among the blacks and the whites and other forms of discrimination. Added to this, blacks are less likely to be homeowners because of a long documented history of mortgage market discrimination.  As a result of this discrimination, blacks people have little or no access to good wages, stable jobs, and retirement benefits at work. Here are a few facts from the CFSI report

In comparison to the more than 50% of whites who are financially stable, only 23% of African Americans and 22% of Hispanics are financially stable. Due to their current rates of income growth, it would take almost 228 years for African Americans to be able to reach the same level of wealth the whites are currently in today. While it would take the Latino family about 84 years or more.

This article focused on highlighting some of the ways blacks in America can help alleviate their poor conditions. Here we would be considering six ways poor blacks can reduce their poor conditions.

Investment 

While the confidence of the blacks in America that someday there situation would turn for the better is something enviable, they have continued to ignore some of the measures that could help alleviate their situations. One of these measures is having an investment. Up till today, there are many blacks who prefer to save their money in a private safe at the corner of their home than keeping it in the banks all because they don't trust the whites. This alienated belief is drawn out of the economic division between the whites and the blacks. 

How to invest in the stock market 

Blacks are more drawn to value life insurance than they are to investment. Most of the wealthy Americans today make their money by investing in different available forms of investment. Investment cuts across stocks, bonds, securities, real estate, and others. It is a process of allowing one's money to grow up until the maturity duration of the investment after which it is sold for a higher gain in the stock market. A survey carried out by the Yankelovich, reveals that blacks often prefer to invest their money in real estate than in other forms of investments like vehicles, stocks, bonds and so on. This is partly because of their lack of trust in the whites. 

In relation to the attitude of the blacks towards investment, an economics professor at Northwestern University and a former governor of the Federal Reserve Bank of Chicago, Marcus Alexis states his observations of the general attitude of the blacks to investment. He states that  "For the vast majority of high-income black families, this current generation is the first to have any real money to invest. Many of them are, perhaps understandably, averse to taking risks." 

Added to this, there is a popular report of one black man, who works with the information technology beat for a major newspaper. When asked about his understanding and stance on investment, the man revealed that he has no idea, how much interest the fund he often pays each month in a passbook would generate.  "I haven't invested in stocks or mutual funds, even though I know I should," he said. "Partly, I'm suspicious of the market and wonder if I'd lose my pitifully small stake. Then again, I think to myself, I don't have enough money to make it worthwhile. I know this probably isn't true, but there you are."

Another version of this story was narrated by a black couple both of which are advanced and financially buoyant. In fact, the couple both have advanced degrees and work for major non-profit institutions. Their net worth is over $300,000, which implies that they are richer than 99 percent of black families. Until about 6-10 years ago, none of the couples has any form of investment, however, the husband holds a $150,000 cash value life insurance policy that was sold to him by a childhood friend.  His opinion and attitude toward the stock market changed after attending some financial seminars organized by his employer. It was not until the seminar that the man opened a 401(k) retirement plan and also start investing in other opportunities. According to him "By the time we finish giving to financially needy people in our respective families, there's not a lot left to invest,"

Ultimately, many blacks are yet to discover and maximize the great benefits attached to the various types of investments. The first and most important among the benefits is that you earn far greater than the initial money invested. Investments itself mean that you are earning from both social and financial capital.

As an investor, you are expected to be conversant with the institution you are investing in. Until blacks cultivate the habit of investing, their dream to alleviate their impoverish level might only remain a wishful thought.

Savings

Saving is also another very important way poor blacks can help alleviate their impoverished level. It is increasingly being recognized as an effective measure to help alleviate poverty. Not until recently, most microfinance banks in America only focus on credit. However, this service does not usually get to the poor in society. One of the most significant importance of saving is that it helps to maximize funds. 

The perversive notion or belief that the poor are too poor to save is nothing but a lie. Saving does not have a particular price tag, what is important is that an individual saves his or her money no matter how small the money is. A little drop of water, they say, makes an ocean. Consistency is the most important key to becoming financially stable by saving. Among the reasons the poor blacks are advised to save are:

• saving helps them respond quickly to financial emergencies
• It also helps them embrace opportunities to grow their wealth like investment and others
• Saving would also make them more financially dependable.

Good Job

This is another very effective measure that can be used to reduce poverty among blacks. Having a good job ultimately implies that one would be able to fund his or her basic needs like food, shelter, clothing and other bills.  Having a good job can help alleviate poverty among blacks through the following means:

• Having a good job would help provide for the needs of the family and improve the family standard of living. Let's assume one of the poor blacks who are married is gainfully employed, he or she would be able to provide the family with the necessary things, like, school fees, shelter, good foods and many more.
• Economic growth: a good job would lead to economic growth because, when the citizens of a country are gainfully employed, the government of such a country would be able to concentrate on the other aspect of the country that needs to be developed. This implies that the growth of poor blacks in America or Africa Americans would also affect the economy of the country. 

Other benefits of a good job include:

• Generate fund for the government
• Reduce the crime rate in the country
• Help sustain the country's level of productivity
• Help initiate industrial growth.

Reduce Debt Rate

Many poor blacks in the United States are struggling with one debt or the other. The burden of debt associated with poverty is usually very extreme. Most poor blacks in the United States spend more than 40% of their income on debt payment and in the end, they end up borrowing again and repeating the cycle of payment with their insubstantial paycheck. In some studies, the effect of debt has been revealed in poor decision making. This is why most poor persons suffer greatly in terms of making financial decisions. This has made them more focused on short-term income over long-term gains, and among others. Therefore, poverty itself can cause some behavioral decisions and changes that keep promoting future poverty.

The poor people can work on the rate at which they engage in debt. This can be done by using a debt management plan (DMPs). With the DMP, the debtor would be able to negotiate with the creditor based on his or her monthly ability. Although the effectiveness of this is not guaranteed as the debtor might face unexpected financial situations. Overall, reducing their debt rate would help poor blacks improve their low financial ability.

Retirement Plan

This is another very good and effective plan the poor blacks are yet to utilize. Most time even blacks who are substantially okay end up leaving the rest of their lives in penury because they had refused to operate a retirement plan. 

A retirement plan is simply a way of preparing ahead the days after you are no longer working. This preparation entails opening an account and depositing some parts of your paycheck into the account. Since virtually all retirement plans are tax-free it means your money would continue to grow without any payment on the tax until withdrawal. The benefits of retirement plans cannot be underrated.

• With a solid retirement plan, you are certain to live the rest of your life in good health and with more rest than worries. 
• Retirement plans also help you plan ahead for days after your retirement. You can use the money in the account to invest in stocks, bonds, securities, real estate and many more. 
• The retirement plan can also allow you to earn more if your plan operates marching contributions.

The various types of retirement plans to consider include 401(k), 403(b), 457(b), IRA retirement plans like Roth IRA, traditional IRA, Spousal IRA, rollover IRA SIMPLE IRA and so on.

Life Insurance

There are lots of benefits attached to life insurance that most blacks are not even aware of. The truth is as we continue to grow and our health, family, and finance change so would your need for life insurance also change. For the poor blacks who are neck-deep in debt and also facing some financial challenges, life insurance is an effective way to take care of this. It is more like a safety net peradventure you die unexpectedly. Life insurance can cover debts like a credit card, education, and mortgage. It can also be used to take care of those who are financially dependent on you. Below are some benefits to buying life insurance.

• Peace and reassurance that your family would be well taken care of when you passed away 
• Life insurance would help pay up some of the debts you leave behind is there is any. 
• Payouts in life insurance are generally tax-free.
•  If for instance, you take out a joint policy with your partner or spouse, you might be entitled to multi-policy discounts.

• You can bundle coverage with other types of life insurance.
• Some companies would allow you to increase or decrease the benefits attached to the policy.

• There are some types of insurance policy that operates cash value. This implies that in some companies, a portion of the paid premium is set aside and allowed to grow with interest. Sometimes, this portion can be used for investment. Whichever way, life insurance allows you to borrow the money in case of any emergency.