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The library of essays of Proakatemia

Why is it so difficult to talk about money: In a multicultural team enterprise environment?

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The Psychology of Money: Timeless lessons on wealth, greed, and happiness
The laws of human nature
. The Next 100 years: A forecast for the 21st century
Mind over money: The Psychology of Money and How to use it Better
Morgan Housel
Robert Greene
George Friedman
Claudia Hammond
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Why do we find ourselves in uncomfortable situations when we talk about money? It can be a salary debate with your employer, a close friend asking for money even when they didn’t pay back the last time, tip culture in a foreign country or money disputes in your co-operative. There are many scenarios when people don’t have the same understanding about money. What is the cause for this? In this essay I will be diving into human psychology, culture and individual level and attempt to answer the question “Why is it so difficult to talk about money in a multicultural team enterprise environment?” This topic is important for you if you work in an environment where money is handled, and you don’t work only with the people from your region.
When people come together to complete one purpose together, conflict is guaranteed. Now conflict is not always a negative thing since it will lead into better understanding once resolved, but the conflicts can be handled better with knowledge and understanding of where the other party is coming from.

Cultural History of Money

Before we start with human behavior lets look at some history of money around the world. The usage of “money” has existed in many forms. Money is a convention, because in the past anything that was agreed upon could be used as money. (Shells, dolphin teeth, squirrel pelts, coco beans, cigarettes…) The use of coins appeared about 3,000 years ago and they were stamped lumps of precious metal in varying sizes. (History of money -University of Amsterdam. 2018)
There have been many changes in money, to get to where we are now, the fiat money era (From 1971 until now) Fiat money is a type of currency that is not backed by a precious metal, such as gold or silver. It is typically designated by the issuing government to be legal tender and is authorized by government regulation. So basically, the government decides the worth of a one-euro coin, not the value of its metal. The suspicion against the state has inspired alternatives of currency, like bitcoin.
Around the globe money and wealth has symbolism and superstitions tied to it. “In India, gold is especially symbolic of wealth and success, and plays a leading role in many traditional rituals. As a result, there is high demand for gold as an asset class, whether it’s traded as physical gold or a CFD (contract for difference) for the precious metal.” (Article, Az Ahmed, Digital Channels, April 2021)
In different parts of the world money has its own path of development, which has affected the way people in different countries see money. Other cultural factors like governmental regulations affect how people treat their money. In example in saving money, “household savings in China have traditionally been high relative to other countries. One reason for this is thought to be the country’s one-child policy which was in place until 2015. This policy meant households had less need to spend on children, but also reduced ability to rely on children in retirement – incentivizing household saving.” (Digital Channels Article. April,2021)
Money system is different in every country. Similarly to China, Japan had virtually no public retirement plan at the 1917’s and corporate pensions were minimal. Japanese planned for retirement threw savings. (George Friedman. The Next 100 Years: A forecast of the 21st Century. P.93)
Many western cultures are different and have established retirement plans demanded by the government. Taxing changes in other parts of the world and tax has many purposes. Scandinavian cultures place a strong emphasis on social welfare and equality. High taxes fund extensive social programs, and the focus is on providing a safety and security for all its citizens. The view is that money should contribute to the well-being of society rather than concentrating on individual wealth. There is also cultural appreciation for simplicity. Excessive displays of wealth may be viewed negatively.
All these factors and the developed history of these factors in one’s country forms an individual’s opinion and habits regarding money. These are just mere examples, the true diversity of countries money habits and where they come from is a huge topic and it has so many elements you could write an essay out of each country. In this essay we are just scratching the surface.

Collectivist culture and money

What is a collectivist culture and what does it have to do with money? The theory about Individualism and Collectivism comes from Hofstede’s theory of cultural dimensions, developed by Geert Hofstede (1984, 2001).
Collectivism indicates that there is a greater importance placed on the goals and well-being of the group. A person’s self-image in this category is defined as “We” and individuals from collectivist backgrounds often prioritize relationships and loyalty more prominently than those in individualistic cultures. In collectivist cultures also money is often seen this way. Family and friends are more likely to see money as a joined property and its more acceptable to ask to loan money from family and friends than it is in some western cultures.

Individualist culture and money

Well, how about individualist culture? Hofstede (1980) considered individualism to be a focus on rights above duties, a concern for oneself and immediate family, an emphasis on personal autonomy and self-fulfillment, and the basing of one’s identity on one’s personal accomplishments. Individualistic culture focuses more on self-supporting lifestyle and it’s encouraged to refer to “I” when talking about accomplishments of your independent self.
Individualism exists on a spectrum, meaning that those within a predominantly individualist society can have individualistic behavior depending on beliefs and circumstances. Hofstede (1980) assigned each country an individuality index on a scale of 0 to 100 based on responses in a large survey study. According to this study, some countries are more individualistic than others. The United States — had the highest individuality index in the world (91), followed by Australia, the United Kingdom, Canada, and Hungary (Hofstede, 2010). (Individualistic Cultures and Example Behavior, 2023)

Psychological Barriers in Money Conversations

Every single person, regardless of their nationality, would like to think that they are in control of their life. Everyone does. But this is often not true. In Robert Greene’s book The Laws of Human Nature, he introduces “the law of irrationality”. It explains that humans like to think that they are in control of their life, and that they have an accurate view of the world. But emotions are more powerful than we think, and we often find ourselves overpowered by them. Emotions cause you to react instead of think. “World is often based on how you feel and not necessarily how it actually is. The challenge is to balance our rational and irrational minds.”
Diving deeper into how psychologically perceptions are created and why they are so difficult to change later in life. In “The Psychology of money and how to use it better” by Claudia Hammond (2016) She explains the developmental roots of money beliefs. According to C. Hammond, your beliefs about money are so difficult to change because you started to develop them when you were very young. Changing those images will take time because it took a long time for you to learn and understand them the way you did.
Money has interesting effects on people’s mind and how we operate. I chose examples from C. Hammons book. “Earning more might make you happier, but not after a certain point.” Being financially stable is critical part of you staying physically and mentally healthy, but once you have enough, more money won’t make you happier or healthier. So, the benefits of money to your happiness will reach only till a certain point. Hammond introduced “hedonic adaptation” which is when you start to get used to something that used to be exiting and new for you. Once you get used to it it’s hard to give it up and not keep living life that way. Example, a 5-star hotel stay is exhilarating and new the first time, but if you start to adapt to that lifestyle, it starts the cycle of you needing to go to 5-star hotel and bigger pleasures to feel satisfied. Like in Morgan Housel’s book Psychology of Money (2020) it was explained in chapter three, “The hardest financial skill is getting the goal post to stop moving.” When you start to get more money, what often happens is that you’re living expense and the need to have more rises with it. This is were many of us have a tendency for irrationality and envy. M. Housel wrote about how human brain usually is drawn to envy and negativity rather than positivity and success. It’s a survival instinct to focus more on the possible threats than what is good or going well.
Claudia Hammond also mentioned in her book that money doesn’t always increase motivation but might also decrease it. In some professions high pay may result in lowering of working motivation and with a tighter pay-check the valuation of money is higher so it might result into more interest and enthusiasm to work. When extra money is gotten by a surprise it results in a boost of motivation, but when there is an expectation to receive more money the likeliness of boosted motivation is low.
In the world of different cultures, individuals, and life situations there is endless amounts of variations on perceptions on how money works. “No one’s crazy” is a phrase brought to you at the very beginning of Morgan. H book Psychology of Money. It introduces the idea of how complex and versatile the world of money and finance really is. The world is so full of possible financial situations, ways to get money and lose money that it’s impossible for us to even comprehend. The book states that “Your personal experiences with money make up maybe 0.00000001% of what’s happened in the world, but maybe 80% of how you think the world works”.

In conclusion, navigating discussions about money within multicultural team environments involves understanding the effects of human psychology, cultural backgrounds, and individuals’ perspectives. The historical evolution of money, shaped by cultural and governmental factors, influences individuals’ attitudes and behaviors towards finances. Cultural dimensions such as collectivism and individualism further impact how money is perceived and managed within societies.
The most important thing is to acknowledge and respect our differences and try to work our way to understanding the beliefs and diverse backgrounds of our multicultural members. That way we can together work towards resolving conflicts and achieving better financial understanding and cooperation within diverse teams.

– Joost Jonker. 30 October 2018. A HISTORY OF MONEY: Wageningen. University of Amsterdam/IISH.
– AZ AHMED. APRIL 21, 2021. How culture affects financial decision-making around the world. :DIGITAL CHANNELS.
– George Friedman. January 2010. The Next 100 years: A forecast for the 21st century: Knopf Doubleday Publishing Group.
– Geert Hofstede. 1984, 2001. Hofstede’s theory of cultural dimensions.
– Charlotte Nickerson. October 18,2023. Individualistic Cultures and Example Behaviour.
– Robert Greene. 2019-10-01. The laws of human nature: Penguin Books.
-Claudia Hammon. 2026,11,01. Mind over money: The Psychology of Money and How to use it Better: Harper Perennial.
-Housel, M. 2020. The Psychology of Money: Harriman House Publishing.

Finnish student in the English Entrepreneurship and Team leadership program.

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