A financial planner explains why building wealth that lasts for generations can be 'a whole different ball game' for Americans of color

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  • Pam Capalad is a certified financial planner and founder of Brunch & Budget, a fee-only financial planning firm.
  • Capalad says there are persistent psychological barriers working alongside systems of oppression that often inhibit people of color from building long-term wealth.
  • Together with her husband, a financial educator, Capalad launched See Change, a program helping people of color manage their money in the context of culture and the racial wealth gap.
  • This article is part of "Money That Lasts," an ongoing series about generational wealth from Personal Finance Insider.

In normal times, Pam Capalad and her team of financial coaches talk with people about their money over brunch.

The meetings have gone virtual during the COVID-19 pandemic, but their goal remains the same: to help people feel confident and in control of their finances.

Capalad is a certified financial planner, accredited financial counselor, and the founder of Brunch & Budget, a fee-only financial planning firm based in New York City. She started the company in 2015 after several years of working in the wealth-management industry and heading up a financial literacy organization, Pockets Change.

As Brunch & Budget began to take on a diverse set of clients, Capalad recognized a need for financial advice in the context of culture and the racial wealth gap.

"What I found was a lot of our POC [people of color] clients were first-generation college graduates, first-generation immigrants, first-generation with a professional salary — sometimes all three. They were often more likely to be saddled with student-loan debt, less likely to have homeownership in their family or history of homeownership, and less likely to be expecting an inheritance," she told Business Insider.

It's a situation Capalad knows intimately. She emigrated from the Philippines to America with her parents at the age of two. Capalad's mother worked as a nurse for decades, but her father struggled to find jobs that paid more than minimum wage despite holding a college degree in engineering in the Philippines, she said. 

Together with her husband Dyalekt, director of pedagogy at Pockets Change, Capalad launched See Change, a group and individual financial planning program within Brunch & Budget that's designed specifically for communities of color — not only to help them manage money on a day-to-day basis, but to build wealth that lasts generations. 

"It was a whole different ball game, in a lot of ways, just because the dollars needed to stretch much further than, frankly, a lot of my white clients who had a history of homeownership, who maybe had student-loan debt or didn't, but they had a safety net with their family," she said.

Confronting the mental and systemic barriers to building wealth

The average American probably wouldn't say building wealth is easy (straightforward, maybe, but not achievable without some sacrifice and discipline).

But as Capalad and Dyalekt acknowledge with See Change, people of color, particularly Black Americans, not only face systemic financial challenges but often come up against deeply ingrained psychological barriers.

"One thing that we found is that we have to really address a lot of the behavioral stuff that POC have kind of been carrying with them generationally," Capalad said.

For example, they said, many people were brought up on the idea that debt is bad and should be paid off immediately, even at the expense of saving money, which can perpetuate a cycle of scarcity because there's nothing to fall back on in the event of a financial emergency.

"We have a lot of clients who have savings consistently in their bank account for the first time ever, while working with us, because we told them — Listen, it's OK to delay paying down the debt. It's gonna be there and the plan to pay it down is there, but you have to prioritize savings. That mindset shift is a tough one for people to wrap their heads around," she said.

Something else that's very common among communities of color is sharing money and resources with family members, Capalad said. Rather than discourage people from doing this, as is often the case in financial advising that focuses solely on the individual, See Change coaches work to incorporate those relationships into clients' financial plans.

Working together to build better money habits

The engine of success in the See Change program is community.

Each client is paired with a Brunch & Budget coach who helps them develop a "financial roadmap." They also get assigned a financial cohort, a small group of clients who are also people of color. While the expert acts as an advisor, accountability partner, and advocate, the cohort is there to help "unpack" emotional and behavioral challenges around their personal money situation.

"You feel like you're alone in it until you hear other people talk about it," Capalad said.

See Change focuses on a different theme every month that leads to discussions and curriculum, from imposter syndrome and burnout to toxic family traditions.

"A phrase that we like to say is, the habits that help us survive are not necessarily the ones that help us thrive," Dyalekt said. "There are a lot of things that we do when we don't have a lot of money … that help us get through the day that now have become habits that hold us back when we're trying to change our status."

Capalad said advising to the extent See Change is offering would typically cost about $200 a month. Thanks to a grant from a nonprofit, they've been able to reduce the cost to $50 a month for individuals and $75 a month for couples right now, with a minimum 12-month commitment.

"One of the things that Dyalekt loves to say that I love … is that financial planning is not a luxury, it's an expensive necessity, and how do we make it so that everyone has access to it?"

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