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Financial advisors say closing the wealth gap starts with financial literacy

No matter how much you make, using your money to growth your wealth starts with these basics.

ST. PETERSBURG, Fla. — Whether you make $50,000 or $500,000 this is the time to invest in your future. Financial advisors say now is the time for financial literacy. To do that, here are some terms to keep in mind. 

While income is how much you're paid, wealth is your net worth. There's both an income and wealth gap here in the U.S. The average net worth of a white family is $170,000. For a Black family, it's just $17,000. That's how much you have to your name after all your debts are paid. 

But, one thing that can turn income into wealth is how you invest what you make.

“Things like putting money into the market, devoting a portion of your cash towards things that grow instead of depreciate — you know index funds instead of cars,” financial advisor Dexter Wyckoff said.

He also recommends having a savings account for emergencies to prevent you from going further into debt. 

One of the biggest pieces of the puzzle when it comes to building wealth is homeownership. Wyckoff says white families in the 1940s and 1950s were able to buy homes and pass them along to future generations, but redlining made it difficult for people of color to have access. When they were able to, some found themselves upside down due to subprime mortgages on their properties.

“This was really prevalent in 2008. So, when the American housing market corrected or crashed, Black people who owned homes lost about 52 percent of their net worth in one year," Wyckoff said. 

"Homeownership is two-thirds of where American wealth is and until we’re caught up, the portion of the African-Americans that own homes, they will participate in that part of the American dream is absolutely essential to closing that wealth gap."

He adds the key to investing is time. If you haven't started, this could be the right one because you can get in essentially at a discount when markets are down. 

Wyckoff recommends sitting down with a financial advisor no matter how much money you make. To learn about financial literacy, click here or go to the Treasury website.

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