Small Progress Is Still Progress — 60% Black Gen Z Financially Independent, Other Obstacles Threaten Wealth Creation

A new study shows that nearly 60% of Gen Z black Americans are more financially independent than 45% of their non-black American counterparts.

In contrast, 60% of Gen Z Blacks are more likely to have more debt than 44% of their peers, despite progress in reducing their debt this year compared to last year. That's one of the findings of Bank of America's Better Financial Habits, a new study from the nation's second-largest bank. Learn about the barriers the generations face and what they are doing to improve their financial situation.

Felicia Lewis, managing director of Branch Expansion at Bank of America, shared via email that it's encouraging to see the black generation taking proactive steps to shape their financial future, despite the persistent financial literacy gap. For example, research shows that 80% of Gen Z are now considering earning extra income.

Lewis notes that while there are still barriers for Black Generation Z—including possibly higher debt and lower rates of savings contributions than their peers—they are embracing a "culture of 'agitation'" to overcome these barriers to creating wealth.

They also prefer corporate ownership. The study found that the younger black community prioritized entrepreneurship, three times more likely to prioritize starting or building a business in the next year than their peers. Research shows that the average net worth of blacks who own businesses is more than 10 times that of blacks who do not own businesses.

Bank of America is one of several of the nation's largest banks that has pledged billions of dollars to address racial inequality and social injustice in the black community. According to Lewis, the bank's investment focuses on creating opportunities for people of color and communities in the areas of health, health care, employment/retraining, small business support and affordable housing.

To continue on a positive path, Lewis says Black Gen Zers can practice saving and spending wisely. He explained, practicing responsible credit card habits like b- Paying balances on time and in full in order to manage debt.

“By spending as much as you can, you'll have more money at the end of each month that can be used to pay off your debts. For those with multiple types of debt, such as credit cards and student loans, be sure to make the largest payments on those with the highest interest rates.”

Additionally, research shows that 32% of Black Gen Z survey respondents say their biggest financial regret is not being able to set aside enough for an emergency.

Lewis suggests that these people should focus on saving early and play it safe more often. He recommends creating a rainy day fund to protect against emergencies and prevent further debt growth.

"As this generation enters the workforce, they also need to take advantage of employer-sponsored savings plans like 401(k)s and Health Savings Accounts (HSAs). Maximizing contributions toward achieving full employer compliance is one of the the best ways to start preparing for the future.now.

Explore the bank's website for tips and details that can help you improve your personal finances.

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