Historically, the wealth gap between white Americans and people of color has been significant, highlighting a concerning issue of wealth inequality in the United States.
This raises questions about how race influences an individual’s financial behaviors and opportunities.
To explore this further, a survey was conducted to examine the similarities and differences not only between white and Black Americans but also across all major ethnic groups in the country.
Here are the key findings.
(Editor’s note: “people of color,” here refers to all non-white racial and ethnic groups collectively.)
Key findings
- White families had a median net worth of $284,310 in 2022. Hispanic families had a median net worth of $62,120, and Black families had a median net worth of $44,100, according to data from the Federal Reserve.
- People of color are more likely than white Americans to save over 10% of their income each month.
- Asian Americans have the highest median household income and are the only group to reach a six-figure median income.
- White Americans tend to have the highest level of financial concern with an average worry score of 3.6. On the other hand, people of color have a worry score of 3.4, with Latin Americans showing the least financial worry.
Net worth by race and ethnicity
Over the past three decades, the net worth of white families has consistently exceeded that of Black and Hispanic families by over $100,000, based on Federal Reserve data.
In 2022, the median net worth for white families was $284,310, compared to $62,120 for Hispanic families, $44,100 for Black families, and $132,200 for families of other races.
| Race | 2022 |
|---|---|
| Black, non-Hispanic | $44,100 |
| Hispanic | $62,120 |
| Other | $132,200 |
| White, non-Hispanic | $284,310 |
Data source: Federal Reserve (2023).
Recent research indicates that while the wealth gap between Black and white families has slightly reduced since the mid-1800s, progress has halted and even regressed in recent times.
One reason for this is the disparity in capital gains growth. Although the income gap between Black and white Americans narrowed until the 1980s, the rate of growth in capital gains did not align. White families have a significantly higher proportion of their wealth in equities compared to Black families, with stock ownership being heavily skewed towards white individuals, according to the Federal Reserve.
Savings rate by race and ethnicity
People of color are more inclined than white Americans to save over 10% of their income every month. Fifty-one percent of people of color save more than 10% of their income monthly, compared to 34% of white Americans.
Hispanic/Latino Americans exhibit the highest likelihood of saving over 10% of their income, while white Americans display the lowest likelihood.
What percentage of your income would you estimate that you save in an average month?
| Race/ethnicity | Up to 10% | Over 10% |
|---|---|---|
| Asian | 59% | 41% |
| Black | 52% | 49% |
| Hispanic/Latino | 40% | 60% |
| White | 66% | 34% |
| People of color | 49% | 51% |
| All respondents | 53% | 47% |
Data source: The Motley Fool Ascent survey via Pollfish on April 26, 2023.
Determining the ideal savings rate for an average American can be challenging as individual financial circumstances vary and impact saving habits.
One general guideline is to maintain an emergency fund covering at least three to six months of expenses to prepare for unexpected financial situations.
Emergency savings by race and ethnicity
White Americans are less likely than people of color to have saved enough to cover three months of expenses, the recommended emergency fund minimum. Thirty-seven percent of white Americans have savings for three months, compared to 50% of people of color.
Hispanic/Latino Americans are most likely to have three months’ worth of savings (57%), aligning with their higher propensity to save over 10% of their income monthly.
Hispanic/Latino Americans stand out as the only group with over 50% having the recommended three months’ expenses saved. Asian, Black, and Hispanic Americans are close, but just over half from these groups lack the essential three-month savings.
Do you have enough money in your savings account to cover three months’ worth of expenses?
| Race/ethnicity | Percentage |
|---|---|
| Asian | 47% |
| Black | 44% |
| Hispanic/Latino | 57% |
| White | 37% |
| People of color | 50% |
| All respondents | 47% |
Data source: The Motley Fool Ascent survey via Pollfish on April 26, 2023
Income by race and ethnicity
According to Census Bureau data, Asian Americans have the highest median household income ($100,572) and are the sole group with a median income surpassing six figures.
Asian Americans earn approximately $25,000 more than white Americans on average and more than double compared to Black Americans.
Black households report the lowest median income ($46,774), followed by American Indian and Alaska Natives ($53,149).
| Race/ethnicity | Median household income |
|---|---|
| Asian | $100,572 |
| White alone, not Hispanic or Latino | $75,412 |
| White | $74,932 |
| Native Hawaiian and other Pacific Islander | $69,973 |
| Two or more races | $63,854 |
| Hispanic or Latino origin | $60,566 |
| Other | $57,671 |
| American Indian and Alaska Native | $53,149 |
| Black | $46,774 |
Data source: U.S. Census Bureau (2022).
The Federal Reserve reports that the income growth rates of Black and white Americans were converging until the 1980s, after which both groups experienced similar growth rates.
Employment rate by race and ethnicity
Among different racial and ethnic groups in the U.S., Native Hawaiian and Pacific Islander Americans have the highest labor force participation rate at 62%, while Black and American Indian/Alaskan Native Americans have the lowest at 56%.
| Race/ethnicity | Percent of population employed |
|---|---|
| Native Hawaiian and other Pacific Islander | 62% |
| Hispanic or Latino ethnicity | 61% |
| Asian | 61% |
| Two or more races | 60% |
| White | 59% |
| Black | 56% |
| American Indian and Alaska Native | 56% |
| All respondents | 58% |
Data source: U.S. Bureau of Labor Statistics (2023).
Financial Concerns among Different Racial Groups
White Americans have a higher average financial worry score of 3.6 out of 5 compared to 3.3 for people of color, according to The Motley Fool Ascent survey. Hispanic/Latino Americans have the lowest financial worry score at 3.2.
The financial worry score reflects how often individuals worry about their financial situation, ranging from all the time to never.
Notably, Hispanic/Latino Americans express the least financial worry, with 18% stating they worry about finances all the time, the lowest percentage among all groups.
Conversely, Black Americans are the least likely to report almost never worrying about their finances (11%).
On average, Americans have a financial worry score of 3.4 out of 5.
| Race/ethnicity | Financial worry score |
|---|---|
| Asian | 3.4 |
| Black | 3.4 |
| Hispanic/Latino | 3.2 |
| White | 3.6 |
| People of color | 3.3 |
| All respondents | 3.4 |
Data source: The Motley Fool Ascent survey distributed via Pollfish on April 26, 2023.
Credit Card Ownership across Different Racial Groups
White Americans have the highest credit card ownership rate at 65%, while Hispanic/Latino Americans have the lowest rate at 59%, according to The Motley Fool Ascent survey.
| Race/ethnicity | Credit cards |
|---|---|
| Asian | 61% |
| Black | 60% |
| Hispanic/Latino | 59% |
| White | 65% |
| People of color | 60% |
| All respondents | 61% |
Data source: The Motley Fool Ascent survey distributed via Pollfish on April 26, 2023.
Credit card ownership rates are relatively high across different racial groups, although disparities exist in obtaining requested credit amounts, especially for people of color, impacting their credit-building opportunities.
Data indicates that while people of color are less likely to own credit cards than white Americans, they are more inclined to carry revolving credit card debt.
Checking and Saving Account Ownership across Various Racial Groups
White Americans show higher ownership rates of checking accounts (88%) and savings accounts (75%) than other racial groups. This is noteworthy considering that Hispanic/Latino Americans, with the lowest financial worry score among adults, are less likely to have these accounts.
Overall, a higher percentage of Americans have checking accounts compared to savings accounts, at 74% and 64%, respectively.
The disparity in checking account ownership without having a savings account is more pronounced among white Americans.
| Race/ethnicity | Checking account | Savings account |
|---|---|---|
| Asian | 77% | 65% |
| Black | 75% | 65% |
| Hispanic/Latino | 60% | 50% |
| White | 88% | 75% |
| People of color | 70% | 61% |
| All respondents | 74% | 64% |
Data source: The Motley Fool Ascent survey distributed via Pollfish on April 26, 2023.
Both checking and savings accounts offer financial benefits to individuals. Checking accounts provide a secure place to manage everyday finances, often with minimal fees and high Annual Percentage Yield (APY) to facilitate wealth accumulation.
In comparison, the best savings accounts not only offer FDIC insurance but also provide higher interest rates.
Non-Retirement Investment Account Ownership by Race and Ethnicity
A higher percentage of people of color, particularly Hispanic/Latino Americans at 13%, have non-retirement investment accounts like brokerage accounts, compared to white Americans at 8%, according to The Motley Fool Ascent survey.
Despite this, white Americans still hold the majority share of stock ownership at 89%, even with fewer brokerage accounts.
| Race/ethnicity | Non-retirement investment account |
|---|---|
| Asian | 10% |
| Black | 8% |
| Hispanic/Latino | 13% |
| White | 8% |
| People of color | 11% |
| All respondents | 10% |
Data source: The Motley Fool Ascent survey distributed via Pollfish on April 26, 2023.
Long-term investing is a key strategy for wealth building. Opting for brokers with no trading fees and no minimum account requirements can enhance investment growth.
Primary Investment Focus by Race and Ethnicity
While white Americans primarily invest for retirement savings (46%), people of color are more inclined to invest for general savings or emergency funds (33%).
Investing for savings or emergencies serves as the predominant investing objective for most people of color.
What is your primary investment priority?
| Race/ethnicity | Saving for retirement | Securing my children’s future | Saving for a downpayment on a house or car | Saving for a vacation | General saving / emergency fund | Other |
|---|---|---|---|---|---|---|
| Asian | 28% | 10% | 11% | 6% | 34% | 10% |
| Black | 19% | 15% | 11% | 11% | 41% | 4% |
| Hispanic/Latino | 21% | 12% | 15% | 11% | 29% | 13% |
| White | 46% | 11% | 6% | 5% | 31% | 2% |
| People of color | 23% | 12% | 12% | 9% | 33% | 10% |
| All respondents | 29% | 12% | 11% | 8% | 33% | 8% |
Data source: The Motley Fool Ascent survey distributed via Pollfish on April 26, 2023.
Retirement account ownership rate by race and ethnicity
According to the Federal Reserve, White Americans have the highest retirement account ownership rate at 62%, while Hispanic Americans have the lowest at 28%.
| Race/ethnicity | Percent who have a retirement account |
|---|---|
| Black | 34.8% |
| Hispanic | 27.5% |
| White | 61.8% |
| Other | 52.9% |
Data source: Federal Reserve (2023)
The best individual retirement accounts (IRA) offer no fees or account minimums outside of a company-sponsored 401(k) and are ideal for growing investments until retirement.
Certificate of deposit ownership rate by race and ethnicity
While only 8% of white Americans own a certificate of deposit (CD), they have the highest ownership rate compared to other races. Conversely, only 2% of Hispanic Americans and 3% of Black Americans own CDs.
| Race/ethnicity | Certificates of deposit (CD) |
|---|---|
| Black | 3.2% |
| Hispanic | 1.8% |
| White | 7.6% |
| Other | 6.8% |
Data source: Federal Reserve (2020)
Although certificates of deposit (CDs) may offer higher interest rates than savings accounts, they have restrictions on withdrawal until the CD term ends, which could last from six months to five years with some having minimum deposit requirements.
Budgeting habits by race and ethnicity
According to The Motley Fool Ascent survey, people of color are more diligent in reviewing their finances than white Americans. While 70% of white Americans review their finances monthly, 84% of people of color do so with the same frequency.
Among ethnic groups, Hispanic and Latino Americans are the least consistent in reviewing their finances, but Asian Americans are the most likely to neglect financial reviews.
How often do you review your finances (e.g., checking your bank account and credit card balance, reviewing your spending, viewing your investment accounts)?
| Race/ethnicity | At least every month | Less than once a month | Never |
|---|---|---|---|
| Asian | 73% | 17% | 10% |
| Black | 82% | 15% | 3% |
| Hispanic/Latino | 58% | 34% | 7% |
| White | 70% | 23% | 7% |
| People of color | 84% | 14% | 3% |
| All respondents | 74% | 21% | 6% |
Data source: The Motley Fool Ascent survey distributed via Pollfish on April 26, 2023.
Budgeting apps can streamline financial checkups by monitoring expenses and income. These apps not only track finances but also help in setting financial goals and suggesting methods to save money effectively.
Sources of financial advice and information by race and ethnicity
For Americans, friends and family are the primary sources of financial advice, followed by websites.
People of color tend to seek financial advice from alternative sources like YouTube videos, podcasts, books, and TV shows, more than white Americans do.
Where do you get most of your financial advice and information?
| Race/ethnicity | Websites | Podcasts | YouTube / videos | Books | TV shows | Friends and/or family |
|---|---|---|---|---|---|---|
| Asian | 31% | 5% | 15% | 7% | 7% | 35% |
| Black | 27% | 6% | 16% | 5% | 6% | 38% |
| Hispanic/Latino | 23% | 11% | 13% | 9% | 11% | 32% |
| White | 27% | 8% | 15% | 7% | 8% | 35% |
| People of color | 36% | 2% | 9% | 5% | 5% | 44% |
| All respondents | 29% | 7% | 13% | 7% | 8% | 37% |
Data source: The Motley Fool Ascent survey distributed via Pollfish on April 26, 2023.
Percentage of Americans that are aware of their credit score, credit card interest rate, and mortgage rate by race and ethnicity
When it comes to knowing their credit score, credit card interest rate, and mortgage rate, White Americans have a slightly higher awareness compared to people of color.
Understanding these scores is vital as they play a significant role in various financial decisions.
Being aware of your credit score is crucial as it influences credit card eligibility, mortgage rates, and the ability to build credit. Familiarity with mortgage rates is essential for making informed decisions, especially regarding refinancing for better rates and potential cost savings.
Do you know your credit score?
| Race/ethnicity | Yes |
|---|---|
| Asian | 70% |
| Black | 75% |
| Hispanic/Latino | 55% |
| White | 77% |
| People of color | 68% |
| All respondents | 70% |
Data source: The Motley Fool Ascent survey distributed via Pollfish on April 26, 2023.
Do you know your credit card interest rate?
| Race/ethnicity | Yes |
|---|---|
| Asian | 65% |
| Black | 65% |
| Hispanic/Latino | 66% |
| White | 71% |
| People of color | 66% |
| All respondents | 67% |
Data source: The Motley Fool Ascent survey distributed via Pollfish on April 26, 2023. Among respondents with a credit card.
Do you know your mortgage interest rate?
| Race/ethnicity | Yes |
|---|---|
| Asian | 59% |
| Black | 56% |
| Hispanic/Latino | 56% |
| White | 61% |
| People of color | 57% |
| All respondents | 58% |
Data source: The Motley Fool Ascent survey distributed via Pollfish on April 26, 2023. Among respondents with a mortgage.
Race and personal finance in America
Financial habits are crucial, but they do not solely determine one’s financial success. People of color tend to adhere to more recommended financial habits than white Americans, such as regularly monitoring their finances and establishing an emergency fund.
Despite this, there exists a substantial racial wealth disparity in the United States. People of color, particularly Black and Hispanic/Latino individuals, have significantly lower median net worth. Since wealth is often passed down through generations, this wealth gap perpetuates inequality from one generation to the next.
Sources
Methodology
The Motley Fool Ascent conducted a survey among 2,000 American adults through Pollfish on April 26, 2023. Responses were post-stratified to ensure nationally representative findings. Quotas based on race/ethnicity were implemented, with 500 white respondents, 500 Asian respondents, 520 Latino/Hispanic respondents, and 480 Black respondents.
