Last month, during my weekly FaceTime call with my mother, I noticed she was all bundled up in her home.
Since the temperature had dropped in Georgia, where she lives, I didn’t think much of it — even though Mom was wearing a thick winter sweater that seemed more appropriate for New York, where she was raised.
On the following week’s video call, Mom was sporting a turtleneck. So this time, I asked her about it and she made a startling confession, sheepishly revealing that she didn’t want to turn up the heat and have a larger utility bill, so she was basically toughing out being in a chilly house. When I urged her to warm things up, she assured me it was just a brief, temporary decision.
But the next Sunday, when I saw her dressed in a coat during our regular check-in, I knew it was more serious. “Mommy, I will pay your utility bill,” I told her. “Turn up the heat to whatever temperature you’d like. But I don’t want you sitting there in a cold house.”
For me, forking over an extra $100 a month for a heating bill is no big deal. But 100 bucks is a lot of money for someone living mainly on a modest Social Security check. The episode served as a harsh reminder of how precarious my mom’s financial situation is, especially at this stage of her life.
At 77, my mom is single, retired, and has no retirement savings at all. Meanwhile, my family and I are doing great financially; thanks to entrepreneurship, investments in stocks and real estate, and some other smart money moves, we’ve amassed a seven-figure net worth.
We’re extremely grateful for the privilege we have and count our blessings daily, especially since we know how rare it is for a Black family like us to be in this position. The median Black household has a net worth of only $24,100, a fraction of the $188,200 in net worth the median white household has, 2019 Federal Reserve data shows.
And these numbers don’t always show the nuance of financial instability for many Black families. A quarter of Black households have zero or negative net worth, compared with a tenth of white families, according to the Economic Policy Institute.
The reasons for the wealth gap are complicated and multi-layered, with racism, historical injustices, structural inequality, and educational disparities all playing a huge role. So do career choices, marriage status, and inheritance levels for Black people, which are starkly lower than for white people. The practice of redlining, for example, under which the government would not guarantee loans for Black Americans who were trying to purchase homes, as well as the effect of mass incarceration on Black representation in the workforce, are just a couple of examples of how African Americans are systematically prevented from building wealth.
Consequently, here’s the harsh reality about being Black in America: The deck is often so stacked against you that the weight of it all can feel overwhelming — no matter your income, your net worth, or how much you’ve achieved. For African Americans like me, systemic inequities and generations of poverty can make it seem like whatever you’ve done is never enough, especially when you know you’ll have to help support relatives or make contingency plans for any number of scenarios out of your control.
The reality is that for those of us able to generate wealth and reach a level of comfort, we are often also financially supporting family members or paying down debt. We simply don’t have that generational wealth that so many white families have to fall back on and start out their adult lives with. Even two people earning the same income can be looking at totally different financial situations based on their race and class: One could be putting money into savings or investing, while the other might be using that same income to pay a family member’s rent or help support an aging parent’s retirement.
I know that people like my mother don’t have any real safety net other than relatives. There’s no inheritance coming. As a result, for far too many Black people, low income and low wealth translate into a lifetime of scraping by.
My mother married my father at age 19, and then my parents — neither of whom went to college — had five girls together in quick succession. When they met, my dad had been working as a shoeshine man in Harlem, just like his father and his grandfather. Several years after tying the knot, however, my father moved from New York to Los Angeles to take a shot at pursuing an acting career. When my mother later followed, with kids in tow, so did money problems and a host of other marriage woes.
Some of my earliest childhood memories are of my parents arguing over finances, including my father’s chosen work endeavors. Acting gigs weren’t steady, and the shoeshine stands that my father set up in Southern California didn’t produce a regular paycheck. With five mouths to feed, my mom didn’t like him exploring his creative passions or his entrepreneurial side.
“Michael, you need to get a real job!” she would yell at him. By the time I was 7, they divorced, leading to years of increased financial struggle, including periods when we lived with my mom in a shelter or simply squatted in empty apartments without paying rent.
Since my father didn’t pay required child support payments, my mom, Lucille, juggled multiple jobs, mostly as a secretary and a cashier. Along the way, she made an incredible number of sacrifices for her five daughters and always pushed us all to go to college and prioritize education. Ultimately, Mom retired as a school bus driver in a suburb of Atlanta.
She now gets a pension of just $182 a month, along with a Social Security check of roughly $1,500 monthly. That’s what she lives on, along with occasional money she receives from my husband and me and from my oldest sister, Cheryl, who also lives in Georgia.
Like so many struggling retirees in America, my mom can sometimes be too proud to ask for help. I know she doesn’t want to feel like she’s imposing on her kids. Then there are times that she won’t request assistance because she feels guilty about her own spending.
Among Black Americans, it’s not uncommon for those who can to help family members financially: Some call it the “Black tax,” a term commonly used in South Africa that refers to the obligations of first-in-the-family college graduates, professionals, or others who “make it” to assist their family members.
I’m happy to help out my mother by covering her needs when she’s short on cash. But it can be an emotional experience for her to even ask, especially when her spending choices sometimes exacerbate her financial challenges.
I’m definitely not judging her, as I’ve battled the same demons. Twenty years ago, I had $100,000 just in credit card debt. Fortunately, I paid it all off by aggressively budgeting, reining in excess spending, and using every bit of “extra” money — like income tax refunds and work bonuses — to attack my debts. Even though I’m now financially comfortable, if I’m being honest, one of my biggest fears in life is that I might still wind up like my mother: elderly, alone, and nearly destitute.
I guess I should probably share at this point that for the past 18 years, I’ve worked as a money coach and co-owner of a financial education business. So anyone who knows me and my current circumstances may think my fears are ridiculous, or that I’m being hyperbolic. For starters, I’m happily married to a great guy who happens to be my business partner, too. I’m a Gen X-er, and I’m far from broke.
But I also realize how fragile economic stability can be, both because of my own family and from what I know through my professional work. Even for many higher-income African Americans, financial security often feels so tenuous, in part because of family demands and in part because that’s just the reality of being Black in America, where historical and current disparities loom so large.
I’m not alone in experiencing the realities of living with the Black tax. Recently, on the social media app Clubhouse, an entire conversation was devoted to this topic. The room was packed, including with people like Ervin Johnson, a Black millennial who works as an executive at a nonprofit in Washington, DC.
“It was like a therapy session for Black professionals,” Johnson later told me of the Clubhouse experience. “There’s so much to unpack about the Black tax,” he added, “because it’s definitely a hidden burden that’s in the back of your mind all the time.”
Like many Black people who are the first in their family to earn a high salary, Johnson contributes significantly to his parents’ finances, including paying for various health care costs, insurance, and more. “I’m glad that I’m in a position to help. But you do sometimes feel guilty about your success or about hitting certain goals,” he said. “It’s also a responsibility that sometimes makes you wonder how much further along you could be financially.”
With my mom’s permission, I looked recently at her Social Security statement, which details her earnings record for the more than 40 years that she worked. The statement showed that for most of her life, my mother earned anywhere from $15,000 to roughly $25,000 annually. In her two highest-grossing years — 2000 and 2001 — she earned $31,685 and $33,739.
The part of me that’s shocked at that wonders: How on earth did she raise five girls on such a small sum?
But another part of me — the kid who dealt with the lights being disconnected or who frequently stood on our apartment’s heat grates to stay warm — knows how: my mother’s grit, prayers, and determination that her girls would have a better life than she had.
We lived in two-bedroom apartments my entire life: my mom in one bedroom and my sisters and I, five girls — all of us born one and two years apart — in another small room with two sets of bunk beds. We survived with the help of welfare and various federal assistance programs like food stamps, Section 8 housing vouchers, and government powdered milk.
I remember from ages 9 to 16, along with my Black and Latino peers who also grew up in various low-income neighborhoods throughout central Los Angeles, busing into wealthy white school districts. There, I’d hang out in upscale neighborhoods like Brentwood and the Pacific Palisades, where kids all had their own bedrooms, sprawling homes with pianos in the family room or pools in the backyard. It was an eye-opener, to say the least, and the first time I encountered a group of people for whom homeownership was the norm.
In America, homeownership typically represents about two-thirds of the average household’s wealth. Unfortunately, the national rate of homeownership for Black people is abysmally low: just 44.1 percent in the fourth quarter of 2020, compared with 74.5 percent for white households, the US Census Bureau reports.
Perhaps that’s why I’m now so determined, especially after having children, to make generating wealth a part of my legacy. We believe so strongly in homeownership and education as pathways to building wealth that my husband and I have made a commitment to give our children the kind of financial assistance my mother wasn’t able to provide for me, including paying for college, a car, and a down payment on a first home.
While it’s my duty to support my kids, I don’t consider my mother to be my obligation in the exact same way. Nonetheless, having the ability to aid her financially has made me grateful for my financial strength and keenly aware of my fiscal goals.
As we continue our wealth-building endeavors — now and in the decades ahead, when I’m in my 60s, 70s, and beyond — I want my husband and me to have laid such a rock-solid economic foundation for ourselves and for our children that they won’t ever need to assist us in any way. They will not have to face the prospect of having their economic or social mobility hampered by the generation that preceded them.
Though it can sometimes seem next to impossible to truly get ahead as a Black person in America, I cling fast to my goals, drawing on Lucille’s imperfect yet impressive example of overcoming insurmountable odds for my kids’ sake.
In this way, I’m very happy to be exactly like my mother: Above all else, I just want the best for my children.
Lynnette Khalfani-Cox is a personal finance expert, speaker, and author of 15 books, including the New York Times bestseller Zero Debt. Find her on Twitter @TheMoneyCoach and on LinkedIn, Instagram, and Facebook @LynnetteKhalfaniCox.