Monday: Financial Literacy Apps Are A B.S. Solution To Ending Poverty In Black Communities

Two celebrities have gone viral recently for investing in a “financial literacy app” designed to help “end poverty in the black community”. The celebrities in question do not in fact live in black communities and their estimated net worths are $60 million and $300 million respectively. For anyone who doesn’t know, these numbers sit firmly in the “accountants manage my money and I could throw $100,000 into the bin annually for the rest of my life and it wouldn’t matter” territory.

The median net worth of Black Americans is $9,590 which is vastly different from a net worth in the millions. I strongly doubt this is because Black Americans are mismanaging $59,990,410 throughout their lifetimes. In fact, if you take the median income of $38,000 annually and extrapolate, you’ll find out that Black Americans median lifetime earnings will be $1,300,000.

I have my doubts that learning how to have a savings account will cause an additional fifty-eight million dollars to materialize out of thin air. If that’s the case, then I’ve been doing savings all wrong, clearly. Actually, screw it. Let’s do the math. If the median household invested every single dollar they earned and their earnings compounded annually at an interest rate of 6% due to investment in the stock market, their lifetime earnings would still only be about $4.5million — again, nowhere near $60 million dollars.

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I’m sharing this to demonstrate just how easy it is for people with large amounts of money to remain totally out of touch with the lives of the average people in the Black community they claim to want to help. I wasn’t raised sucking on the teat of media propagandized celebrity worship, so I don’t feel any particular need to be “grateful” that these celebrities are “trying to do something to help” either.

Financial literacy is clearly not going to bring in massive amounts of wealth considering you could have zero expenses and never attain celebrity levels of wealth. I’m the last person who will argue that financial literacy is “useless”, but it’s not a solution to socioeconomic problems facing black communities. The solution also posits the problem as one of individual choice rather than structural issues that disenfranchise black people and black communities in general.

Government policy has gone out of its way to stymy black wealth building specifically as discussed in The Color of Law : A Forgotten History Of How Our Government Segregated America by Richard Rothstein, a book which discusses how black people were blocked from acquiring land and property by de jure practices of the US federal government. De facto practices also prevented Black Americans from acquiring wealth and one of the most prominent examples of this was when a white mob destroyed an area known as “Black Wall Street” in Tulsa, Oklahoma during the 1920s. These examples point to a different locus of responsibility than a financial literacy app aimed at the black community would suggest.

I’ve seen an alternative theory which suggests that “all Black poor people are financially literate anyway”. This is another black and white way of looking at the problem that frankly isn’t true either. The fact that any Black people are financially illiterate is still not the cause of their poverty regardless. We don’t need to pretend to have advanced financial literacy to critique this “solution”.

It’s quite rich that people who by and large have teams of people to manage their money believe that they understand how to live within a budget of $38,000 a year — before taxes! Their solutions are quite obviously out of touch. Giving away 80% of their wealth would probably do more for “the community” than creating an app, but that’s another discussion for another day. Quite simply put, instead of coming up with detached top-down solutions, our attention would be better served by focusing on grassroots activists who spend all day interacting with people living below the poverty line or middle class people. These people know what they need and individuals who won the socioeconomic lottery are not somehow intellectually superior to them.

Believe me, if you know many rich people, you will quickly understand that having a team of people to manage your money isn’t a sign of greater intellect or financial literacy. Rich people are simply less impacted by terrible money management because they have more money at their disposal to insulate them from the consequences of their stupidity. Not all rich people are good with money, not all poor people are bad with money, and that’s the bottom line here. Instead of looking for individuals to blame, we need to tackle the systemic issues that have left the black community with a dwindling net worth and low wages. Is there any way we can get an app for that?