You probably know several things for certain about your personality: You know whether or not you are punctual; you know whether or not you work well in a team; you know which activities are frustrating and which are satisfying. However, you probably don’t know how all these elements of your personality affect the way you spend money.
Though researchers remain divided regarding how personality develops - the age-old nature versus nurture conundrum - it is indisputable that your spending habits stem from your character. If you are in financial straits, it might behoove you to evaluate your spending personality first. Then, any changes you make to your lifestyle can work with your established disposition and perhaps form a more stable foundation for your financial future.
Without further ado, here is a run-down of the five most common money personalities:
1. The Saver
You are happiest when you have large amounts of money socked away. It doesn’t necessarily matter how you save - your money could be sitting in a checking account or a shoebox - or why - for a vacation or new shoes and a larger shoebox - as long as you have plenty of cash on hand. Most likely, you have some semblance of a budget, and you have almost no trouble sticking to it to increase your funds.
While the saver might seem like the ideal personality, it has one major flaw: Savers usually refrain from allowing their money too far from their grasp. Investing money, perhaps in low-risk bonds or mutual funds, seems dangerous, as the process to retrieve it can take time and effort. Even retirement accounts feel risky to savers, as they prevent access to the cash for several decades. Savers must learn to take financial risks to earn significant financial rewards.
2. The Spender
Your favorite activity is shopping - and you don’t particularly care where or why. Buying things for yourself and others gives you extreme pleasure, so you usually spend most or all of your monthly earnings on goods and services. Your credit card is one of your best friends, and you can quickly wrack up substantial debts if you aren’t mindful of your spending.
For obvious reasons, the spender is perhaps the most dangerous money personality. Shopping is necessary, but it can become a bad habit or a grave addiction, and spenders are most at-risk for accruing impossible amounts of debt and killing their credit scores with the wrong payment pattern. It can be difficult to break the spender’s mindset, but healthy finances depend on balancing spending and saving.
3. The Dodger
You tend to avoid financial matters altogether. While you may take home a regular paycheck, you try not to think about budgets or financial records, and you might even miss monthly bills due to your extreme money antipathy. You tell people you don’t like to talk about money, which makes you seem sophisticated and disciplined - but the truth is much more threatening.
To many people, financial matters are simply incomprehensibly complex, and instead of attempting to become educated, most develop the dodger personality. However, money is an essential part of modern life, and dodgers must accept and learn smart strategies to survive and thrive.
4. The Accumulator
Money is your favorite thing, and it is your life’s mission to have as much as possible. You work hard to increase your salary, and making as much money as possible is your main career goal. You have a hard time relinquishing control of your finances to anyone, including experts who have more experience investing, but you love seeing the returns on your financial risks.
Like the saver, the accumulator loves to have money around. However, the accumulator differs from the saver in that this personality is more interested in the status and luxury that money allows. Often, accumulators flaunt their wealth with expensive lifestyles, to the detriment of their savings accounts. Accumulators must learn to maintain a healthy emergency fund, even if it doesn’t provide the high-growth they crave.
5. The Debtor
You live paycheck to paycheck. For some reason or another, your salary isn’t high enough to meet the demands of your daily life. You are stressed and strained, and in your struggles to balance your income and expenses, you have lost control of your debt.
Any of the previous four personalities can quickly transform into the debtor, as financial crises can strike anyone at any time. However, by adopting the good aspects of various money personalities and discarding the bad habits, you can create financial stability and avoid ever encountering the debtor lifestyle.