While there is often more that unites than divides us, every culture around the world has its own unique approach to life. When you visit a new place, you might be taken by the differing attitudes and mindsets the locals adopt, and how their way of thinking could allow them to live a more meaningful life.
You can often apply these distinct philosophies to your financial plan too.
Here are three cultural concepts from around the world, and the crucial financial planning lessons they can teach you.
1. “Ikigai” and the value of clear goals in life
Japan is a country steeped in spirituality and tradition. Many Japanese people build their lives around important concepts such as “Ikigai”, which roughly translates as “reason for being”.
Finding your Ikigai is all about understanding what is important to you and gives you purpose in life. Having that focus then gives you the drive to approach each day with enthusiasm and live a fulfilling life.
It’s important to manage your financial plan in the same way. Rather than focusing on ways to build as much wealth as possible, you might want to start by thinking about what you truly value in life.
You may find purpose in work but it’s also likely you have other goals. Perhaps travelling with family is important to you, or you’d like to start your own business, for instance. You might have hobbies you want to pursue too.
It’s important to start by understanding these priorities and building a picture of what a purposeful life looks like to you. Then, you can create a financial plan that allows you to live that lifestyle.
In this sense, financial planning isn’t just about building wealth for the sake of it. Instead, it’s about facilitating a meaningful life for you and your family.
2. “Lagom” and the importance of balancing short- and long-term aims
Finding your Ikigai and understanding your long-term goals is important, but you will also want to enjoy a good quality of life in the short term.
When it comes to managing your spending and saving, you might want to take note of the Swedish concept of “Lagom”.
This roughly translates to “just the right amount” and it describes a way of life that values balance.
A Lagom lifestyle is one in which you enjoy everything in moderation and avoid excessive consumerism but, crucially, it doesn’t mean restricting yourself too much.
This is similar to the balance between spending and saving in financial planning. It’s important to save for the future but if you are too restrictive and reduce all spending on luxuries, you may struggle to maintain your ideal lifestyle in the short term.
Conversely, if you don’t limit your spending whatsoever, you’ll find it difficult to save for the future and achieve your long-term aims.
Taking a Lagom approach means you can spend in moderation and maintain a good quality of life now, while adopting a regular savings habit so you can meet your long-term goals too.
3. “Sisu” and learning to be resilient in the face of financial challenges
Life can be unpredictable and we all face challenges at some point in our lives. In Finland, the concept of “Sisu” describes a person who demonstrates resilience and courage in the face of extreme adversity.
People who embody the idea of Sisu can bounce back from setbacks and continue working towards their long-term goals. They also remain calm and composed when faced with challenges.
These are important qualities if you want your financial plan to be a success too.
You will often come up against hurdles such as market volatility and it’s easy to panic when this happens. You might decide to change your strategy or cash out your investments, but this could make it more difficult to reach your long-term goals.
Conversely, if you are resilient and stick to your financial plan, your investments may well recover their value and continue growing in the future.
You might face other financial challenges too, such as losing your job or having to take time off work due to illness. Having a strong financial plan in place could mean you are better placed to recover from these setbacks.
For example, a healthy emergency fund may allow you to cover your living expenses while you find a new job. Similarly, if you are unable to work, an income protection policy could provide a regular payment to help you manage your expenses and contribute to savings for the future.
Consequently, you can demonstrate Sisu and be prepared for anything life throws at you.
Get in touch
If you need help applying these cultural concepts to your financial plan, we can support you.
Please get in touch or email us at advice@mlifa.co.uk for more information.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
All information is correct at the time of writing and is subject to change in the future.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.
Note that financial protection plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.
Cover is subject to terms and conditions and may have exclusions. Definitions of illnesses vary from product provider and will be explained within the policy documentation.