6 ways Black Americans can start building wealth today

• Kristi Martin Rodriguez is the vice president of thought leadership for Nationwide Financial.
• She writes that although the racial wealth gap between Black and white Americans is staggering, there are steps Black Americans can take to bridge that gap in their own finances.
• Start by talking about money regularly and living within your means, she writes. Then, start saving, investing, and prioritizing your own health as soon as possible.
• Finally, make a long-term care plan for your loved ones, and consider life and disability insurance.

According to The Brookings Institution, the net worth of a typical white family ($171,000) is nearly ten times greater than that of a Black family ($17,150). This staggering gap in wealth reveals the effects of accumulated inequality and discrimination, as well as differences in power and opportunity.

Black Americans also have an increased risk of contracting COVID-19 and have experienced a more severe financial impact as a result of the pandemic. According to the Nationwide Retirement Institute's May 2020 COVID-19 Consumer Survey, 40% of Black adults say COVID-19 has impacted their retirement plans, compared to 33% of white adults. In addition, 51% of Black adults are reevaluating their retirement plans to assess the financial impact of COVID-19, while just 39% of white adults say the same.

While the data is staggering, there are steps Black Americans can take to help bridge the wealth gap in their own lives. As a Black woman, I know that financial planning for Black Americans is different, as we have distinctive financial needs and challenges.

Here are six steps Black Americans can take to prioritize wealth building in their own lives:

1. Talk about money

In the Black community, we often think of money as a taboo, off-limits topic, but not talking about it is hurting us.

Don't shy away from discussing financial planning with your loved ones. Go beyond just talking about paying off your credit card or saving each month. Discuss how you can accumulate wealth, invest your savings, and create a long-term financial plan by taking small steps now to reach your long-term goals.

A 2019 study from the Alliance for Lifetime Income found that 24% of non-retired Americans who have talked a lot about retirement with their spouse or family are more comfortable with both their retirement plans and their financial preparedness than the other three-quarters of Americans.

2. Live within your means

Ask yourself if your spending habits are putting you in a difficult position financially. Living within your means can be achieved by creating and sticking to a budget and understanding how debt can impact you.

Black parents, including myself, want to give our children the best opportunities possible. I recall growing up hearing my parents and extended family saying, "I want my children to have what I didn't have." However, it's important to consider how any financial decision you make will impact your long-term financial trajectory.

3. Start saving and investing … now

Start tracking how much you save each year and aim to save 10% to 15% of your income as an "investment" in yourself. You'll be amazed how quickly it will add up.

On average, people don't start contributing to their retirement plan until age 31, according to the research of the nearly 2.5 million defined contribution plan participants Nationwide Financial serves. This means most are missing out on nearly a decade of savings, asset accumulation, and greater compounded returns. There's nothing like the power of time when it comes to building wealth.

4. Prioritize your health

Many people don't realize the connection between your health and wealth. When I was pregnant with my youngest daughter, I was diagnosed with gestational diabetes. I experienced firsthand the financial, physical, and emotional strain that a chronic health condition can place on individuals, as well as their families.

Both near-term and future health care needs can result in costly expenses, but there are simple ways to mitigate potential health care costs both today and tomorrow by prioritizing your wellbeing. After my diagnosis, I was able to positively address the course of my personal health by adjusting some of my personal habits, including eating, exercising, and focusing on preventive care.

The 2019 Nationwide Retirement Institute Health and Wealth Consumer Survey revealed only 50% of younger adults had a physical or wellness check and only 45% had preventive screenings in the past year. Taking advantage of preventative care, a health savings account (HSA), or participating in employer health and wellness programs are low-cost, easy actions you can take to prioritize your health and help reduce the burden of related costs.

5. Make a long-term care plan for your loved ones

As a Black Gen Xer, caregiving is a very important topic to me. In fact, my own great-grandmother lived to be 107 – an incredible age!

As people live longer, long-term care will be needed more — and within the Black community, family members are often not only willing but expected to pitch in. While caregiving is deeply meaningful, the 2019 Nationwide Retirement Institute Long-Term Care Survey reveals that 62% of caregivers spend their own money on caregiving expenses, spending an average of $3,933 a year.

At your next family dinner, have a conversation about long-term care. Ask where family members want to receive care and start to think about what that means financially. By creating a plan now, you can ensure you have options and financial resources for future caregiver support.

6. Consider life and long-term disability insurance

The Black community has traditionally relied on family networks as our financial safety net — we generally believe our money is our family's money and vice versa.

However, I encourage you to consider traditional insurance products to help protect against life's what-ifs. Long-term disability insurance will protect your biggest asset — your income — if an illness or injury keeps you from working. Similarly, life insurance can ensure family members will have financial stability should a death in the family occur.

Financial professionals are a helpful resource for Black Americans wanting to take these steps and develop a holistic financial plan. By doing so, Black Americans can develop financial goals that meet their unique needs in the near and long-term and help build wealth in their own lives.

Kristi Martin Rodriguez is the vice president of thought leadership for Nationwide Financial and part of the Master your Money Money Council.

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