When we think about organising our assets or planning our savings, we tend to focus all our attention on products, percentages and timeframes. However, whilst technical knowledge of the various financial tools provides a fundamental basis, it remains incomplete if we overlook the most important part of the equation: the individual themselves.
Who manages your assets? The value of self-awareness and support
Before making any decisions about our finances, it is essential to adopt a subjective and personal perspective. Our decisions are strongly shaped by psychological and cultural influences that act as catalysts or inhibitors. Below, we analyse how our environment, our beliefs and our culture shape our saving habits.
The degree of autonomy
We can categorise our approach into two broad categories:
Internal orientation: Characteristic of those who seek to gain a thorough understanding of their options, study them and make their own decisions, taking full responsibility for the outcomes.
External orientation: This describes those who prefer to delegate the management of their wealth, guided by the advice of specialists, professionals or asset managers.
Understanding your own orientation is a vital first step. This is where the role of the professional wealth manager truly comes into its own. At SafeBrok, we understand that this professional does not replace your decision-making ability, but rather acts as a tool at your service. In fact, the client’s self-awareness is the cornerstone of our initial consultation: a space for active listening where the adviser learns about your specific situation, your goals and your level of autonomy, in order to offer you bespoke support throughout your financial life.
The influence of one’s environment: family, friends and the ‘risk of becoming stuck in a rut’
Our immediate environment (family, friends, professional circles) largely dictates how we structure our savings. When there is a financial tradition within our close circle, it acts as a powerful point of reference.
However, we must be wary of what experts call the ‘risk of fossilisation’. This occurs when we tend to replicate, without critical reflection, the financial decisions we have learnt from those around us. It is possible that what was an excellent savings strategy 30 years ago may need to be reviewed and adapted to the present day. The key lies in honouring family traditions, whilst incorporating new perspectives that are suited to the current climate.
Decisions and roles: How biases influence our saving
A fascinating aspect of financial psychology is the social attribution of roles. Historically, society has asymmetrically associated values such as risk-taking with men. In contrast, women have frequently been assigned a more conservative role or that of guardians of the family’s wealth.
These social expectations profoundly shape us, unconsciously dictating what we ourselves expect of our own behaviour when it comes to managing our resources. Recognising these biases is the first step towards making truly free and equitable financial decisions.
The limits of your savings: Tradition versus a globalised world
Our geographical environment also shapes us. On the one hand, our national culture instinctively drives us to operate primarily within our local environment, not only for practical reasons, but also because of a sense of security and belonging.
On the other hand, today’s globalised economy allows us to diversify our savings across every corner of the globe. However, the challenge posed by this new global culture is to avoid becoming mere ‘passive consumers’ and to take control as active participants in our own financial affairs.
Cultural consensus and 360° planning
To illustrate how cultural norms shape our decisions, there is no better example than the widespread appreciation of the property sector. In our European culture, property is deeply ingrained and is socially regarded as the ultimate symbol of status and financial security.
Property is, without a doubt, a very powerful asset and an invaluable tool for building wealth. However, just because something is traditionally valued does not mean it should be the only avenue into which we channel our efforts, nor that it is the perfect fit for every stage of a person’s life. Sometimes, strong collective consensus can lead us to make decisions driven more by tradition than by our actual needs.
Therefore, rather than simply going with the cultural flow, the ideal approach is to adopt a 360° planning strategy. In other words, analysing how a asset fits into our day-to-day lives, assessing not only its benefits but also its associated costs (maintenance, taxes, liquidity). Integrating property into a well-diversified overall strategy ensures that your assets work in harmony with your short-, medium- and long-term objectives.
Self-awareness as the key to success
Ultimately, any analysis of our financial prospects must always take cultural and psychological considerations into account. By examining our own habits, we will be able to see clearly whether the decisions we make add real value to our future.
That’s why, before you look at the markets, take a look at yourself. And remember that you don’t have to go it alone on this journey of self-discovery and planning: drawing on the support of a professional who is there for you will help you align your personal values with a truly effective strategy.
Sources consulted: How to Invest Your Own Money, by Daniel Suero Alonso (published by Punto Rojo).