Black Americans financially stressed, but optimistic, study finds

Although Black consumers frequently report facing numerous signs of financial stress, expectations that their financial health will improve far exceed those of consumers from other demographic groups, according to a survey by Achieve.

When Achieve surveyed Black Americans to understand the key financial pain points and goals they are facing, it found that inflation and debt make it difficult for many of them to achieve their financial goals. Black consumers reported having limited funds in their checking and savings accounts, and many had expectations that the cost of staple items will continue to rise.

Key survey findings

According to Austin Kilgore, analyst at the Achieve Center for Consumer Insights, the survey showed that about 76% of Black consumers reported living paycheck-to-paycheck, including 43% who said they struggle to make ends meet. In addition, Kilgore said, one-third said that their household income decreased over the last year, while 56% said they expected income to increase over the coming year. More than half of Black respondents also said that making more money and increasing savings are among their financial goals this year, while nearly half have a goal to pay down debt.

“Financial advisors should work with these consumers to help understand their current financial goals, help to establish a budget and review discretionary vs. non-discretionary spend categories to determine if there are opportunities to cut and move funds into savings, and realistically look at income shifts over the last few years to ensure consumers aren’t anticipating income that is unrealistic,” Kilgore added.

Higher levels of optimism

In addition, the survey reported that Black respondents – despite being financially stressed – were often twice as likely than white respondents to predict that various aspects of their financial health will improve this year, and they frequently had higher levels of optimism than other demographic groups.

So, what is causing this high level of optimism among the Black Americans surveyed despite being financially stressed? “We believe that the higher level of optimism among Black Americans stems from a few key drivers, “said Kilgore.

“First, the vast majority of Black Americans surveyed, 75%, said they have no plans to leave their current. job in the next year, which suggests that many may be expecting a wage increase, a promotion or at a minimum, stability within their existing role or company. As the job market heats up, they may also anticipate new sources of income, such as taking on additional jobs or more members of their household entering the job market. In addition, approximately 56% expect their income to increase in the year ahead, adding to the sense of optimism or a belief that they will be able to afford a cost of living that doesn’t shift year over year.”

However, this sense of optimism differs greatly from Achieve’s follow-up survey, which focused on women’s views of the economy and their household balance sheets, added Kilgore. “When surveyed,” he said, “women across all racial demographics had a more pessimistic view of the economy and a stronger sense that a recession may be looming. We attribute this to women typically handling the household shopping and spending; so, they may be more aware of the difference in how far their money goes for items like groceries, gas, or utilities.”

When asked what financial advisors can do to help their clients develop a more realistic view of their financial outlook and start working to improve their finances, Kilgore responded that Achieve looks at each member as an individual, with unique challenges, goals, and financial objectives.

“We work with each member to tailor a plan specifically to their needs to drive the greatest success,” he said. “We think that advisors should take a similar approach to understanding each individual client, their view of economic risk and uncertainty, their employment and income stability, their plan for unforeseen emergencies or hardships and of course, their goals for the future. There is no “one size fits all” approach to financial health.”

The findings from this report are based on an Achieve survey conducted in January of this year, consisting of 556 U.S. consumers ages 18 and older who identified their race as Black/African American. The same survey was fielded to 830 consumers ages 18 and older and is representative of Census Bureau benchmarks of the U.S. population for age, gender, race, and ethnicity.

Ayo Mseka has more than 30 years of experience reporting on the financial services industry. She formerly served as editor-in-chief of NAIFA’s Advisor Today magazine. Contact her at [email protected]. 

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