What is Your Money Personality Type?
Just like with anything else in life, your personality can also dictate your response to money. Understanding your money personality is your first step in shaping your approach to saving, spending, and investing.
Identifying Your Money Personality Type
Five common money personality types include the following:
Debtors don't overly concern themselves with their money; therefore, they don't often track what they spend. They don't put much thought into saving or investing and tend to spend more than they earn.
What Debtors Can Do to Improve Their Financial Health
You can start by opening a savings account and have a portion of your paycheck automatically deposited into your savings account. The key with Debtors is to make the act of saving automatic. Next, you'll want to set up an "investment" plan. This could be your company's 401k plan or something else. It might be a good idea to seek professional help to be sure you choose an investment wisely and do your research.
2. Big Spenders
This type of personality loves spending money. They want all the latest and greatest things, such as:
- New gadgets
- New cars
- Brand-name clothing
When you have a "spending" personality, you aren't typically much of a bargain shopper. You're more about looking to make a statement or being fashionable, which probably means you have to have the biggest flat-screen TV, the most up-to-date mobile phone, and the vast, beautiful home. Big spenders don't fear debt and frequently take significant risks when they invest.
What Big Spenders Can Do to Improve Their Financial Health
If you're a spender, it's not likely that you're going to stop immediately. However, it would help if you looked for the long-term value in things. Before you spend money on something trendy or expensive, ask yourself if it's something that will still be meaningful to you in a year. If not, then think twice before making that purchase. When learning to curb spending, start small. The more comfortable you become in avoiding small expenses, the more significant the impact will be on your finances.
The saver personality is the total opposite of the big spender personality. Savers:
- Close the refrigerator door quickly.
- Turn all the lights off when they leave a room.
- Rarely make any credit card purchases.
- Shop only when it's necessary.
Savers typically do not have any debt and are often seen as "cheapskates."
What Savers Can Do to Improve Their Financial Health
If you're a saver, you may have solid financial health, which is a great thing. But the question to ask yourself is, "Are you saving too much?" In other words, are you socking so much money away that you're not enjoying today or making so many sacrifices that are affecting your happiness? Like with spending, you may be able to moderate your savings a bit. Allow yourself an indulgence every once in a while. And, when you are saving, it's not enough to just pinch pennies. You need to be a smart saver. Your goal should be to minimize your risk with investing and maximize your return. Seeking a professional financial advisor's guidance could help you invest smarter while providing more "fun" money for yourself.
As a "shopper" personality, you get immense satisfaction from looking for things to buy. While you may simply be a “window shopper,” you may fall under the “shopper personality” where you can't resist spending and often purchase things you don't need. You're likely aware of your addiction and are possibly not too concerned with the debt your shopping is creating.
What Shoppers Can Do to Improve Their Financial Health
If you're a shopper, an important step is to get your credit card spending under control. Credit cards’ interest rates can be a disaster to your finances if you’re unable to pay the balance off quickly. You need to really think before you spend, especially if you're about to make purchases with your credit card. Consider the amount of interest you will also be paying on that item if you use a credit card. A good rule of thumb is that if you can’t pay for it with cash, you probably don’t need it. Try to keep your credit card purchases only for emergencies like car or house repairs. Also, try to start focusing more on saving your money instead of spending it.
As an investor, you're entirely aware of your money. You put your money to work. Regardless of where you're currently at financially, you seek the day where your passive investments will provide you with adequate income to cover your bills. You make careful decisions that drive your actions. Your investments reflect your need to take a specific amount of risk while pursuing your goals.
What Investors Can Do to Improve Their Financial Health
When it comes to your finances, you're most likely doing just fine. You'll want to continue with what you're doing but be sure you're continually educating yourself and staying informed. It may be a good idea to make an appointment with a professional financial advisor just to be sure you’re on the right financial track. And like the saver’s personality, be sure that you are not totally sacrificing things you’d like to do now that bring you enjoyment.
What is your money personality type? Tell us in the comments!