Culture is acknowledged to be a critical element in the construction of an individual's identity; however, in today's increasingly multicultural environments, the influence of culture is no longer straightforward. It is now important to explore cultural identity clarity—the extent to which beliefs about identity that arise from one's cultural group membership(s) are clearly and confidently understood. We describe a novel theoretical model to explain why having a clear and confident understanding of one's cultural identity is important for psychological well‐being, as it clarifies one's understanding of personal identity. We propose that a clear cultural identity clarifies one's personal existence, by providing a clear normative template, reducing personal uncertainty, providing an individual with a sense of continuity, and buffering an individual against the fear of death. We discuss the implications of this model within our complex cultural worlds.