How Your Money Personality is Impacting Your Finances
Quote of the Week: “To become different from what we are, we must have some awareness of what we are.” – Eric Hoffer
Our personalities can influence some of the most important decisions in our lives, who we marry, where we work and the friends we keep can vary widely depending on whether we are introverted, outgoing, creative or optimistic. Like almost everything else in life, your response to money is largely dictated by your personality. Have you given much thought to how you behave with regard to your finances and how that behavior affects your bottom line? Understanding your money personality is the first step and will help you shape your approach to spending, saving and investing. Money personalities have been analyzed in a variety of ways and many people can identify with aspects of several profiles. They key is to find the profile that most closely matches your behavior.
Big spenders love nice cars, new gadgets and brand-name clothing. Big spenders are not bargain shoppers; they are fashionable and are always looking to make a statement. They like the immediate pleasure that comes from buying things for themselves but they have a hard time prioritizing their spending and putting money aside for savings. Spenders tend to focus on living in the moment rather than looking at the bigger financial picture and they often find themselves in debt because of their extravagant habits.
Savers are the exact opposite of big spenders. They love to hold on to their money. They tend to be very organized with their finances, often having a clear, written budget and they always know how much money is in their bank account. Savers watch their spending carefully, often to the point where they have a hard time justifying purchases that seem to add value such as vacations or entertainment. Many Savers worry about their future financial security and they tend to be very conservative with where they choose to put their money, often preferring the safety of a high interest savings account over high return investments, such as mutual funds or stocks, always trying to make sure their dependants are well provided for in their absence.
Avoiders are not comfortable with the subject of money due to their lack of interest or they feel that there are other more important issues. They avoid dealing with money as much as they possibly can. They never know how much is in their bank account and are often late with bill payments, not necessarily because they do not have the money but because they do not consider paying bills a priority. In many cases, Avoiders consider money to be challenging and complicated and prefer to devote their energy to more interesting things.
Investors are consciously aware of money. They understand their financial situations and try to put their money to work. Regardless of their current financial standing, investors tend to seek a day when passive investments will provide sufficient income to cover all of their bills. Their actions are driven by careful decision making, and their investments reflect the need to take a certain amount of risk in pursuit of their goals.
THE BOTTOM LINE
While you may not be able to change your personality, you can acknowledge it and address the challenges that it presents. Managing your money involves self-awareness, knowing where you stand will allow you to modify your behavior to achieve your desired outcome. Awareness is the first step when it comes to implementing change, understanding how an obstacle affects you and then taking action to overcome it will lead to dramatically different results.