Personal Finance Dependent

Do your finances feel like a rollercoaster, full of ups and downs? One month you have extra cash to put towards savings, and the next it’s all gone to cover an emergency or pay off debts. You try to be disciplined with money, yet you end up living from paycheck to paycheck without getting ahead.

You’re not the only one. Over 70% of Ghanaians struggle to build up emergency savings, while 80% cannot cover 3 months of expenses if they lose their income source. But it’s not usually low earnings causing the instability; it’s self-defeating financial habits.

Our money behaviors ultimately determine our financial freedom. However, most of us pick up unproductive financial habits when we are young that derail our finances. By identifying what drives our money patterns and actively modifying our financial behaviors, we can take control of our financial destiny.

In this article, you’ll learn why your personal finances depend on your behaviors, what shapes those habits, and, most vitally, how to improve your financial conduct for real, lasting progress. If you’re ready to get off the financial rollercoaster in Ghana once and for all, keep reading.

The Role of Financial Behaviors

Our financial behaviors refer to the day-to-day financial choices we make, from spending vs. saving to budgeting to investing. Our underlying financial values, knowledge, habits, and emotional state all influence these behaviors.

For example, someone who values financial security may be more inclined to save regularly, invest conservatively, and avoid debt. On the other hand, someone who prioritizes short-term enjoyment may overspend and undersave. Our upbringing, life experiences, personality, and psychological biases also shape our financial behaviors.

Positive financial behaviors include

  • Living below your means
  • Saving and investing regularly
  • Tracking expenses
  • Paying bills on time
  • Avoiding high-interest debt
  • Having an emergency fund
  • Having appropriate insurance

Negative financial behaviors include:

  • Spending impulsively
  • Living paycheck to paycheck
  • Not budgeting or tracking expenses
  • Racking up credit card debt
  • Paying bills late
  • Not saving for retirement
  • Financial enabling of others

Factors That Influence Financial Behaviors

These day-to-day financial behaviors collectively determine our overall financial health and stability.

Upbringing and Early Experiences

The financial beliefs, attitudes, and behaviors we are exposed to during our upbringing and early life experiences tend to have a very strong influence on how we view and manage money later in life. The modeling provided by our parents, family, community, culture, economic landscape, and early life events shapes our fundamental money mindset and financial coping skills from a young age. These early financial experiences often leave an imprint on our financial psyche and behavior patterns that persist into adulthood.

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Personality Traits

Our innate personality traits have a deterministic effect on many aspects of our lives, including our financial behaviors. Some traits that are especially impactful include conscientiousness, impulsiveness, delayed gratification tendency, materialism, risk tolerance, competitiveness, social comparison orientation, and optimism/pessimism. For example, being highly conscientious would support positive financial habits, while high impulsiveness can drive poor money management. Our personality composition affects how we think about and react to various financial situations.

External Factors

Financial behaviors do not occur in a vacuum. The economic, social, cultural, and media environments we live in shape social norms, trends, expectations, and pressures when it comes to money. Factors like our peer group financial behaviors, current economic conditions, celebrity culture, social media influences, and conventional wisdom can sway our financial decision-making, especially consumer behaviors related to spending, saving, and debt. When debt and overspending are normalized, it takes discipline to live below your means.

Psychological Biases

Human psychology is filled with inborn cognitive biases that function as mental shortcuts and influence how we process financial information. Biases like anchoring, loss aversion, sunk cost fallacy, confirmation bias, overconfidence, and hyperbolic discounting predictably affect financial risk-taking, expectations, and short-term vs. long-term tradeoffs. Knowing the most common financial behavioral biases can help identify areas where our thinking may be distorted when making money decisions.

Habits and Emotions

Behavioral habits and emotional states also feed into our financial behavior. Entrenched money habits, whether productive or counterproductive, can be hard to break. Moods and emotional volatility also shape financial behaviors in the moment, sometimes leading to regretted decisions. Ongoing stress, fear, anxiety, or scarcity mindset emotions can inhibit positive financial behaviors related to saving, investing, and focusing on the future. Developing self-awareness around these factors facilitates beneficial financial and behavioral change.

Consequences of Poor Financial Behaviors

Unhealthy financial behaviors can lead to:

  • Living paycheck to paycheck
  • High debt and interest payments
  • Late fees and penalties
  • Credit score damage
  • Lack of savings and investment
  • Financial highs and lows
  • Reliance on credit for emergencies
  • Financial stress and anxiety

Over time, poor financial behaviors can result in bad credit, debt spirals, constant financial stress, and a lack of retirement preparedness.

How to Improve Your Financial Behaviors

Below are some of the best ways to improve your financial behavior:

Increasing Financial Literacy

Gaining knowledge builds the foundation for positive financial behavior. Take time to educate yourself on personal finance basics like budgeting, debt reduction, saving and investing, retirement planning, and insurance. Read books, take courses, seek professional advice, and leverage online resources to boost your financial literacy. Understanding key concepts gives you the tools to make informed money management decisions. Become fluent in topics like:

  • How to budget based on income and expenses
  • Debt payoff strategies like debt snowball or consolidation
  • Compound interest and building wealth over time
  • Tax strategies to optimize returns
  • Managing credit and credit scores
  • Types of insurance and adequate coverage
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Identifying Behavior Drivers

Reflection and self-awareness are key to changing behaviors. Consider how your upbringing, family financial dynamics, culture, personality traits, and past experiences may influence your money habits. What messages did you receive about money growing up? How does your natural temperament impact financial decisions? Are there learned behaviors or thought patterns that affect your money mindset? Discuss these topics with a money coach or trusted confidant for an outside perspective.

Setting SMART Financial Goals

Tangible financial goals provide direction and motivation. Set short-term goals like establishing an emergency fund as well as long-term goals around retirement savings. Make sure your goals are:

  • Specific and quantifiable with actual dollar amounts
  • Measurable so you can track progress
  • Achievable based on your circumstances
  • Relevant to your values and priorities
  • Time-bound with clear deadlines

Tracking Habits

Awareness and accountability are prerequisites for habit change. Track your daily financial habits like discretionary purchases, food spending, transportation costs, entertainment, utility bills, debt payments, etc. Apps, spreadsheets, or written ledgers help quantify behavior patterns. Identify areas where you may be overspending so you can modify your habits.

Changing Habits Gradually

Lasting habit change occurs incrementally. Try to change just one poor money management habit at a time. For example, you might start bringing your lunch to work for a month rather than eating out. Once that frugality habit sticks, tackle another area, like credit card overspending. Small, gradual steps are more sustainable.

Rewiring Thoughts

Our thoughts drive our actions. Notice negative money beliefs like “I’ll never understand investing” or “I don’t deserve financial security.” Then actively counter them by replacing them with empowering thoughts like “I can learn about investing if I take it step-by-step” or “I deserve to have financial freedom.” Monitor your self-talk and reframe limiting beliefs.

Seeking Support

We all need support and accountability on our journey. A financial advisor can guide major decisions. A money coach provides structure and encouragement. Like-minded friends can share tips and advice. Support keeps you motivated to implement changes and make progress.

Rewarding Progress

Positively reinforcing good financial behaviors cements them. Celebrate milestones like paying off credit card debt, saving up a sufficient emergency fund, or sticking to your budget for three straight months. Use non-monetary rewards like a weekend getaway or spa treatment. Recognize that every step forward counts.

Take Control of Your Financial Behavior

While past experiences and psychology do shape our financial behaviors, we have the power to reprogram our money habits by increasing our financial knowledge, setting clear goals, monitoring our progress, rewiring our thoughts, and surrounding ourselves with support.

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Focus on small, gradual steps to change behaviors and build momentum. Be compassionate with yourself. Financially responsible behaviors take practice but are attainable. And the payoff over the long run—increased savings, investment growth, reduced debt, and financial freedom—makes it well worth the effort.


  1. Why is personal finance dependent on your behavior?

Personal finance depends on behavior because our day-to-day financial habits and decisions, shaped by internal biases and external factors, collectively determine our financial outcomes. Poor money management behaviors often lead to bad financial results.

2. What is personal financial behavior?

Personal financial behaviors include the individual habits, attitudes, and actions we exhibit around managing money, from spending vs. budgeting to saving vs. borrowing to investing vs. avoiding financial matters altogether.

3. What influences your financial behavior?

Upbringing, culture, personality traits, cognitive biases, emotions, stress levels, peer pressure, economic conditions, financial knowledge, and past experiences all shape our financial behaviors to some degree. Increased self-awareness helps identify behavior drivers.

4. What is the importance of financial behavior?

Financial behaviors are the determinants of financial success or failure. Positive financial habits lead to stability and freedom, while negative behaviors trap us in debt and constant money stress. We have the power to reprogram our money behaviors for better results.

5. What are the five areas of personal finance?

The main areas of personal finance are budgeting, debt management, saving and investing, insurance, and financial goal-setting. Our behaviors related to these 5 areas determine our financial health and preparedness.

6. Why is financial behavior important to financial literacy?

Gaining financial knowledge is only the first step. Putting positive money management behaviors into daily practice is crucial for building lasting financial literacy and security. Knowledge without action will not lead to financial wellbeing.

In summary, our financial behaviors and money management habits largely determine our financial outcomes. While factors like upbringing and psychology shape our money behaviors, we have the power to take control through financial education, self-awareness, setting clear goals, monitoring our habits, seeking support, and staying motivated to implement small, gradual changes.

Practicing positive financial habits like living below your means, budgeting, saving, and investing regularly is challenging, but it pays off immensely over time through increased financial stability and freedom. It takes consistent effort and patience with ourselves when we slip up. But staying focused on our why—whether it’s financial security for our family, a comfortable retirement, or leaving a legacy—keeps us moving forward.

If you’re ready to improve your financial behaviors and get your money working for you, check out for more personal finance tips and resources. The more knowledge you gain, the more empowered you’ll feel to take charge of your financial life once and for all. Small steps today lead to big results tomorrow. You’ve got this!


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