Why Financial Literacy Matters for Students of Color

Financial literacy can improve students' ability to accumulate wealth and feel financially stable. Discover resources to build financial literacy.
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  • Financial literacy builds the knowledge and skills for making financial decisions.
  • Lacking financial literacy impacts students of color at higher rates than white students.
  • The pandemic highlighted economic disparities that affect people of color.
  • Resources are available to help build financial literacy and improve wealth accumulation.

Financial stability and wellness require a foundation of knowledge. Financial literacy is the root of important information that guides your financial well-being. It also supports the dismantling of the racial wealth gap. For students of color, building financial literacy can improve financial stability, which can be compromised by costs associated with higher education.

Nearly three-fourths of students experience high financial needs, which can lead to increased debt and difficulty accumulating wealth.

Cost of living, income disparities, and racial discrimination affect the wealth gap that students of color experience during and after college. Financial literacy can help students decrease this gap and increase financial stability.

What Is Financial Literacy?

Financial literacy is a combination of knowledge, skills, and behaviors that allow a person to make adequate financial decisions and effectively manage personal finances.

Improving your financial literacy can help you improve your overall financial well-being. Financial literacy aids our understanding of economic opportunities that arise throughout our lives.

People of color are greatly affected by the racial wealth gap. It has an impact on wealth accumulation and financial stability.

A lack of financial literacy can limit your ability to assess financial options and make decisions that can benefit your financial future. This lack of knowledge can lead to poor credit scores, limited retirement savings, and inadequate investment opportunities.

Developing financial literacy can help you budget while in college. This knowledge can allow you to save money, pay off student loans after graduation, and invest in wealth-building opportunities.

Students of color should build a financial education while in college to improve their financial well-being and ease the burden of possible financial struggles.

Why Financial Literacy Is Important for Students of Color

Economic disparities affect students of color at higher rates.

In 2019, white households averaged $838,220 greater wealth accumulation than Black households. Due to historically discriminatory practices — and ongoing income, housing, and education disparities — students of color are affected by a lack of financial literacy at higher rates than their white peers.

Improved financial literacy can increase wealth accumulation.

People of color average less wealth and lower incomes than white students. Markia Brown of The Money Plug states, "Because of America’s history with oppressing people of color through the systems they put into place, most don’t trust things like banks and credit cards and loans, and they avoid them. That worked for them. Not using these things, made it so that these things couldn’t be what oppressed them. This was a common survival tactic. However, with the way the economy is structured now, it is almost impossible to avoid it."

While individual involvement on its own will not eliminate this racial wealth gap, improving financial literacy does provide students with more economic knowledge. This includes ways to enhance wealth accumulation and financial well-being.

Preparing for economic hardships or challenges requires a knowledge base.

Black, Latino, and Indigenous households averaged higher savings losses than white families during the COVID-19 pandemic. Businesses owned by people of color were disproportionately affected by pandemic hardships. The ability to manage financial shock, such as those exacerbated by the pandemic, highlights the need for stronger financial literacy among communities of color.

Financial literacy can have an impact on your ability to plan for and thrive in the future.

Financial literacy can help you prepare and plan for needs when looking to purchase a home, buy a car, or invest in a business venture. Understanding insurance options, the impact of your credit score, and down payment requirements can vastly improve your financial decision-making process and outcomes.

As Markia Brown asserts, "It is important that we as a community come together and start having these conversations surrounding wealth and money management and credit, so that we can unlearn the things that no longer benefit us, and move forward with the proper knowledge. Students of color have to forgive their parents for what they didn’t know and be willing to do the work to learn more."

The learning doesn't need to stop here

Explore the rest of our collection of financial education resources to continue your journey to a healthy financial future.

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Financial Literacy Resources for Students of Color

SUMA Wealth: SUMA works to support the financial well-being of Latino/as across the country. Its educational platform, SUMA Academy, teaches youth financial literacy skills to help reduce the wealth gap and improve wealth equity within communities of color. Each online course uses culturally relevant material to help improve financial literacy.

urbanwallet: Financial literacy tips provided by urbanwallet offer students of color learning opportunities to improve money management. The site focuses on urban millennials. It offers investment strategies and financial guides on credit, real estate, cryptocurrency, and more. Urbanwallet works to increase the availability and accessibility of financial resources for people of color as an essential way to build and improve equity.

"Brown Ambition": Hosted by Mandi Woodruff and Tiffany Aliche, the "Brown Ambition" podcast provides listeners with weekly tips to build financial stability. The hosts deal with topics like budgeting, building wealth, learning stock market awareness, and establishing businesses. "Brown Ambition" creates a space for women of color to ask questions that can help them realize their professional and financial goals.

Money Smart: The Federal Deposit Insurance Corporation developed this financial programming platform for students from pre-K through young adulthood. The free curriculum series includes downloadable lessons on paying for college, buying a home, setting financial goals, and various banking and investment topics. Students can play games to test their financial literacy and identify key areas for growth.

Hands on Banking: This free financial education program provides guided lessons, blog posts, and learning tools to help improve money-management skills. The program covers many financial topics, including student loan debt, credit and loans, taxes, homeownership, and retirement. Hands on Banking provides introductory information and in-depth education for each financial topic.


Building financial literacy helps improve overall financial wellness.

A solid financial education can address the struggles, disparities, and discriminatory practices that affect students of color. With planning, financial literacy can also improve your ability to get through financial hardships like those caused by the pandemic.

Your financial education journey should reflect your current situation and future goals. The resources listed above offer great starting points for students of color to build a financial foundation.

Financial literacy provides the necessary foundation to enhance financial decision-making, manage your income, and improve financial stability for you and your family.

Meet the Professional

Portrait of Markia Brown, credit literacy educator

Markia Brown, credit literacy educator

Markia Brown, known as "The Money Plug" on social media, is a board-certified credit repair specialist and credit score consultant. She uses her platform to provide credit literacy education and resources to Black and other underserved communities in easily digestible 60-second videos.

Feature Image: Viktorcvetkovic / E+ / Getty Images