Money Trauma and Financial Literacy: Why It Matters and How to Overcome it
The topic of money can be intimidating and anxiety-inducing, especially if you have not had the privilege of being taught financial literacy. In fact, your relationship with money, good or bad, is most likely passed down from your parents.
As a tax accountant specializing in the adult industry, most of the clients I’m speaking with are young women, many coming from generational poverty. Young women and femme individuals, especially BIPOC, are statistically disadvantaged when it comes to financial literacy, and Gen Z as a whole is the least financially literate of the current generations. Let’s talk about it.
What is financial literacy?
Being “financially literate” basically means knowing how to make smart financial decisions. It’s more than just knowing how to budget - it covers a wide range of topics from taxes to investing to credit. It’s a skill that must be taught, and unfortunately most Americans never learn it in school. If you’re not a finance professional, you most likely only know what you’ve learned from your parents, which is where money trauma comes in.
What is money trauma?
Money trauma can be passed down through generations. Our parents teach us what they know about money, and much of what they know has come from their parents, and their parents, and so on. You have an ancestral line of relationships with money. Whether it has always been out of reach, a finite resource, or a tool to use to their advantage, these views have an impact on how we see and spend our money today.
Many of my clients are coming into wealth for the first time in their lives, and are first in their family to do so. Maybe you haven’t been taught how to manage money, invest, or save or spend wisely. You may not know you should be setting aside money for taxes, retirement, or emergencies.
The Way Forward
Financial literacy is not like a switch that you can turn on by taking a class. There is a lot to learn - I’m still learning! But if you take it one step at a time, you can not only break free from generational money trauma that has been passed onto you, but also impact your own family’s future relationships with money long after you’re gone, whether it’s your own children or your chosen family.
How many times have you felt like you can’t participate in a conversation about finance because you don’t have a basic understanding of the topic? How many times have you felt so anxious about money talk that you’ve avoided it entirely?
Here at TOC, we provide a safe, judgment-free space for you to talk about all things money. We know money can be a heavy topic for a lot of people. It can range from uncomfortable, to downright traumatic. It’s important to us that we provide a safe space for our clients to speak on these heavy topics as they feel comfortable. There’s no such thing as dumb finance questions!
We believe financial literacy should not be reserved for privileged white guys who have business-owning parents and MBAs, but for everyone. We aim to empower marginalized groups by providing resources as well as consultation services, and you can count on us to take the time to explain what’s actually happening when we provide our services if you ever have any questions.
It’s our mission to empower clients to take control of their finances and make smart business decisions. Step one is taxes - start here!