Mrs. Broke Architect and I have agreed on the goal of one day becoming millionaires. According to a study by the Spectrem Group, the number of American households with a net worth of $1,000,000 or more has been on the rise since 2008. In 2008 5.9 percent of American households were worth $1,000,000. By 2016 that number was up to 9.4 percent.
The chances of become a millionaire varies drastically depending on the color of your skin (due to systemic racism) and your level of education. “It’s a false narrative to say that race doesn’t matter in the United States,” William R. Emmones, assistant vice president and economist at the Federal Bank of St. Louis, told Bloomberg in an interview. “It demonstrably does in the results we keep coming upon.”
To start this conversation let first cover the effect of higher education on our chances of becoming millionaires.
Even though Mrs. Broke Architect and I are African Americans with bachelor’s degrees, the Federal Reserve’s data says that we have between a 2% to 8% chance of becoming millionaires. This is very sad. I have been told, or should I say, I’ve had it drilled into my head that education is the key to wealth and uplifting the African American community. The data does not prove that to be true. If we had master’s degrees, our chances would increase to 12%. Now let’s compare that to the 19% and 37% chances for Caucasians with higher education of becoming a millionaire. This is just the first example of how race plays a factor in your economic standing despite your level of education.
Race. I hate thinking that the color of my skin plays a factor in how I am judged, rather than the content of my character. But it is the reality of the world in which we live. This judging of character based on one’s skin color has a direct affect on our economic standing, which in returns impacts our ability to build wealth.
Our odds of becoming millionaires would more than triple if we were born to Caucasians or Asian parents. But like all thing in life, race is not the only factor. We must also factor in education, family economic history, occupation, where we live, how much we spend and of course how much we save/ invest. All of these factors improve and/or decrease our chances of becoming a millionaire. These various factors can be used in a SWOT analysis (Strength, Weakness, Opportunity and Threats). Some factors will fall into more than one category. Below is Mrs. Broke Architect and my SWOT analysis on becoming millionaires:
Race – African American (Weakness & Opportunity)
- I personally do not believe that being African American is a weakness factor. But the data suggests that being African American is not a positive attribute when it comes to building wealth; which means it is something that might work against us regarding outside forces such as:
- Salary Amounts
- Mortgage Interest Rates
- Credit Scores/Reporting
- Under Appreciation of Real Estate Value (Due to Government Redlining)
- The opportunity comes from the idea that no one is paying attention to your wealth building. They just assume most of us are poor. Let’s proved them wrong! Not by just being consumers, but by increasing our wealth by saving and investing.
Education Level (Strength)
- Bachelor’s Degree
Family Economic History – Poor (Weakness)
- Although most parent say they want their children to have a better economic life than the one they had, the sad reality is if you grow up poor, you are more likely to be poor as an adult.
Occupation (Strength and Opportunity)
- Architect – Me
- Business Owner – Mrs. Broke Architect, Owner of kweliTV
Where We Live (Threat)
- High Cost Area (DC metro)
How Much We Spend (Threat)
- We spend roughly 45% of our gross income on expenses. Most of it goes to our mortgage payment.
How Much We Save (Strength and Opportunity)
- We save roughly 30% of our gross income. We hope to raise our saving amount to 50% when our mortgage is paid off.
Based on the SWOT analysis above, we have more strengths and weakness on out journey to becoming millionaires. We also have at least two threats that could seriously side track our goal. These treats are tied to our spending level and our ability to control our expenses.
So, the data says we have a less than 10% chance of becoming millionaire, but the SWOT analysis shows we more strengths and opportunities on our path to becoming millionaires. It appears that the odds are not in our favor and I like it that way.
Mrs. Broke Architect and I both grew up in working class families. So, we have become accustomed to having the odds stacked against of us. Most of the time we overcome the odds; that’s just how we roll in the Broke Architect household. Having the only 93.6 % chance of not becoming a millionaire has become a challenge we are more than willing to take on. And if we happen to fall short and only get to $750,000 net worth, we will be still better off than most Americans—Black, White, Asian or Hispanic. So, I challenge you all to join us in proving the data wrong. The path won’t be easy but anything worth having is never easy to obtain.
Leave a comment and tell me how you are plan to be come a millionaire.
The Broke Architect