Over the last few years, life has been challenging. The developments during and after COVID-19 have also raised many concerns and situations that need to be addressed as soon as possible. One of these biggest concerns is the wealth gap that is expanding and continuously plaguing our economy. And it is one of the biggest threats as it impacts different cultural groups across the world.
A broader and clearer understanding of cultural differences such as traditions, geographical areas, socioeconomic status, family values, religion, and educational levels must be taken into account for effective and efficient cultural finance education. In this blog today, we will take a look at the cultural perspectives on financial literacy.
The power of culture
Saving & investment, the behaviour of consumption, and decision-making depend on cross-cultural financial literacy and cultural perspectives of money. For example, the differences in ownership of assets of different groups in the United States may imply certain types of consumption and saving patterns and could assist in explaining the differences in financial management and minority behaviours. While that is the case with the United States, cultural attitudes toward money vary across the different countries in Asia, influencing the all-around financial health and financial behaviours of individuals.
Characteristics and elements of culture
By our respective cultures, we as a society have been held together. It encompasses several characteristics that we need to be mindful of. From levels of education to tradition, there are many characteristics. However, the following are the three key elements that affect most comparative financial education:
Checking out a person’s history will speak volumes about their identity. It can also be applicable to how they handle their money. If we are to give you an example, if you grew up under parents who managed their money well during your childhood, there is a high chance that you will be growing up with the same mindset.
Alternatively, if you never saw money as a learning opportunity, you may feel overwhelmed with the topic. However, there is also a fact that the socioeconomic status of a person growing up can impact their view of finances. That being said, irrespective of your socioeconomic status, if you know how to handle money and you have had good practices, you will be prepared to tackle tough situations.
The daily activities are a big portion of who you are and are a significant portion that you can control. As they determine what actions you will take with your finances, their effect is notable.
The way you spend your money can be impacted by the people around you. Being human, we try to emulate other people we communicate with regularly. And it goes the same with the finances. For example, East Asian countries are known to be saving neighbouring nations. While teaching the international money mindset, there are many characteristics that you need to consider, and community and the people around an individual are arguably the most important characteristics of them all.
Important things to consider while imparting financial literacy training
As you now know, financial literacy across cultures varies from one place to the other. That being said, here are some of the essential things that you need to consider while teaching financial literacy training:
- Depending on the cultural context, the attitude towards money and other financial means varies.
- From one culture to the other, the role of family in financial decision-making varies.
- Within their community, the relationships of individuals also differ from one demographic group to the other.
- The attitudes toward financial institutions, especially the level of trust, can vary across different demographic groups.
- Religious belief differences can also affect the utilisation of one’s money, financial decisions, and management of financial matters.
These cultural beliefs and values can either contribute to or work against the successful accumulation of wealth and the financial well-being of families and individuals. That being said, if you are an individual who is working in an organisation, there are a few things you need to consider as well:
- You must have knowledge of the certain culture of the group toward which economic and global financial training is being provided.
- You must possess the knowledge of resources available and that a specific group used to enhance their economic well-being.
- You must also have the knowledge of each group’s unwillingness and willingness to seek help to increase their financial well-being.
Cultural sensitivity integration in financial planning
Speaking of cultural influences of money management, as a society, we are tied together by our respective cultures, which encompass a wide array of characteristics. These characteristics are level of education, traditions, religion, regions, socioeconomic status, family values, and many more. There are unique and distinct ways of communicating personal experiences in each culture. These are the experiences that are shared in the form of stories. Relating to these stories is one of the key aspects of the financial education our country so desperately needs.
As financial professionals, it is vital that we take into consideration that everyone we are collaborating and working with to develop a financial plan is coming to us with their own stories.
It iss quite important when working with someone who has a completely different cultural background.
The lessons learned from educating financial literacy are just as vital to consider when you are working with a different group of clients. There are moments when cultural beliefs and values can have a positive influence on personal financial management. However, these can also work against them. It happens especially when it creates a short-term view that clouds someone’s long-term goals for the future.
No matter where it is in the world, Every financial educator needs to understand the diversity in financial literacy. Be it the cultural perspectives of budgeting or any other aspect; the instructors need to be in tune with the community. With rapid advancements and the fast-paced world we are living in, it is not more important than ever to lessen the barrier between different cultures in terms of financial literacy.