Chapter 6: What is Financial Attitude and Financial Behaviour?

We all have seen a million reactions when the bill hits the table after a long lazy meal with friends. The time taken to get the wallets out differs, there is never a consensus on the mode of payment, 1 wise guy indicating the contribution figure while the other is snatching the bill screaming he will pay it off!

Ever wondered that even when you all are in the same age bracket and maybe earn around the same yet, why the way you handle money is so different? Why is one always prompt in payments while the other nose deep in debt? So what exactly defines these behaviour patterns and attitudes?

Let’s first understand what we mean when we say financial behaviour and financial attitude.

Financial attitude is a state of mind of a person about finances which is generally a resultant of his background and environment.

Financial behaviour concerns with a humans action with respect to money management.

We can say that both are closely related and part of the same family. The first affecting the later.

Where Do You Get Your Financial Attitude From?

Our financial attitude is closely related with who we are as a person, our persona, capabilities and vulnerabilities. Following are the few things which are monumental in building your financial attitude:

1. Childhood and Upbringing

Like many things in our life, our financial attitude also begins to take shape very early on in our lives. Money is something we closely associate with our parents and declare them as the first ATM of our life. Hence, the way our parents handle money, their spending habits the way your lifestyle is shaped up plays a very crucial role in defining our understanding of how important is money for a happy life and how readily it is available!

2. Knowledge and Awareness

If you don’t know what is up how will you ever understand it? Thus, awareness is the first major step in shaping up these early childhood perceptions. The more you know about personal finances via your friends, elders, colleagues and the continuous onslaught of mass media makes one curious about diving deeper. Financial literacy a.k.a financial knowledge helps one understand the nitty gritty of the options available and the suitability with oneself taking him one step closer.

3. Emotional Quotient

This is a very important factor which helps to arrive at what is good or bad, right or wrong. Your emotions will define your risk taking capabilities and decide whether you are ready to take control of your finances and have the confidence to look beyond the ordinary and put all that gathered knowledge in motion via one sound and calculated decision.

All of the above will give you a perception and vision by which you look at handling money, it may make you cautious and conservative or growth oriented and aggressive!

Where Do You Get Your Financial Behaviour From?

Your financial behaviour is a product of your financial attitude i.e. the financial attitude you form and continuously keep rebuffing is what makes you act in a particular fashion and define your behaviour.

For example, from someone who has seen his parents continuously struggling to make ends meet and maintain a lifestyle, money will be an extremely aspirational commodity. He/She will always be under the fear of making more money to not be scared by the left side of the menu card. Because of which, will always find ways to make more money either via clever means or by working long hours!

Thus, money is extremely crucial for a good life and you need to have a good amount always is the attitude while finding ways to make money and saving it is the behaviour.

Similarly to the above example one’s financial behaviour can be a derivation of multiple things like, handling a large sum of pocket money, near and dear ones being in the financial field, handling banking from a young age, being vocal about asking for help or knowing more etc.

Ekta Vikram

Ekta Vikram