Financial Influences
Have you ever thought about the way you view money and why you have those views?
- What are your thoughts
- What are your expectations
- What is your approach to money
- What do you value more or less as compared to others
Throughout each day, many of the decisions that we make have a direct impact on our finances. These decisions are often influenced by other people or resources.
Most of us did not learn our financial skills and habits in school but picked them up from various influences such as our families, peers, content providers, and social media. Couple these influences with our feelings and emotions, and you have the ingredients for your money mind and decision-making skills.
Family
Parental/family influence is one of the most powerful factors in your growth and development. Your view of money and the development of spending and saving habits are impacted by your family, whether you realize it or not. This can be challenging if your parents displayed bad financial behaviors such as never talking about money or overspending, and living without a budget. This does not mean that you are destined to repeat all of your family's mistakes, but it gives you some perspective as you reflect on your own relationship with money.
Financial Peer Pressure
Your peers have a huge influence on your decisions with money. Many people have a Fear of Missing Out (FOMO) and will overspend or go into debt trying to keep up with their friends. Click the link below to learn more about financial peer pressure. Take a moment now and reflect on the impact that peer pressure has had on your life. This pressure does not go away as you progress through your life. The hope is that you get better at managing it while not letting it drive your financial decisions. Even for older adults, it is not uncommon to see one neighbor buy a brand new car a short time after their neighbor has recently brought her shiny new car home.
Read through this article from Discover about Financial Peer Pressure Links to an external site.Links to an external site.Links to an external site.(This is for educational purposes only and is not an endorsement or promotion for a credit card or other services)
Social Media
Social Media use can impact your financial decisions by encouraging spontaneous buying behaviors. Those impulsive behaviors are often triggered by:
- Advertising targeted specifically for you
- Quick checkout
- Fear of Missing Out (FOMO)
- Lifestyle inflation nudges
Suppose you understand and accept that social media usage has the ability to trigger impulsive buying behaviors. You could decide to use social media to help you make smart financial decisions. Social media allows you to compare and contrast brands and products by learning about other people's experiences using them. Using social media responsibly can absolutely be beneficial to your money mind when done correctly and with intention. Many financial influences in your life can turn out to be good or bad, depending on how you interact with them. Social media is definitely one of these instances.
Emotions/Feelings
The financial decisions that we make are heavily influenced by the emotions that we feel. In chapter 1 of this module, you learned about how your emotions and feelings constantly influence your financial behaviors.
The key to managing your financial psychology is always to use money in ways consistent with your values, beliefs, and lifestyle.
More Knowledgeable Others:
When we have something new to learn, we often seek a knowledge expert to help us gain new information and apply new skills. Lev Vygotsky called this expert a More Knowledgeable Other (MKO). MKO's are typically parents, family members, teachers, friends, mentors, or other individuals. However, an MKO does not have to be an individual at all.
More Knowledgeable Others (MKO)
Who taught you about personal finances? Was it your parents, a business leader, book author, movie star, or teacher? A foundation of personal finance for all people begins with what they see and hear from More Knowledgeable Others. The concept of MKO's comes from the world of developmental psychology but applies beautifully to your money mind. The problem here is twofold - first, we have no idea if our More Knowledgeable Other actually knows what they are talking about. And secondly, money discussions are still considered taboo for some reason so even your best and most informed MKO's may be hesitant to share information.