Cultural Effects on Your Financial Behaviors

ByNathan Astle

Decoding the Cultural Messages We Receive

This article originally appeared in Psychology Today on November 22, 2024. Nathan Astle is a monthly contributor to Psychology Today.

When it comes to money, it’s easy to believe that there’s a “right” or “wrong” way to handle personal finances. Popular media, financial advisors, and even well-meaning family members often frame financial decisions in terms of good versus bad, success versus failure. Personal finance is nuanced, especially when considering the powerful influence of culture on our beliefs and behaviors around money.

Without understanding the cultural messages that shape our attitudes toward wealth, debt, and spending, we risk making financial decisions based on narrow or incomplete perspectives. Just as we learn language, customs, and social norms from the culture around us, we also absorb messages about money.

Cultural Competence in Personal Finance

Cultural competence is the ability to understand and appreciate how different cultures influence our behaviors. Understanding how our cultural experiences tie into money experiences is crucial. However, many financial discussions fail to recognize the differences in money across cultures. In Western, individualistic societies like the United States, financial decisions tend to be seen as personal choices, with an emphasis on self-sufficiency and independence. Success is often defined by individual wealth accumulation.

In more collectivist cultures, financial decisions often take into account family or community well-being. Lending between family members, for instance, may be seen as an expression of solidarity rather than an individual financial decision. The cultural values that shape these financial practices aren’t “right” or “wrong.” They’re simply different.

Understanding this difference is key to making informed, intentional financial choices that align with one’s personal values. As Bronfenbrenner’s Spheres of Influence outlines, we are part of a larger system that influences us in different ways.

Narrow Thinking Leads to Shame-Filled Financial Decisions

Personal finance is often presented in terms of absolutes. When we fail to account for the cultural messages we’ve internalized about money, we risk making financial decisions that aren’t in alignment with our values and needs. While these cultural messages aren’t always explicit, they shape our beliefs in profound ways.

Examples of this messaging include:

  • Debt is bad: In many cultures, debt is morally stigmatized, seen as a reflection of poor discipline or bad decision-making. But in other cultures, debt may be viewed as a necessary part of achieving financial goals or supporting the needs of family members.
  • Self-worth is tied to net worth: The idea that one’s value is tied to one’s financial success is deeply ingrained in many capitalist societies. This cultural message can create feelings of shame or inadequacy for those who struggle financially.
  • Credit scores reflect your integrity: In the United States, a high credit score is often viewed as a measure of personal responsibility, while a low score can be seen as a sign of financial failure.
  • Wealth equals hard work: The popular narrative that wealth is a direct result of personal effort ignores the structural inequalities that influence financial outcomes, including race, class, and access to resources.
  • Rich people are greedy: This stereotype can skew perceptions of wealth, making it difficult to reconcile the desire for financial success with the cultural belief that wealth accumulation is inherently selfish.

Embracing Self-Aware Financial Decision-Making

Becoming aware of the cultural messages we’ve absorbed is an essential step in taking control of our finances. One powerful exercise in increasing self-awareness is using the money timeline by looking back at your life and identifying key financial memories. Consider your family’s approach to finances, your cultural background, and even the economic conditions of the time. From there, you can identify which financial beliefs are still relevant to your life and which ones may need to be re-evaluated.

Ultimately, understanding the cultural influences that shape our financial beliefs is crucial to making thoughtful, intentional financial decisions. The messages we’ve absorbed over a lifetime inform how we view money and what we consider to be financial success. By becoming more self-aware and curious about the cultural narratives that surround us, we can break free from shame and guilt and make decisions that better support our financial and emotional well-being.