When it comes to your personal finances, think for yourself. Don't kowtow to social norms unless they make sense.

Sometimes without even realising it, we follow the herd right off the proverbial cliff.

Of course conformity is good in many aspects of personal life. If we conform at school we'll probably get through with some qualifications under our belts. If we conform on the roads we don't get pinged for tickets and are less likely to end up dead. If we conform with whatever the Inland Revenue Department wants us to do with paying taxes we avoid a whole lot of stress.


If family and friends have money beliefs most of us will learn them. The herd mentality isn't always good in personal finances because our flawed brains lead us to make all sorts of cognitive errors with our money.

Associate professor Carla Houkamau at Auckland University has been investigating the triggers behind our routine money decisions and found that cultural identity provides a set of rules and guidelines for living and is a very powerful driver of behaviour.

Houkamau and her peers have been analysing data from the Māori Identity and Financial Attitudes Study (MIFAS) study, which closed earlier this year.

More than 7000 Māori took part in the survey, which has lessons for all Kiwis because our social norms affect what we do with our money and how.

"Norms about your group influence your choices and the opportunities you have," Houkamau said at a forum held by the Commission for Financial Capability (CFFC).

Conformity leads to some imperfect outcomes in personal finance:

We buy too much

If our friends have a new phone we start to think we need one.

It makes us want to impress others

I often think about a young, not yet rich real estate agent who told me she needed to drive an expensive car. Homeowners wouldn't think her successful unless she had a flash set of wheels. Really? I have no idea what cars the local real estate agents drive and it has no bearing on whether I think they're good at selling.


We don't save for property

A young person said to me recently: "our generation won't be able to buy property". This is received wisdom. More than a quarter of people getting mortgages are first home buyers. Of course it's hard to buy a house, but if you assume it's impossible you won't start. I suffered from a very similar delusion when I was younger. It was assumed you'd get married then buy a house. So I didn't think about buying when I was a single woman and lost a number of years before getting on the property ladder. Likewise if you grew up in a state house or private rental, you may not have seen buying a home as the behaviour of your group.

We spend too much on weddings and other life events

Spending $20,000 or more on a wedding and honeymoon puts many young couples years back in the financial stakes.

We think a man is a financial plan

Sadly there are still too many women who leave everything to their husbands. This can really come back to bite in many ways. If that man is useless with money there's a problem for your long term financial future. Or if he's devious and spends or hides the money just before separating. Societal norms of women chasing men with money and men controlling women with money and a host of others still exist.

How much we gift

Do you worry about the amount you should spend on a gift rather than simply choosing the right gift for the person? I'm also interested about public displays of charitable gifting. Giving is good, but social norms can drive it such as keeping up with the Joneses or impressing those around us.

Some or all of these behaviours might be right for you. But only if you've analysed them and made a conscious decision. Following the crowd can lead to some financially illogical actions. That might be buying when markets are hot, selling after the fall, or even telling white lies to insurance companies.

Stick two fingers up to society's norms and reset your behaviour to make the most of your money.