What is your money personality?

Do you understand your money personality and how it impacts on your ability to achieve your monetary goals? Are you a bargain hunter or one of the champagne set?

Have you ever wondered why you can’t see eye to eye with your business partner about money? Do you argue with your spouse and family over how money is spent? Do you wonder why some people fritter their money away while others won’t loosen their grasp on it?

The answer is that money has nothing to do with dollars and sense. It is a deeply emotional subject and few of us treat it rationally. And no wonder - money is a large part of our lives essential to our survival. And when your survival is at stake your inner most instincts come to the fore.

Television has capitalised on this phenomenon in “real life” shows. We sit at home watching people receive financial advice from experts. We marvel at how foolishly they manage their money and why they can’t see the “obvious”. Confronted with excellent financial advice, these individuals continued to sabotage themselves. Why would a person choose to do this we ask ourselves?

In fact there are many reasons why some people don’t manage their money as well as they could. The usual conclusion is that they require education, and this is a subject well covered by existing literature. However, education on its own is of no value. Let’s face it, we all know too much chocolate is bad, and in a perfect world we would all eat healthily and exercise regularly. Unfortunately people don’t always do what they know they should.

So how do we change this?

One solution I have identified is the development of eight money personalities that help explain people’s behaviour in terms of earning, spending, gifting, borrowing, saving and investing. The money personality is also a strong indicator of a person’s risk profile.

Understanding your money personality and how it impacts on your ability to achieve your monetary goals is an important first step to financial reform. From there you can identify limiting behaviours and work to effect change at both the conscious and subconscious levels.

As you go through that process you may find that your money personality changes. Or, in reading the descriptions you may notice you have changed over time. This is a normal part of your transition through life.

 The eight money personalities - an overview

 The Champagne Set is easy to identify. These individuals show a preference for top label brands and visible wealth. They are more likely to drive new models of cars, or premium brands such as Mercedes, BMW or Audi. They are fond of standing out from the crowd, and will be comfortable in their Valentino jeans and Versace T-shirt.

Where income permits they will enjoy eating out regularly and opt for superior wines. When income does not meet their appetite for buying the nice things in life Champagne Set individuals are very comfortable borrowing money, and don’t lose sleep over large mortgages or credit card bills.

They tend to be ’see it, like it, buy it’ shoppers, and are decisive where money is concerned.

Hoarders by contrast dislike debt, and work hard to repay it. They are highly cautious in all respects preferring safe investments with low returns. Hoarders prefer to shop around for the best price on purchases and will often have favourite discount shops they haunt.

Around the home the person switching off all the unused appliances and lighting is probably a Hoarder. More than anything else these individuals worry about the future, and are very security conscious. They like to keep money on hand for the proverbial rainy day, and are sometimes accused of being stingy.

This personality type is especially prevalent in those brought up in the depression when money was scarce.

 Penny Wise are a combination of The Champagne Set and Hoarders. The name is derived from the saying ‘penny wise, pound foolish’ - an accurate summation of this money personality. The Penny Wise demonstrates the same caution as Hoarders when it comes to day to day expenses. They make wise decisions when purchasing groceries. They often make their own lunch or employ other money saving devices which may each save a few dollars.

But when it comes to purchases where large dollar amounts are concerned the pendulum swings the other way. They will be fussy about purchasing good quality clothing from top brand names. Even the poorest Penny Wise will purchase expensive new appliances (because you can trust the brand) rather than a reconditioned or shop soiled model.

Unfortunately the extra expense on larger purchases outweighs any savings on living expenses and the individual is left wondering why they can never save.

 Bargain Hunters are every marketer’s dream. As the name suggests, these individuals enjoy shopping, particularly when they think they are getting a good deal. Purchases are frequently made without regard to need. As a result they may lie unopened in a cupboard, or be thrown out. These individuals also enjoy giving, and often use this as an excuse for shopping.

Sales will definitely attract Bargain Hunters, as will special incentive programs such as loyalty cards. While some people loathe going to the shops Bargain Hunters think of it as a pick-me-up. Underpinning this is a desire for love and comfort.

Bargain Hunters are not as comfortable with debt as The Champagne Set but they are likely to have hire purchase or credit card debt.

 Gamblers are eternal optimists. While the name may conjure up images of a roulette wheel Gamblers are defined by their attitude, and may have no interest in conventional gambling. These individuals have an all or nothing approach to life and they love making deals.

Where money is concerned they can be reckless. They always expect that the next wave will be the big one so they’re prepared to try time and again.

Where other individuals may feel defeated by a failed investment or business Gamblers are resilient and have no hesitation in moving on to the next venture. Gamblers tend to be rich or poor, but never in between.

 Don’t Know refers to the level of financial literacy an individual has. This money personality usually has no idea how much they earn or spend. Nor do they know how much debt they have or what it’s costing them. Don’t Know usually experience financial difficulty and it’s not unusual to find that their outgoings exceed their income.

These individuals tend to have high consumer debt, and may borrow from non-mainstream financial institutions. These have high interest rates (sometimes in excess of 50 percent) and the cost of debt servicing further compounds their problem.

Unfortunately this money personality tends to be a big spender. Many are small items, such as lunches or takeaways, but the cumulative effect is significant.

 Poor Me is a variation on the Don’t Know money personality. Poor Me experience all the same characteristics with the added ingredient of helplessness. Both personalities require education, but the Poor Me would prefer someone else to fix the problems and hasn’t reached the point of accepting that they are responsible for making changes.

They believe they are a victim of their circumstances and find it hard to move past that point.

 Wizard is one of the rarest money personalities. They know what they spend and earn, and have a plan to ensure all expenses are minimised. They will have sufficient passive income from investments to allow financial freedom. The Wizard will borrow, but only for purchasing investments.

Financial wizardry is the point most people want to achieve. The following section will give you some clues to help you become a Wizard.

 Lessons

 Champagne Set tend to live in the moment and savings are neglected. Individuals need to establish a savings plan. This will require a change in spending habits. Continue making quality purchases but make fewer, or opt for second purchases or end of season sales, improve self-restraint and think overnight before making large purchases.

Hoarders are good savers -too good. They need to learn to enjoy today. It’s not necessary to tuck away every penny. Where investments are concerned consider asking your financial adviser to diversify your portfolio.

Penny Wise need to learn moderation. Why slave to save $100 on 30 cut lunches and then blow it by not shopping around on a large purchase? When the balance is right savings will accumulate.

Bargain Hunters will benefit from asking themselves whether they really need the item they are thinking of purchasing. It’s difficult but it needs to become a mantra. Question yourself… Do I really need this? Do I really need two of these? Is it really a special price or can I get this price some other time?

Gamblers are unlikely to take heed of any advice, because it genuinely doesn’t upset them if they lose money. Their major lesson is to establish a safety net of income and assets to fall back on in the event of a business failure, investment or gambling loss. The other key is to only spend/invest money you can afford to lose.

Don’t Know/Poor Me are not aware of the financial impact of their decisions so education is vitally important for these individuals. A good starting point is self awareness and is a useful exercise for all money personalities. Analyse how much you earn, what you spend and what you owe. Learn as much as you can about your finances.

 

TALIA MANA is the founder of the Centre for Personal Growth and Well Being, a motivational speaker and author.

 Originally published in Her Business magazine.

Copyright ©2007-9 www. flokka.com and ©2007-9 herbusiness.com. Article material on flokka.com is copyright. Reproduction in whole or in part without advance written permission is prohibited.

• 
 
• 
 
• 
 
• 
 
• 
 
• 
 
• 
 
•