How Culture Influences Our Financial Decisions

If you travel a great deal or regularly spend time around individuals from different backgrounds, you’ll likely have noticed that many cultural groups have attitudes and practices that are significantly distinct from your own. This is all part of the rich tapestry of life, and teaches us a great deal about our own learned habits and priorities. Even matters like finance can be notably affected by this contrast. In this article, we’ll explore how culture influences our financial decisions and why this might happen.

Banking and Investments

Some demographics have more faith in banks and building societies than others. A distrust of these institutions often occurs in places where the banking system is known to be less functional or poorly managed. You may know of individuals who hide money in drawers or mattresses instead of using an account. In some cases, the distrust of banks is the cause. However, some groups do this because they have previously been unable to access certain financial services, or now struggle with newer banking approaches and technology. Some cultures also have very specific rules involving interest. People who come from backgrounds of this kind may therefore avoid taking out loans or utilizing businesses that charge or pay a certain amount of interest.

Family and Friends

Some attitudes towards money are instilled in us as a result of our home lives. People from relatively affluent backgrounds may be less conservative with their money than those raised in a household with a very modest income. However, the opposite may also be true. Some people may feel inclined to make the most of the funds they have now, as they were not able to do so in the past. Others may have been raised by a family who prospered as a result of careful saving, and this may reflect their attitudes into adulthood.

Different cultures also have contrasting approaches involving the support of family members. In some countries, it is conventional to care for older relatives in one’s own home instead of investing in elder care or specialist accommodation. The parents of young people from certain backgrounds will open savings accounts specifically to ensure that their children’s’ education can be paid in full, while others are happy to rely on taking out a student loan to pay for their education. Student loans are a great option for those that can’t afford to pay for tuition fees and associated costs and living expenses up front. 

In some cultures, children do not leave home until they are married. This often results in the family shouldering a greater-than-average financial burden until this occurs. Investment in wedding celebrations and the future life of a new couple may also fall upon the families of the pair in a variety of different ways depending on their heritage.

Day-To-Day Activities

Even our simple day-to-day activities are affected by our cultural attitudes towards finance. People from some backgrounds may enjoy social meals at home with their wider family very regularly and will only eat out on extremely special occasions. Others may have more of a restaurant culture. There are others that prefer to use low-priced, convenient products from supermarkets or similar outlets, while others prefer to invest in individual craftspeople or farmers. This is often the result of the political or social attitudes of the country from which their relatives hail. Even seemingly simple behaviors such as tipping will occur more or less depending on a person’s background.

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