In order to continue our research into college homelessness and its many facets, this week at One Talk Away we extended our conversation to Generational Wealth. To recap our discussion from two weeks ago, we last participated in a very insightful forum on Social Enterprises. From learning the distinctions between Social Innovation, Social Enterprises, and Social Entrepreneurship to spending some time evaluating the non-profit/for-profit business model spectrum, we have been able to spend the last couple weeks marinating on how social enterprises can factor into a sustainable solution for college homelessness. During our group discussion, we received many unique insights, one of which has really been on the minds of the CoAct Team: A Social Enterprise Marketplace. What might it look like to bring together the talents, teams, strategies, and insights from a variety of social enterprises in Tarrant County? What might it look like to provide a space for social enterprises to support one another? What might it look like for consumers to be able to identify social enterprises so as to spend their dollars on worthy social missions? These questions are some of the foundational components being pondered concerning a Social Enterprise Marketplace.
To factor in some continued themes throughout the One Talk Away forums, we have seen that developing affordable housing is one common trend in looking for a sustainable solution to college homelessness. Along with that, we have consistently heard that students need to have the ability to generate enough income to be financially independent, not to mention the reality that most students have to also pay off student debt. We also identified a concern of forgoing equity through home ownership to ensure the affordability of housing. Combining these key trends, it has become an important question to ask how students can accrue wealth and achieve financial stability while also having affordable housing. As a result, this week, we transitioned our conversation away from social enterprise business models to the concept of Generational Wealth, pondering are there other mechanisms for students to create wealth besides home ownership?
The forum began with our speaker Ms. Amanda Arizola asking the group to share their initial perceptions of generational wealth. Some beginning insights included the fact that generational wealth definitely includes land, real estate, and mineral possessions but that generational wealth must not solely be confined to these parameters. In fact, it was mentioned from one participant that knowledge is actually a key component of generational wealth as well—an insight that was expanded upon throughout the entirety of the presentation. Finally, the last building block for the forum’s foundation was the remark that generational wealth is present in all income brackets, even if it is manifested differently (for example, heirlooms can most definitely be enveloped in the definition of generational wealth). As these initial insights show, the group came to the table with a solid understanding of some of the basics of generational wealth.
The team then pivoted slightly to take a look at a few graphics that demonstrated the relationship between housing affordability, income, and types of home ownership. As the graphics showed, there is a sizable percentage of the total population that is overburdened by housing. Given that pressing statistic, how do we create other vessels for achieving financial stability? We discussed that generational wealth is the passing down of assets; is housing an asset if we are overburdened? Lastly, what benefits does home ownership bring that we can not reap while renting?
As this discussion reveals, one question that the group was left to ponder on is how can we not overlook renters in the pursuit of generational wealth? In fact, this question closely mirrors one of the key questions that both started and ended our presentation: How do we create new frameworks that are not dependent on real estate to generate wealth? With that question in mind, the forum shifted to discussing personal savings and their contribution to generational wealth.
From personal anecdotes to raw data, Ms. Arizola facilitated an interesting discussion on how small savings can translate to a large impact. Even if families and individuals commit themselves to saving only a few dollars a month, the generational impact can be sizable.
To add another dimension, the conversation on personal savings made CoAct Co-Founder Jesse Herrera think of the book Utopia for Realist. He notes, “The book goes over some experiments on basic income and the impact it had on communities. In short, the concept seems to work to foster financial independence. More so, the studies show that people would not just sit at home and waste away (which really warrants more research into what a productive citizen means), but rather used the money to invest in education, spend time at home raising their children, or investing in developing a business. Basic financial independence could allow us to invest in radical new ideas that could substantially improve our livelihood, simply by not having to worry if the idea needs to generate our means of income. In addition, the author talks about how our vision of utopia is allowed to change and evolve and that utopia is a constant journey.”
Mr. Herrera continued, “Another thought this brings to mind is trying to challenge the very core concepts of generational wealth. In the book Cradle to Cradle, the author discusses that the only way to get rid of trash is to get rid of the entire concept of trash. Given this realization, how do we challenge the concepts of financial stability and wealth, and what aspects are we comfortable in changing to allow the utopia generational wealth brings?”
As the conversation transitioned to the first round of open discussion, two major themes were consistent amongst the group: the taboo nature of finances & the importance of financial education. To expand on the former key concept, we discussed that a major barrier to building generational wealth is the simple fact that most people do not like discussing finances. Rather, to be more precise, most people actually fear discussing finances. In fact, as the group remarked, in our culture it seems to have become more common to discuss sex than money! Obviously, the inquisitive response in the face of such a common remark by the participants is to ask, Why? For many, there seems to be an emotional response of shame in addition to fear when finances are mentioned: the shame of not making enough money, the shame of not having enough financial literacy, the shame of feeling behind your peers, the shame of even struggling to make end’s meet. As such, many probably shrink away from discussing finances simply to avoid the shame that so often accompanies the conversation.
As we hope to champion the building of generational wealth, it is of great importance to normalize these financial conversations. One main reason that people quite possibly fear discussing finances is due to the wider cultural phenomenon and philosophical framework known as materialism. As people in the United States seek to find their comfort, identity, and meaning in wealth, material possessions, and economic prosperity, the magnitude of a conversation on finances increases tenfold. Instead of finances simply being a necessary component to sound commerce, finances become the focal point of the construction of personal identity. As such, instead of financial planning and advising being conversations helpful for economic well-being, these conversations turn into a self-evaluation of personal worth. Thus, in order to build and establish generational wealth, we must shift the identity-building narrative of our society. We must provide a more compelling, consistent way to construct our identities and understand personal meaning. We must be able to assure our peers, friends, and families that wealth is not a measurement of importance, meaning, or identity; thus, the questions left for today’s readers are, How, then, will we construct our identities? What, then, will we build our lives upon? As long as people view finances as indicative of personal value or dignity, an impassable roadblock will exist that will deem impossible conversations and growth in generational wealth.
In addition to materialism being a potential reason for the taboo nature of finances, it also must be mentioned that some people simply don’t like discussing finances because they don’t understand financial concepts and opportunities. Imagine how intimidating it must be to talk with a financial advisor and hear of perpetuities, annuities, dividends, mutual funds, the S&P 500 and have no idea what is being talked about! Yet, most of us don’t have to imagine: we have experienced this confusion before. In light of that reality, it is a lot simpler to avoid financial discussions instead of experiencing the confusion (and resulting shame) that results from a lack of previous exposure to the financial world.
Undoubtedly tied to the discussion on the taboo nature of finances, but yet still distinct, was the second most prevalent theme during the first round of participant discussion: the importance of financial education. Obviously, in order to educate on finances, the taboo nature of finances must be corrected, as already mentioned in the paragraphs above. However, what makes this topic also distinct is that there might be a way to educate on finances before they create a grip of fear and shame. By this idea, we are meaning the importance of educating our youth on financial well-being, wisdom, and sustainability.
As simple investment principles hold, the earlier that one starts investing, the more time that they’ll have to compound their wealth. As such, this basis alone makes a strong argument for educating our nations youth on financial literacy while they are still in schooling, potentially during high school. However, there are more arguments that can be made for high school financial education. One additional argument is that many students actually desire to be taught “life skills” while in high school. From personal experience alone, it is easy to recall conversations with peers about how “pointless” many subjects and classes can be in terms of life application, yet very few courses exist that teach important, impactful life skills. Secondly, it could be very valuable to educate students on financial literacy because once they graduate high school, there exists few means for being able to disseminate information to a captive audience. When most people graduate high school, they either go to college or begin employment, being tossed into situations regarding debt, making an income, paying bills, budgeting for the future, affording houses, etc. Immediately, wise financial skills are needed, and oftentimes, these young adults lack the free time or opportunities to be able to attend a financial literacy course.
Since a key cornerstone to building generational wealth is education, it is imperative that this education begins from a younger age. By the time that youths turn into adults, many psychological fears and emotional responses to finances have already been created; plus, there exists a great amount of time for unwise, damaging financial decisions to have been made. Two programs that currently offer education to youth that are available to conduct further research are CFPB’s Educational Curriculum & FDIC’s “Money Smart.”
Now that the two major themes have been presented, the remainder of this analysis will touch on a couple other questions and insights that were mentioned. First, one question for contemplation is how do we decide the most effective financial advising framework? We have already discussed the importance of education, but the question remains on what principles should be taught. Rather than providing a clear answer, this question demands each of us to review our current financial principles and understandings, evaluating if there are more compelling ways to save and invest. We ought to engage with our peers and discuss different strategies for financial saving and investment. Moreover, we should challenge our assumptions about what we currently think is the best way to coach finances.
One additional insight that was mentioned throughout the participant discussion is how the building and presence of generational wealth varies amongst communities of color. Mr. Herrera comments, “Also there are historical disparities against certain communities to deny access to wealth and resources. The Federal Housing Administration denied resources to certain communities, primarily black, that have left lingering effects. In addition, there are still economic hurdles present with obtaining credit, qualifying for loans and investments, and a general lack of understanding of how to utilize the current economic tools. I think another factor that we need to consider is that some of the means to generate wealth often come with the perception of high risk. I can say this influences my decisions. For those that have much less than me, how might it influence their desire to use a risky platform?”
Finally, the forum concluded with a synthesis between generational wealth and affordable housing. In this ending portion of our time together, we used our insights gained to theorize how generational wealth relates to college homelessness. One key theme throughout our discovery of college homelessness has been how homelessness isn’t simply about having a roof over your head but rather the presence (or lack of) a support system. Similarly, the group touched on the reality that most financial planning conversations will best take place in one on one peer environments. Although workshops and forums can open the door to discuss generational wealth, little tangible traction will be gained without personal conversations, accountability, and support on the journey. As such, there exists the opportunity to coordinate our efforts to build generational wealth, create affordable housing, and find a sustainable solution for college homelessness: finding a way to establish genuine support systems and real friendship, potentially facilitated by conducive housing! Though the challenge still is large with many avenues to explore, this forum on generational wealth added many more key insights that will support us on our journey to being only One Talk Away from ending college homelessness.