by Chloe McKenzie | Founder & CEO
When a member of the BlackFem team send me materials that will be sent to potential partners, parents, our sponsors, really anyone who is not an internal team member, I find myself reiterating that BlackFem, Inc. provides programs about wealth and financial literacy. I even told our newly onboarded Summer Fellows, “you’ll get used to it, but BlackFem does way more than financial literacy.” I’m often skeptical of trends that quickly lose their potency because they become associated with the general public — we all know who is excluded from that image: low-income people, particularly those in communities of color. Wealth literacy adds a focus on net worth that financial literacy misses.
It was necessary for me to begin this piece with the aforementioned context because I realized around 2 in the morning last week that part of the reason why my team forgets to write or emphasize wealth and financial literacy is because they may not even know what is wealth literacy. In fact, I’m not sure the word existed until I thought about how to better brand what exactly it is we do. But, if they can’t articulate the difference between wealth literacy and financial literacy, how could we then expect others to understand its importance, particularly since the advent of the white-washing of the financial literacy movement? Very simply, financial literacy is the understanding of how money and finance works. Obviously that is incredibly important, particularly for those with lower socioeconomic backgrounds, people of color, and women generally. But, it also isn’t enough if you are a person who was graced with the task to dismantle the institutional and societal structures because of your identity markers. This is where wealth literacy comes in. If financial literacy is the ‘what you need to know to be more financially successful than you otherwise could have been’, then wealth literacy is the ‘how you can put your knowledge to use to increase your net worth.’
If you come to any of our youth programs that I am hosting, you will hear me say to my girls “Finance Is Personal!” too many times to count. This is incredibly important in the context of differentiating between financial literacy and wealth literacy because again, financial literacy is broad-based, whereas wealth literacy allows a financially literate person to take their knowledge and create an individualized plan to achieve her financial goals. Let me provide an example. James was a student I had at a high school BlackFem works with in the South Bronx. James would always say, “Miss… I didn’t spend too much this weekend. I told myself I would only spend $50 this weekend and I spent like $53.” I responded, “James, how’s it going? Tell me this: how did your spending money affect your net worth this weekend?” Before I discuss the same conversation we had 2 weeks later, let’s talk about the profound distinction I wanted to make to James. A teacher who teaches his students about budgets generally is helping his students build financial literacy, however doing that alone does not reframe his students’ mindset about how using a budget can help him build wealth. I guess to be fair I cannot say that for sure, but just teaching the concept generally does not ensure that his students think about spending through the lens of their net worth increasing or decreasing.
Fast-forward two weeks and James comes into class again pretty upset with himself because he overspent again. This time he had a better excuse: he was celebrating his 4-month anniversary with his girlfriend, which of course I took the time to congratulate him. But, James’ demeanor was dramatically different than two weeks prior because the day we had our first conversation I taught his class about building their balance sheets. Balance sheets are incredibly useful because it very clearly helps us calculate our net worth. James was so upset because, as he mentioned, “Yo, I can’t keep taking these hits to my wealth though. I love my girl, but damn.” This is impact of wealth literacy. Wealth literacy compels people to change their mindset about the wealth-building process. First, it unearths the well-kept secret that wealth is attainable for anyone if you know what you’re doing (so this is the financial literacy). Second, and perhaps more importantly, it provides the most accessible reason for why you should take all of this “talk” about finance seriously — really because it can apply to you individually.
Just because financial literacy in its simplest form isn’t taught in most schools around the country, and I can unfortunately almost guarantee financial literacy education does not exist in our most disadvantaged communities and schools, doesn’t mean that we should settle for just that when it is offered. It isn’t enough. If we are really looking to change the (financial) trajectories of our target communities, then we cannot provide a quality financial education without wealth literacy. Certainly it will be hard to find curriculum that involves both forms of literacy, but I guess that’s what makes our programs so unique and successful.
If you are one of my Summer Fellows and reading this, does it all make sense now?