"The System is Financially Gaslighting Us"
Welcome to the latest installment of Money Advice For the Rest Of Us
A few months ago, I published the first round of Money Advice For the Rest of Us. You can read the intro post here, but the basics are as follows:
Back when I first entered the working world, none of the advice I could find online or from my parents was equipped to deal with the specifics of massive student loans, the lingering trauma of the fallout from the Great Recession, the ridiculous housing market or even ever-escalating medical costs. It felt like all financial advice was for the rich, or for those obsessed with retiring early, or Old Economy Steves.
The problem wasn’t just that I was (relatively) young. It’s that the terms of financial engagement had changed, and no one even thought to update the dominant mode of advice.
So we’re trying something out here for the next few months. This is financial advice for people with student loans, for people who pretend they know what a Roth IRA is but really have no idea, and for people who want to balance their individual financial security with the financial health of their larger community. It’s for people with financial anxiety, people thinking about the looming consequences of global climate change, people who just need straightforward prioritization instruction, and people who financially support extended or immediate family. It’s not for people looking for tax loopholes, people with significant family money, or people who already have financial planners. It’s for the rest of us.
All questions are sourced from subscribers — both from periodic Friday threads and from the comment sections of posts like this one. This week, I am truly thrilled to have answers to four of those questions from Pamela Capalad, a certified financial planner who has the most refreshing, provocative, and affirming advice I’ve seen from a finance professional…..maybe ever?
When I asked her for a bio, she thought this list was much more effective in communicating who she is and what she does, and I agree:
I have a literature degree, but taught "money camps" for youth in college and it changed the trajectory of my life
I co-founded a financial literacy program for youth called Pockets Change with an educator friend also in 2008, in 2014 we brought in my husband Dyalekt who is an MC and hip hop educator and the program is now a hip hop + finance program for youth
I co-host a podcast called Brunch & Budget with Dyalekt on personal finance & racial economic inclusion that has over 200 episodes (started in 2014). Check out a recent episode on the racist history of insurance and why you need it anyway
I left wealth management in 2015 to start my own financial planning practice, Brunch & Budget to serve marginalized communities, with a focus on financial planning for POC (including a group financial planning program for POC called See Change). Most of our clients are POC, about 40% are small biz owners, and many of them are in creative fields.
I’m hoping to convince Pamela to come back for another round of answers — so subscribers, please put questions for her in the comments. And as a final note: your subscriptions make it possible for me to pay Pamela for her time and labor. Thank you so much for supporting the work of Culture Study. If you’d like to support this work as well, here’s how.
I’m excellent with money because I’ve had to pay off massive debt with a small salary for a long time. A lot of people are struggling with very basic money advice, opening a 401K, knowing what debt takes priority. But there is also this miasma of it all being and buying into the late stage capitalism world we’re in. And money advice from someone who spells that out might be good. Helping people know that for the most part, they aren’t flawed, or broken, or unable to manage their affairs, and the deck is stacked against them in every way possible. At the end of the day, people in debt and with low-wage jobs are the best with money but are made to feel the worst.
Also, can we have a larger discussion about why we need to pay off the debt? How do we throw off the tyranny of the credit report? Are there ways in which our hyper individualized culture could be subverted to help others pay off their debts or buy houses together?
Awhile ago, I was on a call with a client helping her open a second bank account. We checked her current bank first and found out that if you have two accounts with them, they charge you a monthly fee.
We went hunting for a bank that didn’t charge fees and settled on one. We started filling out the form together online and it asked a seemingly innocuous question: have you lived at your address for the last five years?
Like most New Yorkers, the answer was no.
Then it asked the next seemingly innocuous question: what was your previous address?
Her face scrunched up. She had taken time off to travel for the last nine months and had been staying at friends’ houses, Airbnbs; you know, living that “location independent” lifestyle people love posting about on IG.
For the next five minutes, she wandered around her house trying to find a piece of mail she had sent to a home where she had a longer stay. She yelled “Aha!” from the back of her living room and excitedly ran up to the zoom waving a coupon for some meal kit service. We finished the application and did a little zoom dance before signing off.
A few days later, she emailed me and said her application was rejected. Something about negative activity on her Chexsystems report (which, in case you haven’t run into that, is like a credit report, but for your banking activity). She couldn’t think of a single time she even overdrafted on an account, much less have a delinquency, so we logged on together the next week to figure out what it could have been.
We downloaded the report and scrolled through it. I didn’t see anything and neither did she. I scrolled through it again much slower, trying to find the page with the negative marks or things to dispute. Nothing. Not. A. Damn. Thing. This bank had rejected her for… nothing.
This was one of many small moments I’ve had with clients when we sit with them through things that seem easy, mundane even. So many of us have tried to do some seemingly simple financial thing — open an IRA, set up our 401k, call a credit card company, get life insurance — only to get stuck part way through and just stop. We think it’s our fault — how hard could it be to fill out a form?? We blame ourselves, feel embarrassed, tell ourselves we failed, and don’t talk to anyone about it.
I share this story because in big ways, yes, but mostly in small ways, the system is financially gaslighting us. Banks open checking accounts for people everyday, it’s your fault you couldn’t open one and has nothing to do with their arbitrary metrics and automated rejection systems that you have no way to dispute 🙃
I want to thank you so much for asking this question and also tell you that you are not alone. The deck is stacked against us, and it’s so high, we think living in a silo is just how it’s supposed to be. In fact, the system as it is thrives on our belief that we need to do this alone. You said it right in your question: we live in a hyper individualized culture. Money is the last taboo, and we feel ashamed if we “don’t have enough” and we feel ashamed if we have “too much,” all the while not having anything real to compare ourselves to.
Some simple things we can do to break through the taboo and make real change:
Think of your personal finances as a revolutionary act. Filing your taxes or having a high credit score or having a savings account might not feel like much, but think about what you don’t have access to when you owe back taxes or have a low credit score or live paycheck to paycheck. These financial systems are designed to take us out in the most mundane ways. Don’t let them.
Start talking to your friends about money. Break the ice. You don’t have to exchange credit scores or student loan balances right away, but start with the mundane stories and laugh about them. Imagine sharing a similar story I shared above with your friends. You’d be surprised how many of your friends have gone through similar things and you can start to pool your experience and knowledge together.
Get a money buddy. If you’re ready to take it a step further, find someone who wants to dig into the weeds together. You can share more vulnerable financial details, help each other fill out paperwork or make calls together, or just remind each other that you’re not alone! Get a whole group of money buddies together and maybe you have a lending circle, a pooled down payment for a building you can all live in, or the ability to kickstart someone’s amazing business idea.
The financial world we live in relies on us to feel scared and dumb and powerless. Every step we take towards moving away from hyper individualism and towards collective power is a step closer to financial revolution.
My partner and I are buying a condo together, and we’re not married. We're getting life insurance so that if something happens to one of us, the other can have the funds to keep staying in the condo and be okay. We are also making wills. Neither of us are close to our family, and we don't really care what happens to our condo or our stuff when we die. If we don't specify anything in the will, what happens to it? Should we make plans for it? Would somebody sell our condo and give money to a charity on our behalf? How does this work? Trying to research online isn't super helpful because folks assume if you're doing legacy planning you actually have a legacy, and we don't.
I’ve been having the estate planning conversation with a lot of my clients recently in light of Covid, and a number of them are in your situation. I want to tell you right now: you do have a legacy! You have an asset that you’re going to put money, time, and energy into during your lifetime and you’re thinking about how to pass it on. That’s the beginning of legacy planning.
When we talked to our clients about what it would look like to leave a legacy, something beautiful kept coming up — our chosen family. Many of us may not have kids or family members who we want to leave money to or who we’d want handling our financial affairs (or we assume we have to let family manage it, so estate planning is just as uninspiring and daunting), but we do have close friends who we trust like family. They can be a part of your legacy too, whether you enlist them to help execute it after you die or leave them as financial stewards and beneficiaries to continue your legacy after death.
I was recently asked to be the executor for some close friends’ wills (which I was totally honored to be asked, by the way!). After discussing it with each other, they decided they didn’t want their families to have to deal with the paperwork that came along with the grief of the death of a loved one. They also had two back up executors (also close friends) in case I wasn’t able or willing, and had provisions in their wills to cover travel costs, time spent distributing the estate, etc. They had several charities and orgs listed as beneficiaries to their different accounts. The legacy they wanted to leave included their chosen family too.
If you don’t list a specific person or entity for where your assets go, the state probate court decides where it goes and it usually ends up going to family members. Instead, you can use the will to detail everything from who/where you want the assets to go to, who you want to execute your wishes, and how you want them to execute it, right down to the real estate agent if you wanted! Your legacy is your vision for how you want your community to be beneficiaries of what you’ve built in your lifetime.
One thing I would consider doing is taking the estate planning a step further and look into getting a trust set up and having your condo owned by the trust. Taking this step avoids probate court all together and your wishes are carried out in privacy and without a judge overruling them. Since you’re not planning to leave it to family members, there is a risk that family members could contest the Will in probate court and a judge may rule in favor of giving your estate to your family instead. You’d name a trustee (which is basically an executor for a trust) to carry out your wishes.
Also remember that your estate planning documents will change as your life changes so whatever you create now is not set in stone. You’re laying the foundation so that decades from now, you can have peace of mind that your legacy carries on.
This is fairly niche and I'm not sure what the question is so let me provide some context.
I'm a queer woman of colour. I live in the US and grew up in the UK; I have one parent who is British, one who is American. This is relevant because my intersectionality is routed not just in being a POC, it's also in being multi-cultural.
I'm on the spectrum between progressive and radical and for most of my adult life, I've been in pursuit of growth in some form or another. These types of searches have led me to a lot of white spaces where people talk about many things that resonate but include cultural appropriation and usually micro-aggressive behaviour.
Something that has come up time and time again when I've signed up to join a course or program, there is an offer for financial assistance for POC and an offer to assist with fundraising for tuition. On the face of it, it appears innocent but it's actually somewhat problematic.
In the first case, the offer of assistance for POC makes a massive assumption that all POC lack the funds to pay the full price. What that ends up looking like is when I start the course or program, most people treat me like I'm poor whether I paid the full price or not. I can't tell you how degrading this is. This was also my experience in grad school.
In the second case, assistance with fundraising looks like asking for money from family and friends. In my family culture as well as being Black and Native, asking for money is really inappropriate. I can't understate this enough. The first time it was suggested to me that I ask for money from family I was utterly horrified. Now, when I see this as part of a program sales page, I see it as a red flag and probably not a great place for me to be.
So what's the question? I'm not sure. Certainly, what you mentioned here about financial obligations rings true as I have a couple of family members whom I provide some financial assistant too. I've had the good fortune to be able to figure out how to manage my personal finances but it's not what I was taught - like many, talking about finances was more taboo than talking about sex. But navigating white spaces where I'm assumed to be a way with my money because of the colour of my skin is something I still haven't managed to master
I was at a summer camp conference once (in my parallel life) and a participant shared that when she was a teenager, she was one of the only Black campers that summer and everyone was having lunch talking about college. She mentioned that she was taking on student loans and one of the white campers said, in complete earnestness, “wait, I thought all Black kids got to go to college for free.” 😐
There is a tension you describe here that often goes unaddressed. These POC-based financial assistance programs exist because the reality is that in the US, Black families have significantly less assets than white families. The average white family has 10 times the wealth of the average Black family and if things continue down this path, the median wealth of a Black family will be $0 by the year 2053. Many of these programs and institutions are predominantly white because that is literally where the wealth is concentrated.
The problem is, the financial assistance programs created by these organizations are a bandaid. Actually it’s worse, these programs are a manifestation of white guilt. We know this because:
Many of them are still merit based — you can’t just be a POC applying for financial assistance, you often have to be the best POC applying for a “scholarship.”
They are culturally insensitive — many POC are in your situation — they are the ones providing financial assistance for their families, not the other way around. Also, as you shared, in many families of color, asking for money from family is a huge taboo. We already have enough trouble explaining to our families why we aren’t a doctor, lawyer, or engineer — now you want us to ask them for money for this thing we do that we’ve never been able to explain?? (for the longest time, every time he talked to me, my dad would ask, “so what do you do, just sharpen pencils all day?”) I’m insulted on your behalf.
They are designed to maintain a financial hierarchy — the icky feeling you get from these programs is frustrating because it’s so real and so intangible (ahhh microaggressions). One of my biggest pet peeves is when (mostly white) people say they want to “give back.” You can only give back something you took in the first place. There are unspoken strings attached when you receive money earmarked “for POC” or that they will help you fundraise (i.e. take money from your community instead of theirs) — mainly that they are simultaneously absolving themselves of their white guilt and also putting you in a position where you have to be grateful for it.
You also bring up another important point, where “I'm assumed to be a way with my money because of the colour of my skin.” While the racial wealth divide is very real, as I shared in the stats above, far too many people determine that the reasons behind them are a result of personal responsibility and not a financial system rooted in white supremacy. Whether or not you received financial assistance doesn’t even matter. Your very presence as one of the only POC in the room reinforces the belief that more POC don’t deserve to be there because of their lack of financial responsibility.
So wtf right? I’m honestly not sure either. I’ve also been in these types of white spaces you describe and have mostly taken myself out of them. It was literally keeping me up at night trying to figure out how to be assertive (but not aggressive), to speak up (but not too loud), to be passionate (but not emotional), and to only say comfortably uncomfortable things about race.
I am here to say I feel you, I see you, and it’s okay to take yourself out of these spaces for your own mental health and self-care. It took me a long time to leave them myself because as a business owner, I wanted to feel like I belonged somewhere, that I had not just a network, but a community. For a long time, it felt like these places were my only options and I had to compromise my own feelings of comfort and safety to feel some sense of belonging.
A friend of mine had a matchbook that said, “may the bridges I burn light the way.” I think about this every time I meet people and communities I would have never met had I continued to put energy into places that only wanted a piece of me.
I would like to know the right questions to ask when shopping for a tax advisor and financial planner, and how to determine “reasonable” fees when getting quotes. Also, the best way/time in life to get or shop for life insurance!
There are a lot of “right questions to ask financial advisors” lists so definitely look those up for more technical questions, but I want to help you make sure you find the right financial relationship. First, a few words so we’re all on the same page:
Financial planner vs. financial advisor - people tend to use these interchangeably, but if you want the official-official, the term “financial advisor” is a blanket title that could mean anyone who helps manage one or many aspects of your finances: stock brokers, insurance agents, tax advisors, bankers, etc. can all call themselves financial advisors. A financial planner is a type of financial advisor who helps to specifically create a plan or a program to help you reach short and long term goals.
Financial planner vs. tax advisor (also when I say tax advisor, I also mean accountant, tax preparer, bookkeeper, etc). I often get asked if we do taxes at our financial planning practice and I totally get why. Taxes are such a huge part of someone’s financial life and it’s one of the few money things everyone is required to think about at least once per year.
The reason why most financial planners are not also tax advisors is because accounting and taxes are governed by a whole different set of industry regulations than financial advisors and the tax code is so monstrous in this country that specializing in taxes is a huge undertaking in and of itself. Many financial planners are trained to help with tax planning, but when it comes to actually filing the tax returns, keeping up with new tax laws, doing bookkeeping, and running payroll, let’s just say I’m grateful that our accountant does all that stuff for us too.
I’m going to break the next section up into three parts - questions to ask yourself, questions to ask a financial planner, and questions to ask a tax advisor.
Questions to ask yourself: before you start interviewing financial professionals, it’s helpful for you to ask yourself some questions so you’re clear on what you’re looking for. This will make it easier to find the right people sooner, especially if the idea of retelling your financial story over and over makes you queasy.
What do I need a financial planner for? How do I need support in my financial journey? Most people fall into two camps when they’re looking for financial planning - they are either looking for validation that they’re on the right path or they are looking for someone to guide them down the right path. If you’re a validator, you’re most likely looking for someone who charges hourly or has a “quick-start” program to do a thorough review of your finances and send you on your way. If you need a guide, you most likely want to find someone who will not only help you create your financial plan, but also help you implement it and help you stay accountable to it.
What do I need a tax advisor for? You can work with a tax advisor just once a year to help file your taxes or you can work with a tax advisor all year round to help with bookkeeping, quarterly tax payments, payroll, tax projections, etc. Not all tax advisors do all things and you might not know what you need until you talk to someone, but you can know going into a conversation that these are the types of services a tax advisor can offer.
What learning or coaching style do I respond to best? How do I like to receive information? This is an extension of the first question, but I want you to dig a little deeper. A lot of financial advice is delivered in a fire hose type of way - here’s a 1-2 hour meeting where you get told everything you need to do and then you do it. If that sounds awful to you, think about how you’d prefer to receive information instead. Do you need shorter meetings? Email follow ups? More visuals? Do you need more education? Do you need something to get you relaxed and open to think about finances? How do you like to be held accountable? Knowing your learning style will give you concrete ways to advocate for your needs.
How do you want to feel about your finances after working with a financial planner? Think about how you feel about your finances now and how you want to feel one year from now after working with a financial planner. You may not know how to get there (that’s the planner’s job!), but having an idea of what it would feel like on the other side will be a good gut check when you start interviewing financial planners.
Questions to ask a financial planner: Entering into a financial planning relationship can be a little scary. Often, I’m the first person someone has shared this much of their financial life with. I remember when my husband and I were interviewing to hire our own financial planner (yes, just like therapists need therapists, financial planners need financial planners), I was feeling extra nervous about being judged. Use these questions as a way to quell the nerves.
What is your background? Why did you get into financial planning? This question is such a great way to find connection with a financial planner. You’ll get to see right away what makes them get out of the bed in the morning. Financial planners who love this work will light up when they get asked this question and will happily share their story with you.
What types of clients do you usually work with? This question will tell you if you’re going to be a right fit for them. You want a financial planner who will get you. And I’m not saying only work with a financial planner who’s worked with people in your shoes. Asking this question will reveal how excited they are to work with you, whether or not they have direct experience with your situation.
Are you a fiduciary? What is a fiduciary? Why would someone not be a fiduciary? It’s pretty shitty that you have to even ask this question, but it’s an important one. A fiduciary is a financial advisor who is required to put your best interests first, specifically above earning more commission. And no, not all financial advisors are required to be fiduciaries. And yes, an advisor is also allowed to only be a fiduciary *sometimes.* Yeah, I know. Asking this question in three parts will help you understand how they really feel about being a fiduciary.
How do you get paid? Want to be even more annoyed at imprecise language in this industry? In financial services, you can be “commission-based,” “fee-based,” or “fee-only.” Commission-based means you make most of your income selling products and earning a commission for each sale. Fee-based means you make some of your income selling products and some of your income collecting fees (which to me, sounds like commission & fee-based, but what do I know). Fee-only means you earn all your income by collecting fees and don’t sell any products for commission. Good times.
Ask them to explain a complex concept to you that you’ve been wondering about, i.e. what’s a Roth IRA? Why should I get life insurance? I have a freaking Literature degree. When I first started in this industry in 2008, I told myself I would read the Wall Street Journal every day to learn all this stuff. A month into that, I was more confused than when I started. It literally took me years to understand what a Roth IRA was. These financial concepts are (often purposely) convoluted and you want to know that your financial planner can help translate as much as possible and is willing to go over concepts multiple times.
How do you work with clients? What’s your process? This goes back to understanding your learning and coaching style and making sure it’s a good match with your financial planner. While most financial planners will all cover the same topics because we got the same training and education, the way we deliver this information to you matters. Get in the weeds early on how you’re going to be working with your financial planner, both while you’re creating your plan together and also the support you’ll get to implement it afterwards.
Questions to ask a tax advisor: your relationship with your tax advisor can be a little more transactional, but I recommend asking them 1, 2, 5, and 6 above to get a feel for who they are and how they work. More specific questions to ask a tax advisor include:
How do you work with clients during tax time? How do you work with clients throughout the year? This question will give you an idea of what services the tax advisor offers and also how you could potentially work with them outside of tax season to make tax season less hectic for you.
What is your communication method? I’ve heard way too many stories from clients where their accountant just ghosts them during certain parts of the year. If this is something that would make you anxious, get more details on the tax advisor’s communication method - are they better via email? Can you call them anytime? I was working with a tax advisor once who I could text!
How do you collect information? If a tax advisor has a process and a portal, that’s a good sign! It means they have an organized way to handle potentially high volumes of work under strict deadlines.
Now, to your question about reasonable fees, I wish I had a clear answer for you, but I don’t. What it comes down to is a value question. If you feel like you’re clear on what you’re getting for your money and it’s worth it to you to spend that amount, it’s a good match. This work isn’t about getting the best deal, but about you feeling good that what you’re spending money on is giving you clarity and peace of mind on your finances.
When it comes to getting life insurance, ask yourself: do I have someone or something dependent on my income for their financial survival? This can mean a partner, a child, a family member, or a mortgage, a student loan that doesn’t get discharged at death (ugh yes this is real), or property that needs to be maintained. If you aren’t financially responsible for these people or things, you probably don’t need to get life insurance.
If you do need it, you most likely only need term insurance — that’s the type of insurance that expires after a certain number of years, usually 10, 20, or 30 years. Term insurance is relatively inexpensive (I pay $18/month for $500k of life insurance) and you can shop around at a marketplace like Policy Genius or check out MassMutual’s term-only life insurance offering, Haven Life.
If you have health issues, more complex life insurance needs, or just want to talk to a person about this, reach out to the good folks at Low Load Insurance Services, LLIS.com - they’re all insurance agents who are paid salary instead of commission so they’ll have your back and won’t try to sell you anything you don’t need.
You can find more about Pamela Capalad and Brunch & Budget here. And subscribers, if you have questions you’d like to submit for a future installment, please put them in the comments below. As you can see from the questions above, they can complex, nuanced, specific and/or vague — what matters is that they’re the questions you really need answered.