Today’s society is diverse, and so too are its marriages. Interracial unions are a common occurrence within the myriad of cultures found in America. In these relationships, couples from different backgrounds bring rich perspectives and unique experiences to their unions. But those differences can cause a few rough patches to arise, especially those related to finances. Budgeting is a critical aspect of any marriage. Interracial couples often have to navigate not just that basic skill but also the basic cultural skirmishes that can arise around personal finances. This blog post takes a look at some good strategies for creating an effective budget and for working out some of those tricky cultural differences.
Understanding Cultural Differences in Financial Habits
Prior to plunging into particular budgeting tactics, one should realize that cultural backgrounds can affect fiscal behaviors. The cultures from which people come have a strong influence on problem-solving methods, including methods used for financial problems. Culturally, some families prioritize saving and holding on to money, even when it is not possible, whereas some cultures might be more about spending and enjoying life now. Those are two extreme examples, and of course there are many variations in between and beyond on this spectrum. Figuring out where you and your partner fall on that spectrum (and understanding your family cultures around money) can help you solve these problems together.
Open Communication
The successful marriage of all couples has open communications as its foundation. This is especially true for couples who have different cultural backgrounds and for whom money talks can be fraught with misunderstandings. When it comes to discussing finances, interracial couples should prioritize making themselves understood in the context of their individual cultures. Here are some tips for achieving this:
- Set Aside Regular “Money Talks”: Schedule time each month to sit down and talk about your finances. Doing so may prevent misunderstandings and ensure both partners are on the same page, or getting there.
- Exchange Financial Histories: Talk about how your pasts have affected your financial decisions. Understanding your partner’s past can help you understand them better in the present.
- Set Up Shared Objectives: Collaborate to determine monetary aims that truly express the sentiments and dreams of both partners. This might involve amassing the requisite funds for a down payment on a house or plotting an investment strategy to ensure a comfortable retirement. Not to mention, a couple could also be financing a child’s education.
Creating a Joint Budget
After couples have set up clear lines of communication, they can work to create a budget that combines both partners’ finances. A combined budget can help biracial couples get on the same page with their finances and can also help ensure that both partners are up to speed on all of the costs associated with running their shared life. Here’s how to create an effective combined budget.
Step 1: Gather Financial Information
Each partner should gather together their individual financial information, to include income, expenses, debts, and assets. This will give both partners a clearer picture of their financial situation, and allow them not only to see but also to elucidate where they might improve.
Step 2: Categorize Expenses
Divide your expenditures into different categories, for example:
- Unchanging Bills: Lease or home loan, energy payments, guarantees, and payments on borrowed money.
- Discretionary costs: Food, gifts, and fun. – Costs for working: Office supplies, printing costs, and business dinners. – Basically, stuff I spend on that isn’t hooked up to an autopay. I tried to keep the list as comprehensive as possible.
- Investing and Saving: Accounts dedicated to retirement and emergencies, along with other goals that require saving.
Step 3: Set Spending Limits
Considering the types of expenses, couples should set specific limits for each one. This will ensure living within the means and help prioritize the financial goals.
Step 4: Monitor and Adjust
Review the budget regularly to keep track of all spending and to make any needed adjustments. If life changes in some way, so should your budget. Adapt it to fit your new circumstances.
Embracing Cultural Diversity in Financial Planning
Couples of different racial backgrounds can use their unique experiences to better their financial planning. Here are some ways to embrace that cultural diversity in your budgeting:
- Combine Cultural Traditions and Values
Each partner possesses their own cultural traditions around financial management. When two partners join in a relationship, they have the opportunity to blend their money-related traditions into a financial plan that fulfills both of them. For instance, one might invest in experiences while another might save. Together, they can find a balance that works for them and might even create a more interesting and surprising financial life as a result. - Celebrate Cultural Milestones
Allocating funds for cultural celebrations and important events can go a long way toward honoring both partners’ backgrounds. Significant cultural events, family holidays, or milestone gatherings deserve special budgeting and, more to the point, strong commitment from both partners to make them happen. That commitment to simple yet powerful acts of honoring one another’s heritage deserves a special mention right here. - Learn from Each Other
Every partner in the relationship stands to gain from the other’s cultural background in finance. For example, one partner may have worked with some truly nifty investment strategies or savings techniques that could be beneficial to the couple. Good couples are good teams, and one way to be a better team is to have more knowledge on the team. Knowledge is power, and power leads to better financial decision-making.
Building an Emergency Fund
An emergency fund is a vital part of any financial strategy, and it is of special significance for interracial couples since they might confront certain distinctive difficulties. Here’s the process to follow for creating that fund: - Set a Savings Goal
Decide how much cash you wish to have accessible in your emergency fund. A typical recommendation is to bank three to six months’ worth of living expenses. The lower end of that range is a better fit for people who are holding onto other liquid assets, like cash that’s just sitting in a savings account. - Open a Separate Savings Account
Think about creating a distinct savings account just for the emergency fund. This can help keep the money separate from other savings and can also make it easier to track how fast you are filling the fund. - Automate Savings
Establish regular automatic transfers from your checking account to your emergency fund. This can help guarantee that you make regular contributions to the fund without having to remember to do it. - Review and Adjust
Periodically examine your fund for emergencies and modify the amount you are trying to save for such an eventuality if you have any reason to think your figure is no longer accurate. Regular life transitions—switching jobs, having kids, etc.—can upend your finances. When they do, you may need to reassess your funding priorities.
Investing for the Future
It is necessary that interracial couples include investing in their financial planning to amass wealth over time. These couples can begin building that wealth by through investing. Here are some basics to help them understand what investing is and how to do it. - Educate Yourselves
Both partners should take the time to learn about investing. This can read books, attend workshops, or seek advice from financial professionals. Understanding the basics of investing can empower partners to make informed decisions. - Set Investment Goals
Establish your investment objectives. You can invest to meet many different kinds of goals.
You can invest to meet a near-term goal, such as saving to go on a big trip in a year.
You can invest for goals that are many years away, such as putting money into an account that will be used to fund a child’s education.
Most people also invest to build wealth that can be passed on to future generations.
- Diversify Investments
The reduction of risk in an investment portfolio is achieved through diversification. When couples invest, they should think about a combination of different asset classes: stocks, bonds, real estate, and so on. - Monitor and Rebalance
Periodically examine your investment portfolio and make changes where needed. Conditions of the market and your individual situation may change, and it’s crucial to keep everything in line with your investment objectives.
Conclusion
Budgeting is a crucial competence for any pair of people, but it takes on special importance for pairs of interracial spouses. By taking steps to understand their not-so-common cultural backgrounds, by engaging in frequent and open conversations about the sometimes taboo topic of money, and by using these discussions as a springboard for integrating their two cultures, budgeting couples can and do lay a strong financial foundation for their future lives together.
Joint budgeting, cultural integration, and using their two cultures as a basis for strategic planning are steps that any pair of spouses can—and should—take.