Culture and Its Impact on Financial Literacy

posted on Tuesday, May 23, 2023 in Financial Tips

Financial literacy is a person’s ability to make sound decisions about their money. It’s more than just budgeting. It also involves wealth management and finding ways to grow one’s finances. Knowing and understanding how money works can help a person become more self-sufficient and financially stable.

Now, while many factors affect how financially literate a person is, one of the biggest influences comes from a person’s culture. Take a closer look at how culture impacts the way people handle their money by reading on.

Characteristics and Elements of Culture

Society as a whole has been held together by our respective cultures that encompass several characteristics that we need to be mindful of. These include our levels of education, religion, socioeconomic status, family values and influence, regions, and even traditions.

And out of all of these, three key elements have been identified to have the biggest impact on our money-making decisions. These are the following:

• Community – The people around you can make an impact on the way you spend your money. As humans, we tend to emulate other people we regularly interact with. The same goes for how we use our finances. East Asian countries like Japan, South Korea, China, Singapore, and others are known to have a higher saving rate than neighboring nations.
  
  Some analysts attribute this to the influences of Confucianism and Taoism on their culture. These ideologies teach frugality as a good virtue to have. One can also attribute this significant saving rate to policies meant to promote capital growth.
   
• History – Looking into a person’s history can tell a lot about their identity. It can also apply to how they handle their money. For example, if, as a child, you grew up with parents who managed their money well, you would most likely develop the same mindset. On the other hand, if you have never had the opportunity to see money as a learning experience, you may feel overwhelmed by the topic.
  
  There’s also the fact that a person’s socioeconomic position growing up can impact how they view finances. However, no matter your socioeconomic status, being smart in handling your money can help prepare you for any economic difficulties coming your way.
   
• Activity – Your day-to-day activities are a significant portion of who you are and are one of the characteristics you can control. Their effect is notable because they somehow determine what actions you will take regarding your finances.  

Conclusion

Culture and its numerous aspects can help or hinder a person’s financial growth. And that’s where financial education comes in to help people become more self-sufficient in life. If you want to learn more about how to grow your money, contact us today at Community 1st Credit Union. Talk to one of our C1st representatives; they can help you achieve your financial goals.