8 Impacts of Race, Ethnicity, and Culture on Financial Beliefs
Financial Beliefs In Context
“You think you just fell out of a coconut tree? You exist in the context of all in which you live and what came before you.” Your financial beliefs did not just fall out of a coconut tree. Rather, they exist in the context of culture.
Culture permeates our being. Our sense of humor, time orientation, work ethic, personal space, dating practices, even our gestures are all formed through culture. Oftentimes, we accept these behaviors and beliefs as universal truths, and as we are submerged in our culture, it can be difficult to notice let alone accept that these behaviors and beliefs are not universal truths.
While they may feel true to us, there are no universal financial truths. Just as public displays of affection are not inherently good or bad, spending money on oneself is not inherently good or bad even though our culture may have strong stances for or against it.
Financial Compatability in Interracial and Intercultural Relationships
Your partner’s financial beliefs also did not just fall out of a coconut tree. Your partner is just as much their culture as you are your’s. Your partner’s financial beliefs are deeply, deeply held and true to them.
Interracial and intercultural couples can learn a lot about themselves, their culture, and their beliefs through their partner. Better understanding how culture impacts your financial beliefs and your partner’s financial beliefs will improve communication about money, lead to sustainable behavioral change, increase alignment, and bring you closer together. Learning from one another’s financial beliefs and gaining new perspectives could even help to improve your individual relationships to money.
Be open to your partner’s financial beliefs - you just might learn something!
Question your own financial beliefs - questioning your financial beliefs does not mean that you need to change them (but you might!).
8 Impacts of Race, Ethnicity, and Culture on Financial Beliefs
1. Cultural and Global Historical Events
We learn about money from our caregivers, who learned about money from their caregivers, who learned about money from their caregivers, and on and on. Therefore, the impact of cultural and global historical events, such as the Cuban Revolution, the fall of the Berlin Wall, and the very recent independence of Kosovo, on personal financial beliefs cannot be overstated. Intergenerational financial trauma can lead to feelings of shame, anxiety, insecurity, and more. Understanding the roots of your financial beliefs can help you to address and change them (if you want to that is!).
Ask your parents or grandparents about the cultural and global historical events that shaped their financial beliefs.
Learn more about the history of the country that your parents, grandparents, or great-grandparents were from to better understand their financial beliefs and your financial beliefs.
2. Global Political Differences
Country politics dictate the rights, restrictions, opportunities, and freedoms of a people. These rights, restrictions, opportunities, and freedoms instill different financial beliefs. For example, according to the World Bank, some countries “do not provide for equal inheritance rights for sons and daughters”, while in the United States, you can leave your assets to anyone (partner, child, sibling, friend, charity, or even a guardian for your pet!). Imagine the different financial beliefs that these two vastly different scenarios could instill in a person.
Learn about the financial rights, restrictions, opportunities, and freedoms of the country that you live in and consider this has shaped your financial beliefs.
If your family and\or your partner’s family has immigrated from another country, learn about the financial rights, restrictions, opportunities, and freedoms of your\their country of origin.
3. United States History
Let’s take a look at two major historical events that have shaped American financial beliefs and behaviors.
Many people who lived through the Great Depression of 1929 strongly believe in saving money and being frugal. Children of Depression era parents witnessed these financial behaviors and formulated their own beliefs about scarcity, insecurity, hoarding, etc. Furthermore, according to the Library of Congress, African Americans were most impacted by the Great Depression with unemployment rates reaching nearly 50%.
Consider how you and your partner’s families were impacted differently by the same historical event.
Until the Fair Housing Act of 1968 and the Equal Credit Opportunity Act of 1974, mortgage lenders and creditors could legally discriminate based on race and national origin.
Reflect on the intergenerational financial privileges and disadvantages that you and your partner have. For example, if your parents could not obtain a mortgage or credit card, how did that shape your financial beliefs?
We cannot change history, but we can change the future.
Read Kamala Harris’ Opportunity Economy Plan
Read Donald Trump’s Core Promises
Vote!
4. Social Mobility
The social mobility index indicates the possibility that a person can move from a lower social status to a higher social status either through means of a ‘better’ title or higher pay. According to the World Population Review, Denmark has the highest social mobility index at 85, while the United States has a social mobility index of 70. Countries, such as South Africa, India, Guatemala, and Egypt, have a social mobility index in the 30s and 40s.
Growing up in a country with a high social mobility index could instill financial beliefs, such as “You should not tell people how much money you have or make” or “More money will make you happier.” High social mobility could lead to feelings of hope and optimism or feelings of fear and anxiety.
Growing up in a country with a low social mobility index on the other hand could instill financial beliefs, such as “Good people should not care about money” or “I will never be able to afford the things I really want in life.” Low social mobility could lead to feelings of content and calmness or feelings of restlessness and sadness.
It is also important to recognize inter-generational social mobility. For example, if your partner’s parents were undocumented immigrants, they likely had to work low paying, manual labor jobs. Today, your partner has graduated high school and is working a stable job with benefits. Your parent’s on the other hand were born and raised in the United States and finished college themselves. You now have a masters degree and are earning more money than your partner. These are both instances of inter-generational upward mobility - both are progress, both are wonderful!
Everyone has different starting points. Consider your starting point and your partner’s starting point, and celebrate the progress you have both made.
Identify your money scripts using the Klontz Money Script Inventory.
5. Individualistic versus Collectivist Cultures
North America and Western Europe have predominately individualistic cultures, whereas much of Eastern Asia, Latin America, and parts of Africa have collectivist cultures. Let’s explore the differences of these types of cultures and their impacts on financial beliefs.
Individualistic cultures strive to move their self and family forward. While individualists save for and spend on themselves, they are not necessarily greedy or selfish. In fact, many individualists donate time and \ or money to charities.
Collectivist cultures work together to elevate the entire community. Some of this is out of necessity - for example, if no one in the community can afford to build a latrine, but everyone’s pulled resources can build a communal latrine, the community unites to build a latrine together. Collectivist cultures do not only pull together out of necessity. This mentality of supporting your neighbors and community extends beyond finances.
Explore the upsides and pitfalls of each of these cultural approaches to finances.
How could you benefit from adapting some of the mentality of the opposing culture?
6. Immigration
There is much to be said about immigration and financial beliefs. Even if you did not immigrate to the United States but your parents or grandparents did, your financial views have inevitably been shaped by the experience of immigration.
The expectations of first generation immigrants are very different than the expectations of second generation immigrants. First generation immigrants face many financial challenges, including lack of access to employment and financial resources (EBT, healthcare, etc.), the responsibility of sending money to family in their country of origin, etc. Depending on immigration status, these financial challenges can take years to overcome.
While second generation immigrants oftentimes (but not always) have more educational and professional opportunities than their parents, they tend to feel the pressure of high expectations from their parents. These high expectations can lead to perfectionism and self-criticism as well as feelings of shame, anxiety, and inadequacy.
7. Family Size
Historically, people have had many children. However, as healthcare has improved and the infant mortality rate has decreased, people can assume that there is a high likelihood that their children will live into adulthood. Therefore, people are having fewer and fewer children. People also had many children with the expectation that they would work and financially contribute to the family.
The number of siblings that you, your parents, or your grandparents have could greatly shape your financial beliefs. For example, growing up in a home with several children could impact the resources accessible to each individual child. Some children may be expected to drop out of school at a young age to work or to take care of other children in the home.
Read the United States Department of Agriculture’s The Cost of Raising a Child
Learn more about Children in the World through the World Population Review
8. Let’s Not Forget - Intersectionality!
Finally and so very importantly, the formative experiences of historical events, politics, and immigration on women, children, queer people, and people with disabilities is vastly different than on men. The rights, respect, and responsibilities afforded to women, children, queer people, and people with disabilities varies greatly by country and culture. Knowing how different cultures revere these groups of people can provide helpful context in understanding your and\or your partner’s financial beliefs and behaviors.
While it often takes a little more digging, seek personal accounts from women, queer people, people with disabilities, etc. to further know and appreciate the roots of your, your partner’s, and your family members’ financial beliefs.
