Understanding Racial Trauma's Impact on Financial Literacy

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In the span of a week, I went from mourning those murdered in a Buffalo supermarket shooting to mourning children murdered at an elementary school in Texas. As a Black woman, I went from internalizing the message that I am not even safe to go grocery shopping to fearing the reality that my child may not come home after being dropped off at class.

In the weeks leading up to this, I was contacted by several mayors and superintendents who wanted my help thinking about how they could respond to the legislative acts that are removing history – and now math books that teach history – from its classrooms. One superintendent asked, “How can they ban our math books, but then ask us to use those mathematical principles to comply with a mandate that we teach financial literacy?” She was referring to the fact that as history, literature and math books are being banned, mandates for financial literacy are on the rise. I responded quickly and said, “Financial literacy does not place a premium on remembering the past. Really, financial literacy is just a social narrative that places the burden of ending or overcoming wealth inequality on the people who suffer from it most. So, the parallel is on brand.”

So, when I saw the results of NEFE’s High School Personal Finance Education Poll, I knew it was time to talk about the relationship between personal finance, financial literacy and white supremacy.

There seems to be a general consensus that there is a growing need for financial knowledge. Reasons offered span from the emergence of a wider variety of financial products on the market to the increase of financial responsibility in areas like paying for college and retirement planning. Many have now also accepted that the increasing need for financial literacy education is because economic inequality is worsening. While this may be true, it continues to perturb me that few – if any – researchers are curious about the interrelatedness of the growing need for financial knowledge and the rapidly increasing presence of white supremacist violence.

That is the purpose of this publication: to propose a framework for understanding the relationship between financial literacy education and white supremacy.

The Relationship Between Financial Literacy and White Supremacy

David Remund, a Roy H. Park Fellow in the School of Journalism and Mass Communication at the University of North Carolina at Chapel Hill, conducted a literature review that explicated the conceptual and operational definitions of financial literacy. Unsurprisingly, he found that financial literacy is most often measured at the individual level. Equally, he noted that when people evaluate others’ financial literacy, they often look at five things:

  1. Knowledge of financial concepts.
  2. Ability to communicate about financial concepts.
  3. Aptitude in managing personal finances.
  4. Skill in making appropriate financial decisions.
  5. Confidence in planning effectively for future financial needs.

Remund went on to offer an operational definition – a way to take an abstract concept and measure it in tangible ways – for financial literacy that is so heavily cited, it has now shaped the way we think about evaluating people’s financial circumstances and socioeconomic positioning. He found that the four most common operational definitions of financial literacy are budgeting, saving, borrowing and investing.

Culturally, we are thoroughly convinced that financial literacy is our best answer for economic hardship. Though we are increasingly divided politically, financial literacy has support across the political spectrum. While widespread agreement is refreshing, our collective belief in what financial literacy can do is dangerous. Believing that mastery in budgeting, saving, borrowing and investing can ensure economic prosperity is how financial literacy education and white supremacy are connected.

In The Color of Money, Mehrsa Baradaran, professor of law at UC Irvine School of Law, reminds us that since our economic system was premised on slavery, it is fair to say that white supremacy’s true intent was – and still is – economic subjugation. Once slavery was abolished, policies were enacted to continue to restrict certain people from fully participating in the national economy. This is why, while fighting for civil rights, Martin Luther King, Jr. often referenced that freedom also meant the ability to determine our economic destiny.

But what ties financial literacy education and white supremacy together is not necessarily that it perpetuates the idea of whiteness as dominant and defining, though there is an argument that it does. Rather, it underpins white supremacy by perpetuating the concept and practice of individualism and individual autonomy.

Financial literacy, as evidenced by Remund’s work, purports that the cause of financial stress and hardship are not structural but simply behavioral. If our understanding of economic inequality stands on this premise, things get racist and sexist rather quickly. Eddie Glaude, Ph. D., professor at Princeton University and author of Democracy in Black, puts it well: “Somehow people absurdly believe – and they have done so for much of our history – that Black social misery is the result of hundreds of thousands of unrelated bad individual decisions by Black people all across this country.” That we are taught that the socioeconomic harm and hardship we experience is something we can budget, save, borrow and invest our way out of is how financial literacy participates in the cumulative degradation of wealth for groups targeted by racism, sexism and other forms of oppression.

Ronald Kent Richardson, Ph.D., thoroughly documents that the concept of individualism and white supremacy are inseparable. He writes that white supremacy isn’t some flaw that we need to rid ourselves of. Rather, white supremacy plays a “fundamental ontological function in America by structuring the concept and practice of individual autonomy.” Proof of this is most visible when we attempt to study people’s struggle against economic inequality, as we tend to only consider their knowledge of financial concepts, ability to communicate about financial concepts, aptitude in managing personal finances, skill in making financial decisions and confidence in planning for future financial needs. All roads lead back to the individual, not the system.

If most Americans do not understand how placing our highest value on individual autonomy underpins white supremacy, they certainly do not see how financial literacy achieves the intended outcome of white supremacy.

Financial Literacy, Financial Trauma, and White Supremacy

Early in my career, I thought I was a proponent of financial literacy. I used to say things like, “Money is power, and financial literacy can distribute that power to our most marginalized populations.” Admittedly, I was never truly convinced of this maxim, but I did believe that knowing about financial concepts influences a person’s wealth-building capability. After being in the financial education space for several years, I decided it was necessary to rhetorically interrogate this idea. I discovered that financial knowledge does have an influence on a person’s wealth-building capability, but is not the largest influence. The largest influence on a person’s wealth-building capability is financial trauma.

Financial trauma is a cycle of triggers and reactions to the fact that our economic system places the burden of ending or overcoming wealth inequality on the people who suffer from it most. This not only limits a person’s ability to build wealth, but it also causes traumatic financial stress; it requires those with the least power to somehow build enough power to fix a system that was designed to harm them in the first place. It is already exhausting enough trying to navigate a system that structurally restricts us from full participation in the national economy, but what makes the trauma even more acute is that when we do interact with the system, our experiences are often overwhelmingly painful, scary and/or destructive. As such, financial trauma becomes a self-perpetuating force of upholding white supremacy.

When certain groups are restricted from full participation in the national economy, they are almost always automatically relegated to lower economic strata in society.


That is the violent brilliance of our economic system – that it can ensure that wealth can perpetuate and reinforce itself for the selected few by making our daily interactions with the national economy so scary, violent and exhausting for everyone else that they may choose – consciously or subconsciously – not to fully participate in it.


Yet, our society has adopted the narrative that nonparticipation is a personality defect, not a protective trauma response. As such, the most economically disadvantaged groups often hold themselves overly accountable and/or are told that they deserve to be over-accountable for their struggle against economic inequality. That narrative is most aggressively used in financial literacy education.

What the Data Really Show

In March 2022, NEFE asked survey participants whether their state should require a semester or year-long course focused on personal finance education for high school graduation. The result was unsurprising: 88% of U.S. adults think their state should require a semester or year-long course. But an interesting story emerged when you begin to disaggregate the data by age, race, education and household income. The survey found that:

  • Younger people are significantly less likely to answer “yes”.
  • People with lower levels of education are the least likely to answer “yes”.
  • Adults who fall below the national poverty line based on household income are significantly less likely to answer “yes”.
  • People who are racially minoritized are less likely to say “yes”.

The fact that respondents who belong to groups targeted by racism, classism, sexism and other forms of oppression were significantly less likely to support mandated personal finance at the very least suggests that financial literacy likely results in financial trauma. But we do not have to rest on this assumption because, during spring 2022, I conducted qualitative interviews of over 100 college students who participated in financial education programming.

After polling them with the same questions that NEFE asked and getting similar results, I hosted focus groups to unpack the data. For the students who identified as a member of a minoritized group, their biggest reason why they felt they didn’t need a personal finance course was captured in what one student said: “Racism and structural oppression will always inform more of my experiences than learning how to budget.” Many of the students passionately detailed how sitting through personal finance programming often induced feelings of shame. Several students described the need to cry or “eat our feelings” after personal finance workshops because “developing [money management] skills cannot be the best you have to offer us when we are battling so much inequality.” Many echoed the sentiment that personal finance programming placed an “undue burden on me to ‘financial literacy myself out of my oppression.’”

Since beginning my research on financial trauma, I have learned many important things. Perhaps one of the most important things that I have learned is that you do not have to experience or have experienced an unspeakable economic horror to succumb to the effects of financial trauma. The things that trigger our financial trauma are often described as mundane – like attending a personal finance workshop – as opposed to unspeakable and incomprehensible events. For many, it is more common that their financial trauma surfaces during the daily incidents of marginalization, exclusion and dehumanization directed toward them because they are the targets of racism, sexism and other forms of oppression.

After I conducted my focus groups, I asked the same students to attend a series of workshops that I was leading. They would be on the same topics they covered before – the familiar four topics of budgeting, saving, borrowing and investing – but I said I would do it my way. “My way” places financial trauma in context. I opened by submitting to them a question: “What if I told you that you were not actually bad at spending? And because I know you are not, I’m not going to bother going over the mechanics of budgeting. Instead, I will demonstrate to you how our bank accounts compel us to think we are bad at spending and budgeting.” I went on to teach students about debit resequencing and overdraft, an example of an economic harm that occurs daily, informing them that overdraft is an opt-in policy and that many of us are convinced to opt in because it is marketed as protection, when it really is a profit strategy.

After students completed my workshop series, I asked them the same questions from before. Now, students who are minoritized responded “yes” more than others, but with a caveat: they all said that if personal finance workshops taught them how to navigate our economically violent system, then they would be more inclined to say “yes.”

The beauty of equity- and justice-based frameworks is that they seek to hold complexity. NEFE’s original findings and my follow-on interview results actually point to the same insight. On the one hand, the fact that more respondents who belong to groups targeted by racism, classism, sexism and other forms of oppression were significantly less likely to wish they had been required to take a personal finance course illuminates that personal finance programming likely does not capture the multi-layered texture of their socioeconomic experiences and struggles. Many of the students in my follow-on interviews expressed this. On the other hand, I’m sure many would tell me that I cannot make these assertions because there is such a large number of respondents who still said they wished they were required to take the course. But, when you dive deeper into those who said “yes,” we find that the vast majority said the most important topic they wished they learned was spending and budgeting.

When we are not taught that our economic system designs structures, processes and institutional messages that make us feel as though we are spendthrift and unsophisticated in our budgeting, then we end up feeling over-accountable for our financial experiences. To take the blame automatically is a sign of internalized oppression, which is also a trauma response. When financial literacy does not include the horrors of our sociopolitical history, financial trauma becomes a central feature in our socioeconomic experiences. Where there is financial trauma, there is white supremacy at work.

We can choose to look at these results and jump the trite conclusion that we should just mandate financial literacy. But, given what is happening in our country, that would make us complicit in the perpetuation of white supremacist violence. If we are going to continue to cling to the idea that financial literacy education can be beneficial to the masses, then its lessons need to reflect a thorough understanding of how white supremacy, financial trauma and financial literacy education are interrelated. If not, education isn’t the outcome—trauma is.


Chloe B. McKenzie is a celebrated researcher, wealth justice activist, and Founder of BlackFem, a leading nonprofit consulting organization that partners with the nation’s most forward-thinking governmental bodies to make opportunities to build wealth more fair and equal for Black women. Chloe’s groundbreaking research on financial trauma reimagines wealth-building opportunities for Black women and addresses key areas of influence – cultural institutions, education systems, policymaking, and families. Her research, work, and impact have been featured in Forbes, British Vogue, Black Enterprise, and on MSNBC. Her work has also been used by major academic and financial institutions like Georgetown University’s Law Center on Poverty and Inequality, The Hope Center at Temple University, Ashoka, and Goldman Sachs’ One Million Black Women Initiative.

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