The necessity of home economics behind the use of financial functions

July 22, 2024
by Noriyuki Morimoto

In order to live abundantly in retirement, you need to invest a certain percentage of your income to accumulate wealth during your working years, so that after you stop working, you can live on income from that wealth as well as withdraw money on a regular basis to supplement public pension benefits.

However, for young working people, voluntarily allocating a certain amount from their current income to prepare for retirement in the distant future requires a high degree of planning and discipline in personal finance. Setting aside theoretical assumptions, it must be thought to be extremely difficult when considering the reality of life.

Such a way of life would be too tame and contrary to the natural human propensity to consume, and seems to run against the expression of human vitality for the development of society. It is similar to putting nutritional calculation ahead of the taste and enjoyment of a meal; it is rather an abnormal way of life.

Realistically speaking, people should need to learn the habits and discipline of asset building with respect to medium- and short-term objectives that feel far more real than retirement in the distant future. For example, people find ways to meet various purposes closely related to their daily lives, such as to prepare a down payment on a mortgage, buy a new car, take a trip, or renovate a bathroom.

Ingenuity in personal finance creates discipline in personal finance. This discipline is what actually makes the appropriate use of financial functions possible. Discipline established in the process of preparing a down payment for a mortgage makes it possible to pay off the mortgage itself, and as people age with discipline in personal finance, they eventually come to understand the need to form retirement life assets.

Whether it is mortgages or asset building through mutual funds, financial functions cannot be used properly unless their necessity is understood. And that need always comes only from life. Any financial function that deviates from the necessities of life is contrary to the true interests of the customer.

Now, how much of the financial functions offered to customers in the actual world of finance are based on the needs of real households?

 

[Category /Personal Asset Management]