Have you ever wondered why people behave so differently when it comes to money matters and personal financial planning? Why does it seem so hard for some people to part with their pennies, while others can't refrain themselves from squandering money on expensive purchases that will prove absolutely useless the next day? The way we relate to money and its overall importance may significantly influence the financial decisions we regularly make and define our lifestyle in general. Like everything else in this life, our attitude towards money is largely dictated by our personality type. Whereas it is true that much of a person's money personality type is deeply rooted in his upbringing and family background, we all have a say in the way we decide to manage our money and organize our financial lives as adults.
Identifying and understanding your type of money personality is very important, not only because this will increase your self awareness about how you approach your spending or saving habits, but it will also help you recognize your own financial strengths and weaknesses and reveal ways to use them to your advantage. The financial behavior of the majority of people is driven by tendencies that lie deep in their subconsciousness. We are involuntarily guided by certain patterns and habits imprinted in our mind that can jeopardize our future financial success, unless we learn how to master and control them. We may try to deny that we relate to any of the commonly recognized types of money personalities out of the desire to be different, not like the rest of the crowd, but this is only a delusion. To a certain extent, we all belong to one of these types or their combinations. And the sooner we'll come to terms with and accept this fact, the quicker we'll understand the money attitudes and behaviors we exhibit in our daily life. The gained knowledge will help us make smarter money management decisions, identify any blind spots and improve our financial standing.
Your underlying tendencies are likely to cost you money every day: either because you manage your personal finances irrationally, or fail to make the most of the financial opportunities that may arise. While there are many variations of money personality types, they can be grouped into five main categories:
1. The Miser – his main goal is to store up wealth by depriving himself and his loved ones of the little joys of life or sometimes even of daily necessities. The Miser is so focused on the intricacies of his personal finances and assets that he fails to enjoy the benefits that his wealth may bring. This personality type is primarily motivated by fear of not having enough money stashed away for a rainy day. Although Misers often pride themselves on being financially comfortable, in reality they never feel rich. The constant state of worry for the uncertain future clouds Miser's reasoning and makes him immune to all the things money can buy. The Miser is a callous selfish personality that tends to drag out a miserable existence full of deprivations and restrictions before leaving a lifetime wealth to his successors.
2. The Saver – this is the money personality that tries to live by the book. The Savers are conservative by nature and very careful when it comes to personal financial management and budget planning. Savers take pride in saving money rather than spending, but sometimes they may go too far in their attempt to tighten up the household budget to its limit. Savers are careful shoppers and always try to find the best deals before making a purchase. They are not interested in following the latest trends: they shop only when necessary and can easily resist the tug of impulse buy. The Saver understands pretty well that all those little expenses can eventually sink the great ship, so they are happy to live within a meager budget in exchange for a financially secure future.
3. The Spender – his main addiction is to shop and spend money on items that most of the times go unused. As a rule the Spender is well off financially, that's why he has a somewhat relaxed attitude towards money and the way he uses it. For Spenders money is the tangible evidence of their financial success and they are gladly using this "financial tool" to enjoy themselves and sometimes give gifts to others. Although Spenders consciously plan their family budget, they rarely manage to stick to it. Their sheer optimism that another small purchase is definitely something they can afford may cost them dearly one day. Without giving much thought about tomorrow's financial security, the Spender risks running into debts should he need to cover any emergency expenses.
4. The Blind – this is the type of personality that has little to no control over money matters. Like the Miser, the Blind is motivated by fear and denial of a reality where money rules. These people aren't focused on building wealth or becoming financially successful. Rather they tend to ignore the importance of personal finance planning by pretending that since they don't worry about money then financial problems shouldn't worry them. While the Blind sticks his head in the sand and lets his financial woes solve by themselves, his money problems may grow exponentially and reach disaster levels. This destructive approach to personal finances and money matters makes the Blind vulnerable and insecure. By refusing to stay financially informed, the Blind willingly gives up on a prosperous future.
5. The Savvy – this personality type is consciously aware of money, that's why he likes to play it safe and takes only calculated risks. The Savvy is well informed about his financial situation and displays extensive money skills. He tends to accumulate wealth by making his money work as hard as it can. He likes to regularly put aside money for retirement or an emergency fund, but unlike the Saver the Savvy also knows how to enjoy the results of his financial endeavors. The Savvy doesn't indulge in luxury items and when he spends big he will first do a comprehensive research to ensure he gets best value for money. The Savvy understands that knowledge is power, hence he rigorously tracks his income and expenses in order to have a real picture of his financial standing. His actions are driven by careful decision making and wise money management strategies.
You may think that none of the above personality types accurately describes your own attitude towards money and financial matters. And you are right: most people are in fact an interesting combination of tendencies and habits. Each money personality type has both good qualities and shortcomings which may prevail in one's mindset. They dictate how you feel about money and how you deal with your financial issues. Understanding your money personality type will give you a chance to fight back all those bad habits and derive maximum benefits from the good ones. The more you know about your financial beliefs, the easier it will be for you to modify your behavior in order to achieve the desired outcome and live in harmony with yourself.