The National Urban League's economic empowerment agenda concentrates on four different areas — jobs, homeownership, entrepreneurship and wealth accumulation. If we ever expect to close the economic gap that exists between Blacks and Whites in the United States, our community needs to learn how to handle its finances. The success of the Urban League's agenda hinges heavily on how well people manage their money and make it work for them, instead of the other way around.
That is why we expanded a partnership with Citigroup to bring financial education services to more African Americans through our local affiliates. Initiated in 2004 and available in 13 cities as of now, the program has helped more than 3,000 people to date. It's just one of six different programs we've launched with several other partners – including Honda Financial, Freddie Mac, Allstate Corporation, the Investment Company Institute and Chrysler Financial. Altogether, more than $2 million is being spent to beef up financial literacy in the African American community.
The aim of our financial literacy efforts is to strengthen the social and economic fabric of the communities we serve through comprehensive, result-oriented programs tailored specifically for minorities who tend to possess less financial knowledge and financial market experience than Whites.
It equips African Americans with the ability to sort through the myriad of options out there and tailor a strategy that will most effectively serve them in light of their needs and goals. Currently, nearly 40 affiliates have been directly involved in our efforts but every one has been touched in some way or another. For example, our partnership with Allstate Corporation provides for the distribution of financial education materials to the entire affiliate network with no personal instruction.
As more and more African Americans make more money, buy their own homes and start their own businesses, they will have more disposable income to invest in the future of themselves, their children and grandchildren. It's not enough to get a job, purchase a home, start a business and take care of your children and their educational needs. We also have to think about building adequate nest eggs to carry ourselves through old age and to leave for future generations to build upon. Great wealth doesn't often happen overnight. It is carried down through generations. Our community needs to learn how to let money make money for us.
According to our 2006 State of Black America, the personal wealth of African Americans is one-tenth of that of Whites. And Blacks tend to concentrate the little wealth they have in their homes. In 2000, 61 percent of their net worth was tied up in their homes, twice the percentage of Whites, according to the U.S. Census Bureau. A mere 4 percent was invested in stocks and mutual funds, compared to 16 percent for Whites.
It's painfully obvious that African Americans are a lot more conservative than Whites when it comes to investing money in the stock market, which, when played wisely, can reap great rewards. We go for the safe choices – our homes, which, given the housing market as of late, aren't always the most lucrative places to put our money. We cannot hide from our finances just because they seem complicated and foreign to us. African Americans need to take the bull by the horns when it comes to their own financial education or risk squandering the nest eggs they're working so hard to build.
Where we also need to teach the value of financial literacy the most is with our children. The earlier we teach our children early on about the value of money and what it can do for them in the long run, the faster we'll close the economic gap.
Marc H. Morial is president and CEO of the National Urban League.