We have seen how financial attitude is a state of mind about finances which usually stems from a person's background and environment, while financial behaviour is more action-oriented with respect to money management.
Now let's explore the various factors that affect a person's financial attitude and behaviour:
1. Positive and Negative Experience
We go through a lot of situations in our personal life which influence our financial attitude and actions. Huge credit card bills, inability to save vis a vis our companions, setbacks due to large liabilities or loans, a particular friendly investment advice acting as a bonus so on and so forth.
Our setbacks make us more alert and cognizant of our financial abilities which force us to make sound decisions and look for better avenues while asking for more information and our positive experiences give us the courage to venture out more and take charge of our financial health.
2. Pseudo Financial Advisors
One has many pseudo financial advisors and investment planners in their life who act as the guiding light in decision making. For example our parents telling us to keep a comfortable flush fund in account, setting up our PPF, taking insurance while on the other hand our friends giving us stock tips and making you follow suit with what is working for them and your local bank helpers suggesting you certain products time and again.
All these people act as influencers in you taking a call for yourself and can either be structural or detrimental to your financial behaviour depending on the result of the advice.
Fun Fact: Individuals that are less knowledgeable tend to overestimate their abilities and are unable to recognise their limited financial competences while individuals financially competent, aware of the complexities of the economic field, may search for, understand and then implement the suggestions provided by financial consultants and, consequently, show good financial management behaviours.
3. Personality
Who we are at the core influences our earning and saving, most of which is focused on our psychological biases, self-control problems, procrastination, and future time perspective with risk tolerance.
Who we are and what we want to be perceived as by our family and society is pivotal in shaping up our financial behaviour. For someone who relates money with power, the materialistic nature and snob of it is very important hence, the fancy spend son lifestyle while for someone fear and insecurities will push to keep accumulating till the end of his time.
To sum it all up, our early exposure to money and finances are starting point of how we look at money, in our entire life we keep re-evaluating and keep making changes to our financial attitude basis external and internal forces acting upon us. Our financial behaviour - positive or negative - is a result of this attitude that is ever dynamic in nature and continuously evolving with the situations we go through.
