Chloe McKenzie is Calling Out Financial Trauma

Once you’ve spent time with Chloe McKenzie—activist, educator, academic, self-proclaimed “wealth equalizer,” and founder of the brand-new Center on Financial Trauma and Wealth Justice—the shame, oppression, and even violence in our financial system become all too clear.

The dark side of finance shows up in explicitly discriminatory practices of redlining, illegal but persistent racism in lending, and policies like overdraft fees that most often penalize those who can least afford it.

But it’s not just banks that can cause harm. Modern cultural narratives about wealth ignore systemic oppression, equating our inherent worth with our net worth and suggesting that if we can’t land a well-paying, cool-sounding job that enables us to buy a home and all creature comforts, it is no one’s fault but our own.

These forces combine to produce a massive wealth gap. By some accounts, single Black women in the U.S. have a median wealth of $200 and single Hispanic women $100, compared to $15,640 for single white women and $28,900 for single white men. McKenzie has cited research that puts the figure for Black women as low as $5.

After a few years in mainstream finance, McKenzie realized that “financial literacy” as it is currently conceived—and indeed, the financial services industry as a whole—amounts to complicity in an unjust system. She has made it her life’s work to understand the narratives that shape our relationship with money and wealth, and to call out how personal and systemic trauma informs those narratives.

McKenzie’s work is timely and urgent, as the pandemic has upended our economy, highlighting the deeply embedded racism and sexism that has underpinned it, and widening and deepening financial hardship. Understanding our relationship with money and wealth is critical to composing the lives we want: to know what we need from work, to know how much is enough, to liberate us from the personal and collective stories that tell us how we should measure our success.

How can we fashion a new role for financial services—and a new role for money and wealth more broadly—as one of healing rather than harm?

McKenzie doesn’t yet know what a new and healthier relationship with wealth would look like, particularly at the societal level. But she is committed to holding the questions that might get us there: How can we deepen our awareness of what shapes our relationship with money? How do we teach people to succeed in a rigged system—and fix the system? How can we fashion a new role for financial services—and a new role for money and wealth more broadly—as one of healing rather than harm?

A childhood lesson in the power of money

McKenzie grew up in an upper-middle class family in Prince George’s County, Maryland, one of the wealthiest majority Black counties in the U.S. Her parents went through a difficult divorce, which showed her how money could be proffered as compensation for trauma. “Whenever something bad happened at home, I was quickly given a credit card,” she said. She also learned how money could be weaponized: One parent opened up credit cards in the other’s name; one parent hid assets from the other.

When she arrived at Amherst College, she was able to focus on her two greatest loves: learning and soccer. She felt safer there, but didn’t know how to ask for the mental health support that she needed. Thankfully, her soccer teammates perceived that her feelings of anger and confusion went beyond normal freshman year angst; her captain brought her to the college counseling center, and McKenzie has benefited from therapy ever since.

When she started to think about a career, McKenzie wanted to become a prosecutor to protect other children from the abuse she had experienced, but summer internships with county prosecutors after her freshman and sophomore years were too overwhelming. Christmas break of her junior year, she was getting ready to leave for a semester in Germany and staying with a classmate, whose dad convinced her to spend a day on the trading floor at his Wall Street firm.

McKenzie dutifully showed up, pulled up a chair next to one trader, introduced herself, and asked his name. He responded, “What's two to the fifth power?” “And I was like, ‘Thirty-two. At least give me something difficult.’”

That lit her competitive fire, and she decided to intern there the following summer. She came back from Germany to join the summer internship program at its midway point—one week before they each had to present two trades to all of the managing directors on the trading floor. She studied hard and “crushed it,” landing a full-time offer for after graduation.

She started to feel “complicit” and “morally bankrupt,” working with the same financial instruments that had brought on the 2008 financial crisis.

A few weeks after graduating from Amherst in 2014, she joined the firm as a mortgage analyst and found the work intellectually fascinating. But she started to feel “complicit” and “morally bankrupt,” working with the same financial instruments that had brought on the 2008 financial crisis, which caused many people to lose their homes. To assuage her guilt, she started volunteering at a homeless shelter after work and on weekends, giving financial advice to residents.

McKenzie hadn’t yet coined the term “financial trauma,” so she didn’t have the language to articulate the parallels between the childhood experiences that shaped her relationship with money and the financial abuse that she was seeing as an adult, at work and on her own time. All of that would come together before long.

The wake-up call

The year after she started her Wall Street job, McKenzie received a wake-up call. A serious illness gave her a sense of urgency about clarifying her purpose—and highlighted the role of systemic racism in her life, fortifying the foundations for her work on financial trauma.

One day in the spring of 2015, she went to work feeling ill. Later that morning, she got up from her desk and walked to the hospital, kicking off months of tests and operations that resulted in a diagnosis of multiple auto-immune diseases.

McKenzie found little support from her manager: “Instead of granting me medical leave, they sent me a laptop that I had to get on a VPN in a hospital room.” Her medical team insisted that the damage to her liver must be from alcohol abuse, demonstrating the medical racism that is euphemistically referred to as a social determinant of health—and can exacerbate financial trauma for those without employer-sponsored health insurance like what McKenzie had.

She had friends write letters to add to her medical records stating that she didn’t drink because of her family history of addiction. She sent her labs to an Amherst classmate, who ended up diagnosing her correctly, and found a doctor in Maryland that would respect and treat her properly, whom she traveled to every time she needed another surgery or service.

“I don't want to die being the lackey of these Wall Street assholes,” she declared.

After her third liver surgery, her doctor delivered a gloomy prognosis, and she started thinking about her legacy. “I don't want to die being the lackey of these Wall Street assholes,” she declared, and from her hospital bed incorporated BlackFem, a nonprofit aimed at breaking the intergenerational cycle of poverty through financial empowerment, particularly focused on Black girls.

BlackFem is born… but so is doubt

McKenzie left Wall Street in July of 2015. That fall she joined New York City’s Success Academy Charter Schools as a teacher to get classroom experience, but continued to develop ideas for BlackFem. The following summer, she piloted her first program: a two-week financial education camp for Black girls. She recruited some of her students from Success Academy and used a classroom at Columbia Law School that a friend studying there secured for her.

She took a leap of faith and quit her teaching job to commit to BlackFem full time, running weekend workshops open to any Black girl in New York City, living off of her savings and her Wall Street money. The program grew by word of mouth, with families traveling from all over the city. She realized that the program couldn’t grow if she was the only instructor, so worked with parents to organize and lobby their schools to incorporate McKenzie’s lesson plans into their classrooms.

She began speaking at education conferences across the country, inspiring attendees to bring BlackFem into their school districts. Within a few years, BlackFem was in 12 states, reaching 20,000 students. McKenzie was attracting support for BlackFem and for herself, with financial institutions including Fidelity sponsoring a national speaking tour for her in 2019.

But doubt was creeping in. Funders were encouraging her to raise her profile on social media by posting financial advice. But she saw how others doing so were not just uninformed, but perpetuating the shame and oppression that she started to see everywhere in the financial industry: suggesting that if you just stop eating avocado toast you can pay off your debt and retire early.

McKenzie also started working toward a graduate certificate in financial planning and services at Boston University: “In typical woman fashion, I felt like I needed to overcredentialize.” But as she prepared for her Certified Financial Planner certification, she began to see additional problems. “All of my case studies for a six-hour exam were about people who already had wealth,” she said. “Like, ‘How do I make sure that this person doesn't pay estate taxes?’” Never mind that taxes fund public goods, like schools. “None of this is for people who have nothing,” McKenzie said. “None of this is for people who are even struggling.”

“This whole industry of financial literacy tries to tout that if you know better, you do better.”

She started to see how the finance industry reinforces inequality—and still manages to put the onus on individuals to improve their own financial standing. “The financial services industry loves to consider themselves helping professionals, but they’re not,” she said. “This whole industry of financial literacy tries to tout that if you know better, you do better.”

But that is not what she was seeing: in her own life, as a financial expert making “weird financial mistakes,” compulsively spending when she felt overwhelmed; and in the lives of the students she was teaching through BlackFem—particularly kids who, like her, had experienced personal and systemic abuse.

Wealth equalization in practice

“If it doesn't teach people how to intervene in the larger macroeconomic system that's creating the conditions for our lives, then it's not financial literacy. It's the perpetuation of the problem.”

McKenzie overhauled the BlackFem curriculum to move even further away from traditional financial literacy programs that teach kids money mechanics. “If it doesn't teach people how to intervene in the larger macroeconomic system that's creating the conditions for our lives, then it's not financial literacy,” she said. “It's the perpetuation of the problem.”

She still teaches students the basics, like the importance of having a bank account and the magic of compound interest. But they also discuss how banks make money off of fees, which tend to hurt those with lower incomes. They discuss debit resequencing, the bank practice of reordering transactions so that customers incur overdraft fees.

Then they role-play opening an account: The bank manager offers overdraft protection and students decline, replying that they know it’s not really “protection.” Then they take a moment to “thank Elizabeth Warren for making sure that overdraft is an opt-in.”

She encourages her students to point out to banks that their policies are hard to find and hard to understand; she explains what the Consumer Financial Protection Bureau is, and who the decision-makers are.

McKenzie wants to emphasize that if they are hit with these fees, it is not their fault: Banks are trying to trick them and make them feel like they are bad with money. Most importantly, she wants them to feel empowered to intervene in the systems that are causing harm.

The extraeconomic dimensions of money

While BlackFem continued to grow, McKenzie dove deeper into her own research—which finally brought together her professional interest in finance with the personal experiences that she was examining through therapy.

The two strands of inquiry came together in what she named the “extraeconomic” dimensions of money: the idea that how we feel about money has much greater sway over our financial decisions than what we know. As she wrote in an essay for the Amherst College alumni magazine last year, our behavior with regard to wealth is informed by our feelings, which is turn formed by our experiences:

This extraeconomic side encompasses the experiences, memories—even trauma—that structure our relationships with money and wealth. It’s the lunchroom bully. It’s my parents’ divorce. Yet despite its importance, our cultural and educational institutions (if they teach financial literacy at all) fail to prioritize the extraeconomic side of money. This leaves us ill-equipped to process our feelings around money and wealth—feelings that come up, at one point or another, for everybody.

In 2019, she earned a master’s in public policy from N.Y.U. to better understand the systems and policies around finance. She now aims to get a Ph.D. in sociology to deepen her understanding of the effect of “all of these internalized things: trauma, violence, abuse, chronic stress. My hypothesis is those things have a greater influence on your wealth-building capability than just knowing about finance.”

“This would actually help us risk manage,” one venture capitalist said, “if we started to think about things from a financial trauma perspective.”

So far, her theory is holding up. One Black venture capitalist told McKenzie that he has seen some Black entrepreneurs “freak out” and get “completely paralyzed” when they receive their first round of funding. He realized after speaking with McKenzie that he should be supporting entrepreneurs in examining these extraeconomic dimensions, which could be at the root of the problems he has seen. “This would actually help us risk manage,” McKenzie said the man told her, “if we started to think about things from a financial trauma perspective.”

Changing the narrative

McKenzie is taking inspiration from the #MeToo movement, in her focus on vocalizing the problem: “We have to name the abuse first. My goal for right now is to just get people to start saying, ‘That’s financial abuse, that’s financial shaming, that’s financial trauma.’” 

She calls out financial abuse in her own life. For example, one potential funder said they would retain ownership over everything she produced. She pointed out the irony of their wanting to fund research on financial abuse as they were committing it, and turned them down.

That is part of changing her narrative. She continues to develop new habits: Having realized that her childhood ingrained in her the impulse to spend when facing adversity, she now practices being still, grateful, and reflective before she reacts to new situations—and certainly before she spends money.

This is what she wants to instill in her students: awareness of how our nation’s history and their personal histories are shaping their narratives, and the ability “to stop thinking of ourselves as units of wealth and units of productivity, and start thinking about our lives in a much more whole, conscious way.”

McKenzie said that there is a running joke on Ph.D. Twitter that the answer to everything is slavery, but does believe that applies here. Under slavery, she said, “people conflated my inherent worth and my net worth all the time—or at least how my inherent worth as a slave would then contribute to their net worth. So it's no surprise that that's the issue that's before us.”

She is still asking herself the question she asked on her hospital bed: what she wants her legacy to be. She doesn’t want her ambition to be tied to “traditional success metrics” of money and power. But as in her work, she knows that her impact lies in holding the questions—questions that are critical for all of us.