In a recent 12-year study, economists calculated the wealth accumulated by white, Hispanic, and Black millennial families by adding up the total value of assets like homes, investments, and retirement accounts and subtracting debts like mortgages, student loans, and credit cards. 

By the study’s conclusion, white millennial families accumulated an average of $88,000 in total wealth, yet Hispanic millennial families amassed an average of $22,000, and Black millennials only averaged $5,000. No group was where the analysts believed they should be in terms of wealth building, but Black families lagged 52% below wealth predictions.

Saundra Curry, co-founder of BC Holdings, urges Black millennials to overcome their hesitations about wealth building and retirement planning as quickly as possible. “Your ability to build wealth does not depend on who you are, where you come from, whether you have a degree, or how old you are,” she says. “Anyone can build wealth, and the sooner you start, the better.”

Why Black millennials lag behind other groups in wealth-building

Historical injustices still limit wealth accumulation opportunities among Black millennials. According to data from the US Bureau of Labor Statistics, Black workers generally earn less than their white counterparts. In terms of education, Black students are also more likely to borrow extensively for their education and graduate with higher debt levels than their peers, partially because financial literacy resources are generally less accessible to Black millennials. 

These disparities impact a person’s ability to save, purchase a home, and make informed financial decisions. Though Curry acknowledges that the racial wealth gap is a distinct barrier to retirement security, she doesn’t see it as insurmountable. 

“Your main obstacle to retirement planning won’t be the amount of money you make. It will be what you do with the money you make,” Curry explains. “I can’t tell you how many people I see with extremely high incomes but very little saved for retirement. To achieve a secure retirement, all you need to do is invest early and discipline yourself not to touch the account until you retire.”

Tips to help millennials save for retirement

According to Curry, the most effective way to build retirement savings is to start early because the power of compound interest significantly grows savings over time. Even small, consistent contributions yield substantial returns when invested over decades.

“Delay is the enemy of wealth building,” Curry warns, “so increase the amount you put toward retirement whenever you have the chance. For example, if you get a 3% raise, allocate 2% to retirement. This enables you to raise your contributions over time without cutting into your budget.”

Curry strongly advises millennials to take advantage of their employer’s retirement plans, especially if they provide a matching contribution. Essentially, these matches serve as “free” money that accelerates savings growth.

As an investment advisor, Curry remembers her first session covering 401K plans with the Tennessee Titans. “At that time, the NFL offered an incredible three-to-one match,” she recalls. “I started by asking, ‘How many of you take advantage of your employer’s three-to-one match?’ When only three hands went up, I stopped the presentation and took four dollars out of my wallet. I told the players, ‘When you put one dollar in, they put in three.’ That message hit home, and the Titans added several new recruits to the retirement plan.”

If millennials don’t have access to an employer-sponsored plan, they can consider opening an Individual Retirement Account (IRA), be it a traditional IRA that provides tax-deferred growth or a Roth IRA that offers tax-free growth and withdrawals in retirement. Both options have specific tax advantages and can complement other retirement savings strategies.

To emphasize how few people actually build wealth, Curry often starts a presentation by asking an auditorium full of clients who they send their mortgage, rent, car, and credit card payments to each month. Everyone proudly writes down the answers, but when she asks who manages their 401K plan, she gets crickets every time.

“People know their debtors, but they have no clue who is helping them build wealth,” Curry observes. “That person should be one of the most important people on your financial team.”

How millennials can pay down debt and build wealth

Curry sees a detailed budget as a foundational tool for managing debt and building wealth. “If you have income coming in and going out, you need to start acting like the CEO of your household,” she says. “Set goals and spending limits that shift the focus from your lifestyle to your wealth-style. In the US, we spend almost everything we bring in on our lifestyle, but investments in fancy new homes, cars, vacations, electronic devices, and meals don’t build wealth. Every time you earn a penny, you have to decide whether you’ll allocate it to your lifestyle or to your wealth-style.”

Budgeting for a frugal lifestyle is the key to accumulating wealth. When millennials learn to live below their means, they can save and invest more. Over time, small sacrifices lead to substantial financial gains.

“Most people make money to spend,” Curry explains, “and when they improve their salary and credit score, they buy bigger homes and newer cars. The truth is that most Americans can make money, but few understand how to thrive in this economic system. If you want to build wealth, you must learn to save and invest.”

Investing in appreciating assets such as stocks, real estate, and businesses creates wealth over time. Unlike liabilities, which drain resources, assets generate income or increase in value. 

“Instead of using your income to own more stuff, use it to own the same companies that Bezos and Warren Buffett own,” advises Curry. “If both you and Warren Buffett send a dollar to Wall Street, they work just as hard for you as they do for him.”

Starting sooner rather than later harnesses the power of time and enables Black millennials to prepare for a secure financial future. “Building wealth isn’t complicated,” Curry concludes. “To start moving in the right direction, you simply need a plan. When you know where you are now and where you want to go, you can  close the gap.”