Factors That Influence How People Use Money


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Money has an enormous role in society, influencing the behaviour and the decisions of the individuals. Citizens are constantly stimulated and manipulated by advertising and promotional campaigns, and economic and financial factors profoundly shape human psychology.

Money is a medium of exchange between two parts. It supports people in obtaining what they need to survive. Modern economics mainly rely on financial transactions and deals. Looing back at the past, ancient societies were based more on bartering, where individuals directly exchanged goods for other goods.

Because people consider it valuable, money has a specific value like gold or other precious metals. A currency is a socially accepted standard unit by which things are priced.

Different factors influence how people manage their usage of their money, investments and expenses. Various elements are taken into consideration, such as inflation, wages, desires and human necessities.

What factors do you think can influence someone when they are deciding how do you use their money?

Human psychology isn’t casual; rather it is the consequence of multiple factors such as family, media, and culture. The external environment profoundly influences and shapes our behaviour, our needs and desires being a sort of product of external agents. It’s relevant to consider that advertising and promotion have a dominant role in a Free Market society. Today we can find adverts on the majority of websites; even if you are using your smartphone or tablet, you aren’t free from the impact and the presence of marketing activities.

Initially, the family background has a profound role in influencing our spending habits. The financial behaviour of parents, grandparents and other relatives concretely shapes our relationship with expenses and investments. For example, if your parents weren’t comfortable spending much money, you may have a parsimonious attitude. On the other side, if your family is too inclined to accumulate debts, you may be a big spender tending to significant financial risks and hazardous choices.

Presently, media such as entertainment and social media deeply influence our lives. These platforms try to spread specific ideas such as big homes, nice cars, new technological devices and beautiful clothes. This form of stimulation encourages people to purchase new products, called consumerism, which is the consequence of the enormous influence of our mainstream culture. The necessity to buy specific goods isn’t always natural and essential for survival.

Human attitudes and perceptions are deeply influenced by culture. Living and growing up in a specific country can affect your spending behaviour. For example, there is the “buy now, pay later” philosophy in many Western nations. In poorer areas, there is a much bigger emphasis on economic restraint and the necessity to have savings. Our vision of money and power differs and has deep roots in our anthropological background.

Does money influence making decisions?

Money profoundly impacts human psychology because it represents security, social status, confidence, freedom and power and can profoundly influence many decision-making processes during our daily routine.

Consumers have to face different daily expenses, such as handling bills, buying groceries at the supermarket or refuelling the car. Money is a constant element in other human actions. Earnings and losses have substantial psychological implications in making specific choices in our daily routine, and that higher levels of wealth produce a more considerable sensation of freedom and liberty in individuals.

According to recent studies, money produces in consumers the tendency to have more abstract thinking and focus on the primary features of a specific product. For example, when purchasing a TV, one may be interested in its video or sound quality rather than the warranty of the product. In other cases, people can consider something valuable more on its brand name than its beneficial features.

How do values affect money habits?

Human behaviour is multifaceted. Daily decisions aren’t only based on fact and logic. Different factors can influence your current choices, even if you aren’t aware of them, and inner drivers and desires from your brain’s irrational part can impact you. Experiences during your childhood can still affect your needs, dreams and desires.

Mainly, inner life values have a significant role in shaping our current habits. Concretely, our social identity, desire and research on safety and security can affect our relationship with money. It’s important to understand that these factors profoundly influence our vision of the meaning and purpose of life, strongly impacting our spending behaviour and the want to purchase specific items.

Life values have various factors, which can condition the relationship with money, such as the desire for freedom and independence, the research of control goals, the need for personal space and the pursuit of happiness. Moreover, it’s essential to understand that everyone has a different and unique psychology and will show a different attitude towards spending and consumerism.

What is ‘money personality’?

In recent years, some financial planners, credit counsellors and psychologists have started analysing a concept dubbed “money personality”. If an individual is too worried about accumulating future savings, he can be considered a “security seeker”. On the other hand, if someone tends to live in the moment without thinking about the following years, he can be considered an “avoider”.

Essentially, understanding what drives the financial decisions is important when aiming to reach certain money goals. It can also be an advantage for entrepreneurs to understand the specific needs of potential customers. A brand’s primary goal is to satisfy a particular individual’s desires, and analysing the financial personality is a good step in predicting the behaviour of the consumers.

What is financial influence?

The main goal of a business is to make a profit. There are, however, different and complex factors that can be defined with the expression “financial influence”. Primarily, the changes in interest rates can concretely affect a company by selling shares. Then, the prices of imported raw materials and competitors’ products can fluctuate. These elements can seriously influence how a holding buys and sells its products.

During the latest decades, the world’s finances experienced a quick and consistent process of globalisation. Today, many businesses are deeply influenced by international financial institutions, with the most recent developments in communications technology allowing for the completion global financial transactions. Financial influence includes various crucial factors such as interest rates and exchange rates. These external elements can deeply determine a specific brand’s success or failure, and they can also manipulate the price of goods and services.

How do you influence finance?

Managing a business requires understanding of many responsibilities. One area, financial management, is vital to making strategic financial choices to grow your wealth. Different factors influence finance, which can decide if your company is successful and profitable. Financial managers have an essential role in a brand’s organisation.

First, social factors such as the ageing population, lower birth rates and longer life expectancy can influence finance. For example, in Japan, there is an old population, which means many multinational companies decided to provide specific services for older people in healthcare and wellness.

Technological factors also have a significant role in influencing finance. Tools, machines and science have a substantial importance in an industrial context. Having more innovative technologies represents a considerable advantage in industrial actions. A company wanting to remain competitive against other businesses means that it has to use the newest and most efficient equipment. The final goal is to reduce costs and increase productivity and efficiency.


Human psychology has a fundamental role in marketing and business. Different social, cultural and environmental factors deeply influence the relationship with money. Modern entrepreneurs should understand human behaviour well to make their companies more competitive. A brand is competitive when it can satisfy potential customers’ specific needs and desires.

In the coming future, building a winning business is going to become more articulated and sophisticated. Many large corporations have already started studying and analysing various aspects of our psychological behaviour. Creating a profitable brand will be an actual science involving deep research. Managing a company isn’t only focused on manufacturing and producing a product; it also involves a deep analysis of human emotions. Successful entrepreneurs understand the dreams of the people.

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