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Retirement Weekly: Investing in diversity — for Black History Month and beyond

As we recognize Black History Month, it’s a good time to pause and reflect on the financial gaps that put many diverse Americans at a financial disadvantage. While the work that must be done will be nothing short of tectonic to truly solve these challenges, there are actions we can take in our own individual finances to help us reach our personal goals while also supporting values around diversity.  

If you’re not sure where to start, here are simple steps to help align your financial choices with your values—whether that means focusing on raising up yourself, your family, or the wider community.

Start simple: Make tangible goals.

Having clear, specific financial goals is important for anyone developing a sound financial plan, but even more so for Black households when you consider many start out already behind: The median wealth gap of Black families holding 12 cents per $1 of White wealth is largely unchanged over the past 30 years. On average, Black households earn 61 cents for every dollar of income earned by white households. Black college graduates hold an average of $23,400 in loan debt, vs. $16,000 for their white peers. And financial this inequity can compound over time, with white Americans on average holding seven times the amount of retirement savings as Black Americans.

Making progress in your personal finances can feel like an uphill battle, but it’s possible to pursue your personal aspirations while balancing your support for the people and causes you care about. Get started by checking in with your employer about financial planning or coaching tools that might be available at work. Taking advantage of workplace benefits can help you get your immediate needs addressed, and help you free up additional funds to set aside for other, broader goals like education, charitable giving, or retirement.

Take stock of the resources around you.

Given the unique challenges facing the Black community today, access to financial education has never been more important. And “first generation” professionals in many fields may not have learned from their families and friends how to manage wealth-building resources like equity compensation or investing.

Demystifying financial empowerment—and bringing wealth-building opportunities—into diverse communities can help spark change individually. Start small: Many workplace financial educational modules and sessions focus on helping you learn the ropes of basic financial planning, investing, and making the most of any equity award benefits you have. Tap into these benefits to better understand your own finances, as well as how you can align your money with your values. Also plug in to employee resource groups to learn more, share more, and understand how some of these issues play a role in wider social issues.

Participating and educating yourself is the first step: Putting it to use is the next. Take what you learn into your community, whether through volunteering, mentoring, or recruiting efforts for your company.

Make investing a core priority.

Investing can help you protect your future—putting you in a stronger position to help the people and causes you care about. In a 2020 survey, just 36% of Black Americans said they had money in the stock market—including in a 401(k) or other retirement account—compared with 60% of white Americans.

Explore the retirement plan options available to you at work and take advantage of any employer matching. Also consider other investment options that can help build wealth over time. For example, you can work with a financial adviser to build a portfolio of investments that focuses on companies promoting workplace equality, access to capital, and products and services that benefit diverse communities, while avoiding exposure to companies with poor diversity records. Your workplace benefits may help you access financial coaching or advice to help you get started.

Make your personal financial stability a priority

Individual financial choices can help make a difference. Putting yourself in a stronger position gives you more room to help uplift diverse families and communities. Prioritize your personal financial stability and your plan first, and don’t be shy in plugging into support through your workplace benefits as you look for ways to turn your values into action.

 Rodney Bolden is vice president, Financial Wellness at Morgan Stanley at Work.

This article has been prepared for informational purposes only. The information and data in the article has been obtained from sources outside of Morgan Stanley. Morgan Stanley makes no representations or guarantees as to the accuracy or completeness of the information or data from sources outside of Morgan Stanley. It does not provide individually tailored investment advice and has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. The strategies and/or investments discussed in this article may not be appropriate for all investors. Morgan Stanley recommends that investors independently evaluate particular investments and strategies, and encourages investors to seek the advice of a Financial Advisor. The appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives.

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