What Money Personality are You?

Over the course of a year the staff at FORTIfi Ltd talk in depth to hundreds of people about their money. It doesn’t take long to realise that there are many different attitudes to personal finances and that the priorities of one person may vary greatly from those of the next person. Others have recognised this also and have done studies on Spending Personalities.

Understanding your money personality can help to;

► get our finances in order and keep them that way
► prevent us going into debt
► understand sources of conflict between ourselves and others with whom we share our financial decisions

A simple way of considering our money personality is to see where we are on these three scales (you might want to mark where you and your partner are);

If you complete this on your own it can give you a better understanding of how and why you spend.  If you complete this with your partner it can help us to recognise that we all have different money traits.  We can then better understand sources of conflict between ourselves and those with whom we share our money decisions.  Couples often have quite different approaches to money – for example, some of us like paying bills by the deadline and others are less organised.  Or perhaps you are, innately, a saver who loves squirreling money away while your partner is a spender: cheerful only when they’re out shopping. If you know this, then you can avoid arguments and find easier compromises. Nobody loves money arguments.

Looking in more detail:

Other people have gone into greater detail when examining money personality and there are several sites on the Internet which contain tests and questionnaires what enable you to look at this in greater detail. The Sorted website – www.sorted.org.nz/calculators/money-personality - is one example.

Another writer who has done some research into this is Lisa Smith from www.investopedia.com. She divides us all into five major profile types. While we can all fit into more than one type, she believes most of us will have a greater tendency to be more of one than the others.

•Big Spenders
Big spenders aren't bargain shoppers; they are fashionable and they are looking to make a statement. This often means a desire to have the smallest cell phone, the biggest plasma TV and a beautiful home. Big spenders are comfortable spending money, don't fear debt and often take big risks when investing.

•Savers
Savers are the exact opposite of big spenders. They turn off the lights when leaving the room, close the refrigerator door quickly to keep in the cold, shop only when necessary, and rarely make purchases with credit cards. They generally have no debts and are often viewed as cheapskates. Savers are not concerned about following the latest trends, and they derive more satisfaction from reading the interest on a bank statement than from acquiring something new.

•Shoppers
Shoppers derive great emotional satisfaction from spending money. They often can't resist spending money, even if it's to purchase items they don't need. Shoppers are usually aware of their addiction to spending and are even concerned about the debt that it creates – but they love a bargain.

•Debtors
Debtors aren't trying to make a statement with their spending, and they don't shop to entertain or cheer themselves up. They simply don't spend much time thinking about their money and therefore don't keep tabs on what they spend and where they spend it. Debtors generally spend more than they earn and are deeply in debt and they don't put much thought into investing.

•Investors
Investors are consciously aware of money. They understand their financial situation and try to put their money to work. Their actions are driven by careful decision making.

Advice for Your Personality
Do you recognise yourself in any of these? Once you do it's time to see what you can do to make the most of what you have. Sometimes making just small changes can yield big results. Here’s the advice from Lisa Smith of www.investopedia.com.

•Spenders: Shop a Little Less, Save a Little More
If you love to spend, you are going to keep doing it, but you should seek long-term value, not just short-term satisfaction. Before you splurge on something expensive or trendy, ask yourself how much that purchase is going to mean to you in a year. If the answer is "not much", skip the purchase. In this way, you can try to limit your spending to things you'll actually use.

•Savers: Use Moderation
Ben Franklin once recommended "moderation in all things." For a saver, this is particularly good advice. Don't let all of the fun parts of life pass you by just to save a few pennies.

•Shoppers: Don't Spend Money You Don't Have
A critical step for shoppers is to take control of their credit cards. Unchecked credit card interest can wreak havoc on your finances, so think before you spend - particularly if you need a credit card to make the purchase.

•Debtors: Start Investing
If you are a debtor, you need to get your finances in order and set up a plan to start saving and investing. You may not be able to do it alone, so getting some help is probably a good idea.

•Investors: Keep Up the Good Work
Congratulations! Financially speaking, you are doing great! Keep doing what you are doing, and continue to educate yourself

Where to from here:
Changing any aspect of personality is difficult and, let’s face it, why would we want to change? – it’s who we are. While you may not be able to change your personality, you can acknowledge it and address the challenges that it presents. One of the greatest requirements when it comes to managing your money is to have a degree of self awareness. Knowing where you stand will allow you to modify your behaviour to achieve your desired outcome.

For our article on SMART goal setting.

See the Miscellaneous Articles section of our website Resource Centre.  Click on the arrow to go there.