4 Types of Money Personalities - Which One Are You?

Wednesday, March 16, 2011

Everyone relates to money in different ways. The way we manage our financial lives is in a large part influenced by our upbringing, peers, friends, neighbors, socioeconomic and cultural backgrounds. The child of immigrants who grew up poor and worked his way through school is going to relate very differently to money than a wealthy person who inherited a vast fortune and never had to worry about where the next paycheck was coming from.

While it’s true that much of a person’s “money personality” is deeply rooted in his or her life experience, we all have a choice in how we live our financial lives and how we manage our money. If we have self-awareness of what money means to us – what we love, fear or avoid about money – we are more likely to make good financial choices and enjoy a healthier, wealthier life. 

The Miser

The Miser’s money personality is primarily motivated by fear; the Miser is afraid of scarcity, or not having enough. She fears what might happen if she ever ran out of money and saves money rigorously, always trying to save for a rainy day and worrying about the future. Misers are often financially comfortable or even wealthy, but they never feel rich; they’re always looking over their shoulder, waiting for the bad times to start. Misers often pride themselves on their independence, on being able to take care of themselves, and while it’s admirable to be in control of your finances, there’s more to life than constantly checking your bank statements. Many Misers miss out on fun opportunities or chances to be generous to others because they’re always worrying about saving more money for themselves. 

The Speculator

The Speculator is motivated primarily by excitement; he tends to be aggressive with his investments, always looking for the “next big thing,” always confident about his earning power. He doesn’t always pay attention to how much he’s spending or saving, because he takes the attitude that “I can always earn more.” Speculators tend to have wild up-and-down swings in their financial lives; they have a “boom and bust” mentality where they might have a really good year (or a really good month) followed by an extended period of limited income or extravagant spending. Speculators don’t take the “slow and steady” approach to managing their money; instead, their financial life is a constant roller coaster ride.

The Avoider

The Avoider tends to be motivated by fear and denial about the reality of money in her life. She might not even know how much is in her bank account on any given day and planning for retirement feels too far away to worry about. The Avoider takes a “see no evil, hear no evil” approach to managing her financial affairs – bank statements go unopened and unexamined. As long as collections agencies aren’t calling her, that means that she’s probably doing OK – right? While it’s great not to worry too much about money, the Avoider is ultimately doing herself a disservice. By not staying informed about her finances, she’s missing out on opportunities to set the foundation for a more financially secure future.

The Spendthrift

The Spendthrift is motivated by desire – for all the things, products, and experiences that money can buy. The Spendthrift is an expert in things he can’t afford, whether it’s an extravagant sports car, a closet full of designer clothes, expensive restaurant dinners or lavish vacations. The Spendthrift can always find new ways of spending money without ever giving a thought to how to save it. Life with a Spendthrift can be fun, but the fun comes crashing to a halt when it’s time to pay the bills. The Spendthrift sees money as a way to enjoy life and have fun in the here-and-now. While it’s great to live in the moment, the Spendthrift is putting himself at risk for an impoverished old age.

What type of money personality are you? Of course, not everyone fits into one of these more extreme categories, but all of us might recognize aspects of ourselves in the Miser, the Speculator, the Avoider and the Spendthrift. Some people are really cautious with their money, others are carefree – and ultimately, our money personality reflects our larger personality, lifestyle and values.

Ideally, it’s best to strike a balance between these different money personalities. You don’t want to be stingy like a Miser and miss out on fun opportunities, but you also don’t want to take a hands-off approach like the Avoider. We all need to enjoy life (like the Spendthrift) but without forgetting to save for the future. We need to recognize that money comes and goes (like the Speculator) but we need to have a more balanced approach to saving, spending and investing.

No matter what kind of money personality you have, offers great tools and resources to help you manage your finances, including a Debt Payoff Planner that shows you how to get out of debt faster and save potentially thousands of dollars in interest.

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