5 Ways Building Wealth Is Different As First-Generation Woman of Color

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• The wealth gap remains a harsh reality for women of color, which makes it harder to build wealth.
• Your finances affect your mental health, so it’s important to take care of yourself emotionally.
• Your parents’ finances don’t have to be the baseline by which you judge your experience and needs.

A few months back, I attended a money and mental health session. Presented by the Plutus Foundation, a nonprofit organization devoted to empowering content creators with the tools and resources needed to enhance financial literacy, I sat in on a group chat where we largely talked about how, when you’re a first-generation woman of color, finances can impact your mental health differently. Further, building wealth can also look quite different.

As a first-generation female Vietnamese-American, a lot of what we discussed hit home — and hit hard. I related to the fact that there’s an expectation that you are to look out for your family, and that you inherit intergenerational trauma, which often remains unspoken and a taboo topic.

I sat down with a few financial experts in the space to discuss how trauma influences our money decisions, the connection between money and mental health, and some key differences in building wealth when you’re a first-generation woman of color in the US.

Systemic inequality makes saving and investing harder

The gender pay gap persists. In 2021, Latinas in the US were paid 54% of what non-Hispanic white men were paid. In other words, it would take Latina workers nearly an entire extra year of working full-time to be compensated the same as average yearly earnings of their white male counterparts. Further, Black women workers in the US were paid only 64% of what non-Hispanic, white workers were paid in 2021.

“When we think about our ability to save, invest, and have financial stability, as much as a high income doesn’t guarantee financial stability, it does make it a lot easier if you are managing your cash flow, and for your saving and investment plan as well,” says Anna N’Jie-Konte, a certified financial planner and founder of Dare to Dream Financial Planning. “So when we think about people being underpaid for the same work, it makes it that much harder to build wealth, because as costs increase — as there are costs to live — you have that much less funds to actually execute on that.”

Not sure where to start? N’Jie-Konte recommends getting to a place where you’re spending less than you make. This might involve either raking in more income, cutting back on expenses, or doing both. Then, pay yourself first. “Decide on what you’re going to save and invest on a monthly basis,” she says. Automate as much as you can. N’Jie-Konte is also a big fan of the 50/30/20 budget rule, where 50% of your take-home pay goes to needs, 30% goes toward wants, and the remaining 20% goes toward your debt and savings. 

Wealth inequality can affect your emotional health

Being a first-generation woman of color can also impact your emotional well-being, points out Rita-Soledad Fernández Paulino, founder of Wealth Para Todos, and creator of the upcoming podcast of the same name. “You wonder whether you think you belong in certain spaces, and that impacts your self-esteem,” she says. “It could lead to this burnout from overextending and trying to prove yourself, which impacts your wellness.”

Plus, when you’re first generation and you’re in a work environment where you are also the only person of color, it affects what parts of yourself you feel can show up in the workplace, explains Paulino. “When we have to compartmentalize ourselves, it impacts our confidence,” she says. “And it’s an energy lead. You’re dealing with these insecurities about whether you belong in a space and also the reality of microaggressions, like being called ‘spicy’ if you’re Latina or that you have an ‘interesting accent.'”

Internalized trauma affects you in the workplace

For first-generation women of color, many of our parents have dealt with internalized trauma — not to mention coming to a foreign country where you don’t speak the language, aren’t familiar with…