Is Financial Independence (FI) a White Privilege?

by | May 25, 2023 | Own

Just to say up front, I don’t expect a single blog post to solve an issue as complex as the racial wealth gap. If I do in fact have white privilege, what I hope might come from this post is to use that privilege to advance the conversation by pointing to some historical trends, highlighting possible causes of this heated debate, and spotlighting a couple Firestarters of Color to speak on possible strategies for the Black and Hispanic community.

But first, a fun parody by SNL and some definitions…


Financial Independence (or FI): as defined by Investopedia, “having enough wealth to live a life of comfort without the need to work.” Using the Rule of 25, the general idea is this: take your annual spending, multiple it by 25, and that is the amount you need to live on without needing to work. For example, my living expenses are around $5,000/month (or $60,000/year). That means I would need $1,500,000 (which is $60,000 x 25) if I were living on 4% withdrawals from my investment portfolio and I didn’t have rental property or other streams of income. This definition begs the question: is FI a luxury afforded primarily to White Americans due to white privilege?

White Privilege: Oxford Dictionary defines it as “inherent advantages possessed by a white person on the basis of their race in a society characterized by racial inequality and injustice.” To help keep this conversation as productive as possible, I think it’s important to avoid speaking in generalities. There are plenty of White Americans living below the poverty line and struggling to get by. In their minds, they don’t see any kind of privilege for the financial situation they’re in. Similarly, I think it’s also important to avoid generalities about Black Americans and the struggles they’re up against. But more about that later.

A Quick History

Despite slavery ending in 1865, the racial wealth gap may be proof that Black Americans are still being denied the equality they were promised over a century ago. According to data by the Urban Institute, this economic gap is closing very slowly between Whites and Hispanics, but continues to widen between Whites and Blacks.

median family wealth by race

One possible reason for this disparity could be the passing down of generational wealth. According to survey data by the Federal Reserve, White families are three to four times more likely to receive inheritances or other family support than Black and Hispanic families.  

Receiving generational wealth could explain the head start to FI and why the racial wealth gap has widened over time, like the compound interest of a retirement account.

This financial disparity is happening in homeownership as well, with only 42% of Black Americans achieving the pride of homeownership, compared to 72% of non-Hispanic Whites.

homeownership by race

One way that Black families were limited from upward mobility and building generational wealth was done through redlining and creating hurdles to homeownership. This practice is highlighted in Netflix Explained: The Racial Wealth Gap (2020).

redlining as shown in Netflix Explained The Racial Wealth Gap

With this practice, predominantly Black neighborhoods were color-coded red to make it harder for them to qualify for a mortgage, charged higher interest rates on their loans, and kept out of the nicer non-red neighborhoods where they would have access to better jobs and schools. Our country’s ugly history of systemic racism continued with events like the Tulsa Race Massacre of 1921 (highlighted in the HBO series Watchmen) and the persistence of segregation under Jim Crow laws as late as 1965.

To quote Dr. Martin Luther King, “If a man enters the starting line of a race three hundred years after another man, the first would have to perform some incredible feat to catch up to his fellow runner.” Despite these alarming trends in the racial wealth gap, there are opponents who would disagree that white privilege exists.

A Counter Argument to White Privilege

One attempt to refute white privilege comes from the often-angry Bill O’Reilly. His claim: white privilege is a lie because Black Americans tend to be high school drop-outs who come from unstable homes. However, if someone is judging the perceived instability of the Black family structure, it could a red flag for white privilege. With limited job prospects, the men in lower income, economically distressed/underserved communities are more likely to get caught up in gangs and gang violence and fill our prisons. This trifecta will understandably lead to an unstable family structure back home that lacks the financial support of a male income earner.

In Maslow’s hierarchy of needs, the top of the pyramid is referred to as “self-actualization.” At this apex point, having the freedom to use your unique skills to chart the course for your life usually means your foundational needs, like safety and security, have already been met.

maslow's hierarchy of needs pyramid

In short, it could be white privilege to stand higher on the pyramid, where safety and security are a non-issue, and judge someone who is struggling at the bottom of the pyramid doing whatever they can to survive.

Aside from unstable homes, O’Reilly’s other theory contradicting white privilege is that Black Americans “choose” to be high school dropouts. But this theory does not factor in things like systemic redlining, which has historically made it more difficult for Black families to move into better school districts. Additionally, there may still be a lingering stigma behind the pursuit of higher education. A college professor of mine shared with the class how his grandfather was a slave and had White men coming to lynch him after they heard he was teaching the other slaves how to read.

Present Day Challenges

It would be nice to say that all those challenges created by slavery are in the past. However, there are still echoes of slavery still reverberating today. Racial oppression may no longer exist in obvious ways like Jim Crow laws and redlining, but instead, it has mutated into more subtle forms like voter suppression and gerrymandering of voting districts.  

What Might Be Causing the Disconnect about White Privilege

In a recent PBS series called “Hacking Your Mind,” it’s said that when constructing an explanation to something, the story we tell ourselves tends to be more convincing than the evidence itself.

A professor from Duke University spoke in a podcast interview about how slaveowners would excuse slavery with arguments that slaves were “part of the family” and that “they should be grateful that I’m feeding and clothing them.” That rational may sound outrageous today, but there are new justifications for modern-day slavery.

Over 150 years later, White Americans like O’Reilly dismiss white privilege, and probably the racial wealth gap, too. There’s a few cognitive biases that could be at work causing this inability for the two sides of the debate to see eye-to-eye:

Self-Serving Bias. This bias is the tendency to attribute positive results as being due to our own efforts and negative results as being someone else’s fault. It is designed to protect our self-esteem, but can keep us from learning from our mistakes. In the case of the haves and have-nots, this bias would perpetuate the stereotype that any success by White professionals is due to their hard work. This bias could also be happening when a Black American abdicates his or her power by saying that the system will never let them get ahead.

Cognitive Fluency. This bias says that if things are easy to understand we tend to take it as being more likely to be true. In short, if a simple explanation is offered as the solution to a complex problem, it should probably be questioned. Cognitive fluency seems to be at work with generalizations such as “work hard and you’ll be rewarded professionally.” Media outlets and social media memes love spreading oversimplified explanations to the racial wealth gap, because the controversy attracts eyeballs and clicks for their advertisers.

Confirmation Bias. This bias leads people to only search for evidence that confirms their existing beliefs. Social media algorithms have been shown to only put information in our news feed that we will agree with, which only deepens our ignorance and prejudices. Do a search for “The Filter Bubble” to see how this distortion of truth is even happening with our web browser searches! To combat this tendency to be sheltered from opposing viewpoints, we need to actively search for contradictory evidence if we truly wish to create a well-rounded perspective on major issues.

How Did They Do It?

The reason that I put myself out there publicly with my story and my finances is to provide some much-needed representation of the LGBT+ community within the personal finance space. 

If my fellow gay community members don’t see themselves represented, they may receive subconscious cues that FI is not available to them. Similarly, I want to take this opportunity to give representation to a couple incredible content creators from a group of LGBT+ racial minorities known as Firestarters of Color: @thetranscapitalist and @lealandaverde.

Below are a few transcribed sound bites from the conversation we had earlier in the week, which you can watch in the full video below.

IG post by thetranscapitalist
IG post by lealandaverde

Q: Can you please share with us your name, identifiers, and where you are right now on your path to FI? 

LL: My name is Lea Landaverde. I’m a wealth activist and coach. My pronouns are she, her, ella… including a little Spanish in there. Financial independence means something different to me, which is to pay my bills and do it myself…

TTC: I’m K. Kenneth Davis. I teach financial literacy to the LGBT community, but heavily focused on the transgender community since I am a part of that community. I’m female-to-male trans man. I teach on the mindset and lifestyle to follow that path…

Q: Great! How long has it taken you to get to this point in your journey?

LL: My journey really started when I was 15. I witnessed my parents go through bankruptcy and foreclosure and losing everything to the point of being homeless. They pushed me to take advantage of my privilege as a U.S. citizen and to pursue scholarships for my education. I’m 25 now, so I’ve been doing this work for ten years now…

TTC: In 2009, I was kicked out and disowned. So it was either be on the streets or go to college, and I chose college. I became a civil engineer. I was making six figures, but I was living month-to-month and I was heavily depressed. I was facing eviction, I was in a toxic relationship. What helped me was I read the book “Rich Dad Poor Dad” and around 2016, I studied everything I could in the library to build myself out of debt. That drove me to go to business school and learn what cis gendered white men on Wall Street knew that I didn’t know. I when I learned those secrets I was like, “Yo. I’m sharing this with everybody I know.”

Q: Even in my community of white cis-gendered gay men, they don’t seem to want to talk about money at brunch. They want to talk about anything but! Were there any clear obstacles that you have encountered on your FI journey that you think would not have been there if you were White?

LL: There’s just privilege at the end of the day. There’s income class just being who I am. There’s marriage privilege. It all comes down to privilege and what you have access to. I hate the FIRE movement because it’s to focused on the numbers and hitting FI before 40. Why can’t we embody our wealth and rest now vs. in the future?…

TTC: The thing that comes to mind is the privilege to even get a job. And understanding capital… getting the money to get a loan to buy a home. After I transitioned to male, I made $15 more an hour as an engineer, and that blew my mind…

Q: There’s a quote by MLK about how if you started a financial foot race 300 years behind the starting line of the White racers, it would take some type of superhuman feat to catch up. In spite of the obstacles of the racial wealth gap, you were able to preserve. To what do you attribute your success so far? Is there anything from your story that you think other members of your community could implement in their own lives to follow in your footsteps?

LL: Forgive yourself for your past, because we’re in survival mode and we’ve been in survival mode for a long time. We just gotta be real and be dynamic, and actually look at our finances. Take baby steps. At the end of the day, we can hold ourselves accountable for what we do…

TTC: Knowledge is power. Nobody can ever take knowledge away from you. Once you know, you can do better. There are no more gatekeepers. There are people spitting out knowledge and I want people to take advantage of that. But I had to take that time to self-study, and I encourage others to do that as well. But don’t take our words at face value. Keep learning so you can learn this for yourself so you’re not being taken advantage of. Transgender people are 4 times higher to be unemployed, so I had to get that knowledge for myself…

More People Overcoming the Odds

After the first sprinter in history broke the record for running a four-minute mile, other athletes soon did the same after seeing it was possible. As mentioned earlier, self-serving bias says that failures are someone else’s fault, but that could be a cognitive bias preventing Black professionals from achieving their full potential. Recognizing that leaders like Kiersten and Julien Saunders have been able to blaze a trail to success could be the first step to chart out a path along a road less-traveled. For a dose of inspiration, check out their keynote talk as the headliners for FINCON21.

Another example is Dr. David Rhoiney, who used his military privilege to go from homeless and sleeping in his car, to becoming a surgeon with the Navy without a single dollar of student-loan debt. Follow him on Twitter at @FiSurgi.

Yet another example is Naseema McElroy, who worked as a single mother, travel nurse, and entrepreneur, paid off one million dollars in debt, and then, just seven years later, went on to grow a million dollar net worth. Her amazing mission: “To normalize Black wealth.” She wrote a new narrative for her story, and said in her keynote talk at the 2021 ECONOME Conference that she looks forward to seeing more representation from her community crip-walking across the stage.

The people above have run the financial equivalent of the four-minute mile, so we know that it’s possible. Helping give their story more attention, financial conferences like FINCON are making a concerted effort to support more diversity in their speaker lineup through better representation of Black, Indigenous, and People of Color.

FINCON speaker demographics

Striving to Narrow the Racial Wealth Gap

When scanning the established financial gurus from the past few decades, you may notice that many of them have a few things in common: oftentimes, they are straight, white, cis-gendered men. Some examples of this long tradition of male whiteness include Jim Cramer, Dave Ramsey, and David Bach.

With the new generation of financial educators coming from the FI community, the latest demographics show a hopeful shift in representation coming from minority communities, with new voices like Julien and Kiersten Saunders (Black), Jaspreet Singh (Indian), Ramit Sethi (Indian-American), Paula Pant (Nepalese) and Daniella Flores (Non-binary LGBTQ+ Latinx). However, the financial community still tends to be predominantly White.

The Chartered Financial Analyst Institute reports that 84% of portfolio managers are White and that “Black professionals are the most likely to encounter racial prejudice at work, experience certain micro-aggressions, and become frustrated” and “one in three intend to leave.” This was the case with Julien Saunders, one of the Black voices behind the highly successful blog and podcast, Rich & Regular. When Julien looked back on his time in corporate America, he said, “I needed to wear a mask to work if I wanted to get ahead” (2018).

In his book Blink, Malcolm Gladwell talks about the mental shortcuts we routinely use to make split-second instinctive decisions based on limited information, which he calls “thin-slicing.” Whether we realize it or not, our brains will thin-slice based on our collective experience over our lifetimes. Because the Black community has had such a long history of struggle, they may subconsciously be wired to give up before even getting started. Similarly, White colleagues may unknowingly create a story in their heads that a Black professional is militant and disagreeable simply for having a difference of opinion, as was the case with Julian’s colleagues. In short, through empathy of the other side, maybe we can all do better.

Has My Success Been a Product of White Privilege?

Probably so, but not 100%.

After I was honorably discharged from the military, I struggled to find a job during the Great Recession. After a couple years of trying to stay afloat with my freelance video production business, the market crashed in 2008 and I lost everything: my home, my rental property, and the little bit I had saved for retirement. My white privilege may have helped give me the stability growing up to pursue my education in a safe, secure environment, but my whiteness alone was not enough to help me recover after losing everything.

Being a military vet, I owe a great deal of thanks also to my military privilege. This status of mine gave me the benefit of priority-hiring with my government job. It should be noted that military service is open to everyone, regardless of race. Coming from a small town where the median home price is around $50,000, seeking new opportunities as a gay man looking to become a filmmaker meant moving away. Simply being White was not enough for me to succeed in my chosen career if I had stayed in my hometown. Similarly, if a Black American wants to overcome systemic oppression, it will mean a willingness to leave the familiarity of their communities to start a new life where success is the norm. As someone who is all-too-familiar with being one of the only LGBT+ people in any group, this author is no longer surprised when encountering a lack of support. While my identity as a gay man is not as obvious as skin color, it is something that eventually comes to light and with some coworkers, becomes the primary attribute they see when they look at me.

As one of the only money nerds within the LGBT+ community, that’s another area where I’m used to being the odd man out. This resiliency could be my LGBT privilege, having been fortified in the fires of hardship, like steel put under intense heat to form a stronger sword. I truly believe these hardships are what create our biggest strengths.

Homo Money with a sun flare behind him

The Path Forward

If our country really wants to close the racial wealth gap, I have a couple closing suggestions how we might tackle it together.

By considering the data and exercising self-reflection, White Americans may be better able to recognize the ways in which white privilege has unknowingly helped them and show compassion for the struggles of their Black brothers and sisters. A great way to start you along that journey is to check out the Netflix Explained episode called “The Racial Wealth Gap,” which is posted to YouTube. It’s only 16 minutes and you don’t even need a Netflix account. Just click the embedded video below.

Similarly, I hope Black and Hispanic Americans feel inspired to seek out representations of success within their community, such as the ones mentioned earlier in this post. If you want to stay up to speed on LGBT-specific money news, for example, you can also check out my friend’s weekly email newsletter, Queerency. By immersing ourselves in ideas of subject matter experts, like podcasts, meetups, books, and audiobooks, we can start learning from people who have been in our shoes, start adopting a millionaire mindset, and hopefully choose a path for ourselves that was not available to the generations before us.

What are your thoughts on the racial wealth gap, white privilege, and intergenerational mobility? 


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