NerdWallet's Smart Money Podcast - Navigating Generational Financial Trauma in a Digital World

Episode Date: September 14, 2023

Explore the impact of generational financial trauma on millennials, how social media amplifies it and ideas for healing. Personal Finance Nerd Tiffany Curtis delves into the complex topic of generational financial trauma, particularly its impact on millennials, with two special guests: Aja Evans and Rahkim Sabree. Aja Evans is a licensed mental health counselor and financial therapist, and Rahkim Sabree is a certified financial education instructor and author. Together, they explore how past financial landscapes can shape our current financial behaviors, the double-edged sword of social media in shaping financial perspectives, and the importance of understanding these impacts, especially for marginalized groups. The episode also delves into the Black community's discussions around self-reliance and reparations. The speakers challenge the notion that achieving financial success is an antidote to generational trauma and expose how these misconceptions can breed competition among marginalized communities. Wrapping up the episode, the hosts stress the importance of financial literacy while discussing its limitations in closing racial and gender wealth gaps.  In this conversation, you’ll learn about: generational financial trauma, millennials, social media echo chambers, marginalized groups, how people define financial success, racial and gender wealth gaps, mental health counseling, financial therapists, financial education instructors, reparations, trauma healing, financial strain, and distorted financial perceptions. To send the Nerds your money questions, call or text the Nerd hotline at 901-730-6373 or email [e-mail]. Like what you hear? Please leave us a review and tell a friend.

So many factors go into how we manage our finances. There's education. There's how we utilize technology. There's our comfort with risk. And then there's what we grew up with. The financial environment we experienced as children can have a huge impact on what we end up doing with our money as adults. For many people, including millennials, the past becomes prologue. When we start talking about financial trauma in general, I think that there is a conversation that assumes people were coming from a place of poverty. And yes, that is very, very true for a lot of people. But there are also people who were raised in middle class, upper middle class, wealthy families who are dealing with generational traumas of their own with money. Welcome to NerdWallet's Smart Money Podcast. I'm Sean Piles. And I'm Tiffany Curtis. This is our second episode of our nerdy deep dive into millennials and money. You know, Tiffany, one of the things that we talked about in the last episode is how millennials are really the first generation to grow up with social

media. And that has led to a lot of conversations that folks maybe wouldn't have had otherwise. It's like we're more prone to sharing when it's with hundreds or thousands of strangers than when we didn't have the Facebooks and Twitters of the world, or sorry, the exes of the world. I'm definitely still going to call it Twitter, BTW. Yeah, same. But what you said is really true, Sean. And social media has given us the faith to talk a lot about topics that previous generations didn't really talk about. Or if they did talk about it, it was seen as taboo. Yeah. What do you think is a good example of that? Well, like the topic of generational financial trauma, which we're going to be talking about

today. This is the idea that the emotional and psychological impact of events are passed down through generations, which can have a major effect on how you live your life, and by extension, how you manage your money. We learn how the world works through the lens of our parents and grandparents, and if the way they manage their finances was impacted by, say, growing up in poverty or seeing strained relationships with money, elements of those behaviors and emotions are passed down through the years and can trickle down to succeeding generations. Yeah, and this concept has really come to the fore just over the last few years, and it's a really persistent topic on social media. Exactly. And although anyone can experience generational financial trauma, some groups are disproportionately affected by its legacy. For example, the average Black or Latino

household earns about 50% less than the average white household, according to 2021 data from the Federal Reserve. And data from the Center for LGBTQ Economic Advancement and Research says that queer and trans folks face more workplace discrimination than their cisgender and straight peers. So today, we're going to explore what all of this means for millennials, how it affects how we manage our money, and how to begin to break that cycle of trauma. All right. Well, listener, we want to hear what you think about this topic. To share your ideas, concerns, solutions around millennials and money, leave us a voicemail or text the nerd hotline at 901-730-6373. That's 901-730-NERD or email a voice memo to podcast at nerdwallet.com. Tiffany, who are we hearing from today? Our guests are Aja Evans.

She's a licensed mental health counselor and financial therapist based in New York City. And Rakim Sabri, a certified financial education instructor and author of the book, Financially Irresponsible. asian and rakim so glad you could join us on smart money today thank you for having us so excited to be here so we briefly introduced the topic of generational financial trauma in our intro episode for this series and now i'd like to do a deeper dive asia what is generational financial trauma in our intro episode for this series. And now I'd like to do a deeper dive. Asia, what is generational financial trauma? And how does it affect how we relate to money? When I think about generational trauma, the way I define it is, it is how we grew up and the messaging that we received from our family, our peers, people who are around us in general, talking about money, living through money and experiencing money. So we don't realize it may not have just been from things that we heard, but it might be action, the tone of voice, body language, some of the nonverbal communication

that we were picking up in the room around us when money was discussed or being brought up or lack thereof. So anything that might have been passed from the people who are around you into your life as a child, as a teen, as an adult that you then bring with you into your adulthood and your behavior with your money. And Rakim, you have a lot of insight about how generational financial trauma can affect other areas of our lives. Can you give us some examples of how that trauma can spill over into other parts of our lives? I look at it through the lens of the historical Black American experience in the United States, right? So the generational trauma that Black Americans tend to experience and express comes from slavery, right? Comes from the way that we were treated. And as a result,

institutional mistrust that impacts not only how we interact with money, but how we show up, what our self-esteem looks like, whether or not we feel entitled to certain opportunities, whether or not we feel entitled to defend ourselves in certain areas. And so I really stumbled upon this path, if you will, after reading a book called Post Traumatic Slave Syndrome. And it's by Dr. Joy DeGroote. And she talks about this PTSD like effect or impact of slavery, then followed by Jim Crow, then just following us up to the present day and how this trauma travels through our DNA. And when you look at that through the lens of personal finance and how we manage our money or how we mismanage our money, I can draw parallels between the survival reaction to

just existing, right? Like, you know, why do we have a tendency to avoid life insurance? Why do we have a tendency to not plan for future generations? Why do we have a tendency to put our money under the mattress, right? And there's these narratives that, to Asia's point, we hear, we observe, we internalize, and then we repeat. So conversations about breaking generational curses or healing from or moving through generational trauma have been happening all over social media. And I think that millennials are equipped with more knowledge of this kind of trauma. And a lot of us are committed to not repeating these traumatic cycles. I'd love to hear from the both of you more about how and why

you think social media has created more space for millennials to talk about money and generational trauma. Let's start with you, Aja. I think we are in a very particular position where, you know, the world was opened up when certain social media apps came about. So just having these conversations or trying to or feeling uncomfortable stumbling through them with people in your vicinity was one thing. But the second you open it up to social media and you open it up to the internet, you can have a different conversation with somebody else who might be going through the same exact thing with you as you somewhere else. So it allowed people to not feel so alone. And when you start feeling less isolated, that not only breaks up the shame, but it makes it a lot easier to have transparent conversations about it. So when we started, you know, people naming their debt and having conversations about what it looks like to be struggling to graduate in the middle of a recession, a great recession at that point,

like, what are we doing with our money? What's going on? Why do I feel like I'm not getting ahead? Millennials were in a very particular place to start having very much more free conversations than I think previous generations had because they didn't have as much connectivity right at our fingertips. And how about you, Rakim? Any specific examples that you can think of that are unique here because of social media? We're an interesting demographic, right? Because we're the last generation that kind of had one foot in the door with the analog and, you know, one foot in the door with the digital.

So the generations after us get credit for kind of dismantling and reimagining what standards look like previously, but I think that we really get to claim the credit for starting the conversations or putting some of the old ways, if you will, under a microscope and deciding, is this what we want moving forward? Is this aligned to what we feel is important? And of course, the following generation gets to amplify all that right through TikTok and all of the other social media platforms that give you message is that we tend to create these echo chambers of what success looks like or what success should look like by following all of the people who are doing the things. And so we think in the consumption of this media that everybody is doing better than I am. And I think that the difference between the quote unquote influencers of old, right? When you look at the big names, the Dave Ramsey's,

the Robert Kiyosaki's, the Sully Ormond's, is that they're kind of like perched up on their hill, right? Their ivory tower of sorts. And they're talking at their audience and social media removes the barrier to entry in interacting with people who don't look at don't are rather are not looked at as idols but more so looked at as peers and so i think you know social media it's a gift and a curse because there is like this rapid the information is readily available Like it doesn't have to be curated. It's just like, boom, I can take a video in 30 seconds, post it, and the whole world has access to what those thoughts, those feelings, those experiences look like. I love that you brought that up, Rakim, because it just reminds me of a client I literally saw this morning. And we went over her numbers

because I am a therapist who will talk actual numbers with my clients. And I was like, listen, I am not here to give you any kind of financial advice, but I want you to know that you're in a great place, like financially. She has almost two years worth of emergency fund, almost $100,000 in her retirement. And she doesn't feel like she's doing it right. And she is less than 30. And I was like, girl, we got to back up because where are you getting the messaging that says that you are not on track? First of all, I aspire to be as prepared as that client sounds. But also, I maybe want to speak to the ones who aren't and for reasons beyond them being quote unquote bad with money or feeling like they're bad with money, especially thinking about the groups that are disproportionately affected by this kind

of financial trauma. So the LGBTQ plus community, Black people, Indigenous people, and other people of color. Can you talk about how you've seen the effects of this in your work? I think that there's a conversation that I've been a part of since I've embarked on this work within the Black community specifically, around these polar opposites in terms of this idea that we should do for self, right? That we should go out there and, okay, we don't have the bootstraps to pull ourselves up by, but let's invent those bootstraps and do well. And these conversations are usually had within circles of Black individuals who have accomplished some level of financial success. And I feel like that level of financial

success and however it is defined for them creates or amplifies this disdain that if you pull back layers will probably point to shame, will probably point to guilt, will probably point to resentment for having to climb as vigorously as they did. And on the other side of this conversation, you have poor Black people or Black people who have experienced poverty, who have leveraged the systems that give you a little bit of a breather, right? Like Section 8, like food stamps, like welfare. And there's almost this entitlement that says, well, you know, my ancestors built this country and we deserve dot, dot, dot. And so a big conversation that I've seen intended with this is this conversation around reparations and what that looks like. And so, you know, obviously at

this point, it's less of a hypothetical than it was maybe some years ago, but I feel still very far away. The conversation that concerns me is how do we find some little ground between these two polar opposites within the same demographic, one? And then two, what happens then when reparations is allocated in the form of cash, right? Because just because you have money doesn't solve all of the years of generational trauma, as we're discussing. So as we have these conversations with millennials, as we have these conversations with marginalized peoples across the spectrum of what that looks like, there is kind of like this. I don't want to call it a competition, but this race to get to this point by this point and achieving that, then it's like, okay, now what? So we kind of touched on it a little bit, thinking back to what Asia said about that

client who by all measures is doing very well considering the economy and the world right now, but who still felt like they weren't doing enough despite having that financial security. I'm wondering either Asia or Rakim, what else do you think are some misconceptions about generational financial trauma? Based on that example, having money doesn't mean that you are no longer traumatized. I think there's a perception that believes that you only have financial trauma if you didn't have money. And I think the conversations are so frequently based around that. Yes, we know that in general, Black Americans don't have as much wealth as white Americans. We know that women do not have as much wealth as men. And those are their own financial traumas, right,

within those systems. But when we start talking about financial trauma in general, I think that there is a conversation that assumes people were coming from a place of poverty. And yes, that is very, very true for a lot of people. But there are also people who were raised in middle class, upper middle class, wealthy families who are dealing with generational traumas of their own with money. And yes, money very much so can get us to a level of happiness. But with that money or with that notoriety or with those accomplishments, I also think comes to Rep Kim's point of pressure.

And I think that's another way that generational trauma shows up for people. Hoarding their money, I think, is a huge one. I think how people end up spending their money, overspending is a huge one as well. And I most definitely have been somebody who's gone through that too. Like, I always say that my story of how I even came to this work and personal finance was because I was in my mid 20s, I moved to New York City, and I was trying to make it rain and I could not afford to and I was totally overspending. And it was about my self esteem. And it was about how I felt and my assumption of what other people's money looked like with them going out and doing what I was doing. Yeah. And just for listeners who may not

be familiar, the term make it rain means being flashy with money because somebody may want that clarification. So generational financial trauma is not only a big topic, but it's a big issue to navigate and healing from. It takes a lot of time, a lot of work. Do you think it's possible to achieve financial wellness? What does that even look like when you're working through this kind of trauma? I mean, listen, it's going to take time. And I think recovery is a very specific term that I use because it doesn't mean it's going away. It doesn't mean that you'll never feel those pangs or what some people might call a trigger or a flashback of a memory of just a thought or a remembering a

feeling. It doesn't mean that's going away forever. You'll never have that. But it means that you might be a little bit more aware of it. And as we come to the end of our conversation, it's so important for us to acknowledge that financial trauma has systemic roots. And Rakim, I wonder if you could share some of the systemic changes that you hope happen in the future to better support millennials and generational financial trauma. Wow, that's a big question. But I think that as we have more of these conversations and as financial therapy and financial psychology start to take more of the main stage over this idea that financial literacy in and of itself is the silver bullet to solving all of your financial woes, I think that we can move the needle more intentionally based off of the power that we possess within ourselves. And the other side to that is calling out some of the BS that circulates on social media and traditional media too. You're preying on this survival instinct to get out of a bad situation and you're taking advantage of that and creating more trauma.

And so it's a very delicate balancing act, but we need to stop being enemies to ourselves as well. I'm wondering, Asia, if you have any additional thoughts on some of the systemic changes you hoped happened in the future. I would really love to close these racial wealth gaps. That'd be great. The gender wealth gap, that would also be fantastic to just start closing those in for people to realize that equal pay is really important. And I mean, not being a racist is pretty important too. I don't know how to really put it in a way that is a little nicer than that, because I know that that is hard. But this is the political system that we're in right now.

And if people do not see other humans as worthy and doing the work that is worthy as equal pay as some of the other people, then we won't be able to close these gaps. We won't be able to make these changes because we'll still be fighting to be even. If I can add to that, that's only half of the job, right? Because yeah, you get the head start by doing whatever it is that you did to get the head start. And then everybody's on the same playing field, but the people that have the head start still have the head start. And so I didn't say this, and it's not a hope of mine because I don't think that it's realistic, but I do think it's worth kind of sharing, that redistribution of wealth and power is the only way that there will be equal footing. We can't just say, okay, everybody's equal now, but you have a hundred, 200 year headstart generationally

through the acquisition of real estate, through, you know, participating in the investment of equities. Like, you know, yeah, we can do the financial therapy thing, but we can do the financial literacy thing. But I don't think it's desire of marginalized people to just get a check and then forget about it, right? Because that check still pales in comparison to the wealth that we have been excluded from. Asia Evans and Rakim Sabri, thank you so much for helping us out today and having this really important conversation with us. Thank you for having us. This is amazing. Yes, I always loved an opportunity to collaborate with Asia.

So I am grateful that you saw fit to put us in the same space at the same time and share our thoughts on this very important topic. That was so interesting. A lot of what Rakim was saying about the double-edged sword of social media and the internet at large really resonates with my experience. There's so much to be gained from using a platform that allows us to have conversations that we haven't publicly had before about race, gender, financial challenges. But at the same time, these platforms can skew perceptions. You can see people hyping up their achievements, but you have to question what's real and what's just self-promotion. And if you start to feel bad about yourself because of the content, I would say just close the app and walk away. Absolutely. I think it's important that we also call out how hard it can be to do that. Social media, as valuable as it can be, is also designed to keep us scrolling.

And I feel like that urge to scroll and fall into comparing yourself to others is definitely made stronger when we feel like we aren't where we're quote unquote supposed to be financially. Another thing that stands out to me is how financial trauma or anxiety around money isn't exclusive to those who didn't grow up with money or who don't have money now. We all have complicated emotions around money that stem from our upbringing and the histories of our families. But ever the optimist, I'm going to keep coming back to Asia's advice about how we can rewrite the script and find our own version of financial wellness. It's not going to happen overnight, but we can mend our relationship with money if we put in the work, learn at a tactical level how to improve our finances, and have some patience

with ourselves too. And leaning on others, be a financial therapist like Asia or someone else, or community resources is also really important. I think our culture can sometimes make life seem like an individual pursuit. And I think there's a lot of courage and strength to be found in asking for and receiving help. Absolutely. So Tiffany, tell us what's coming up in episode three of this series. Well, in our final episode, we're going to look at how millennials are upending some of the traditional milestones around adulthood. And we're going to explore how to get out of the pessimistic mindset that everything is bad and that nothing is going to change. Because while we wait for systemic change, we can take charge of our financial

wellness. I think that we have to take fair off the table because there's very little in life that is actually fair. What we can do though, is that we can tool up in such a way to actually understand core tenets of economics, core tenets of entrepreneurship, core tenets of financial literacy, core tenets of investing. For now, that's all we have for this episode. Do you have a money question of your own? Turn to The Nerds and call or text us your questions at 901-730-6373. That's 901-730-NERD. You can also email us at podcast at nerdwallet.com. Visit nerdwallet.com slash podcast for more info on this episode. And remember to follow, rate, and review us wherever you're getting this podcast.

This episode was produced by Tess Vigeland and me, Tiffany Curtis. Sean Piles and Liz Weston helped with editing. Kathy Henson helped with fact checking. Kaylee Monahan mixed our audio. And a big thank you to the folks on the NerdWallet copy desk for all their help. Here's our brief disclaimer. We are not financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances. And with that said, until next time, turn to the nerds.