Everybody has their own unique financial personality that dictates how, when, and why they spend money — and who they spend money with Your financial personality can be a powerful tool for assessing your financial habits, but it can also lead you down the wrong path.
Habits die hard, so your financial personality can normalize any bad behavior. But the good thing is once you realize what kind of financial personality you have, you can actively overcome some of those obstacles associated with your type.
Here are some key financial personalities you might recognize:
The Emotional Spender
Characteristics: The emotional spender is ruled by emotions. If they feel sad, they spend money. If they feel happy, to celebrate, they spend money. This type of financial personality can easily get in a lot of trouble because financial decisions aren’t based on reason or logic. And it’s always easy to justify expenses in the name of feeling better — or to justify decisions because they felt good at the time.
Positives: Emotional spenders can be generous and fun to be around because they don’t get caught up in pinching pennies. However, this can take a turn for the worse when the spending gets out of control (i.e. when you spend more than you make).
Potential pitfalls: Overspending, buying mindless items, never truly being happy, not knowing where money is going.
Quick Fix: Emotional spenders should track their spending. Along with keeping track of the details on their personal finances, they should also consider tracking their emotions when spending money. This will help give a bird’s eye view of the relationship between their finances and emotions. Once the emotional spender realizes their emotional pattern, they should start thinking of positive habits to replace with emotional spending, like exercise, reading, talking with friends, etc.
Characteristics: The saver is often planning for the future and their bank account reflects that. Instead of thinking of ways to spend money, they are devising ways to save money — and dreaming of what they will do with that money. Eventually.
Positives: Savers are good at planning for the future and will have a great nest egg for all their financial goals. In this way, savers are a great financial personality and are very financially responsible.
Potential pitfalls: Savers can come across as stingy, which can affect their close relationships. While savers are planning for the future, they can be susceptible to missing out in the short-term, which prevents them from actually enjoying the present.
Quick Fix: Savers can avoid any awkward social situations by planning a “social” line item in their budget — which ensures they are saving for the future, but also for fun social situations that come up in the present.
Characteristics: The guru is the type of person that thinks they know everything about finance. They are up-to-date with all the latest financial news and trends, they consider themselves a financial expert, and are willing to share that expertise with just about anyone that will listen. Gurus pride themselves on being financially responsible and knowing it all.
Positives: Gurus are often very smart and good with their money. However, their myopic view of their finances can be detrimental. In general, a guru is well-versed in financial terms and knowledge which can help grow their net worth in the long-term.
Potential pitfalls: A guru often gives unsolicited advice and can easily alienate others by being out of touch with their specific situation. While their financial worldview might make sense now, they are not easily adaptable when things change.
Quick Fix: Gurus should realize that things can change quickly and try to adopt a more open mind. Gurus should focus on their own financial situation and not evangelize to others. Start by testing out one thing outside of your financial comfort zone.
Characteristics: The newbie doesn’t really have a clue about how to handle their finances. The newbie just goes along with life, somehow just barely scraping by. This personality often lives paycheck to paycheck or may even be in debt — and has no idea, either way.
Positives: Because the newbie doesn’t have much experience with finances, they are often better risk takers, and make some profitable gambles financially and career wise that increase their net worth. Knowledge is power, but it can also deter you from taking any risks or learning anything new. Some newbies might be more adaptable to learning new things and taking risks that return big rewards.
Potential pitfalls: The newbie is likely to suffer from a YOLO mentality, which makes it easy to spend money in the present but detracts from long-term planning. The newbie also has a hard time with budgeting, planning, and thinking about long-term financial goals, often due to a lack of education or experience. And those risks that they take? They’re not intentional or calculated, which means they fall flat as often as they win big.
Quick Fix: Newbies should empower themselves by soaking up as much financial information as possible. They should start by reading newspapers, blogs, books, and any other resources to educate themselves about budgeting, saving, investing, psychology, and more. This will provide a nice groundwork to get started on their financial future.
Characteristics: The misanthrope doesn’t care about money. They want to live in an anti-capitalist society where money doesn’t exist. Because they dream of living in a different reality and just don’t care about money, they are often suffering financially due to ignoring the system we currently live in.
Positives: Misanthropes often don’t experience as much money related stress as others that truly care about their financial situation.
Potential pitfalls: Misanthropes are often hurting for money. They may rely on others to help them. By not caring about money, they refuse to plan for their present or their future, which in turn affects everyone around them.
Quick Fix: Misanthropes should realize that the current economic system isn’t going anywhere yet and should learn to embrace money, even if it is just in a simple way that includes budgeting and saving for your future. They should start by thinking of how much things cost per hour. Oftentimes, this gives a completely different perspective on work and money.
What’s Your Personality?
All financial personalities have positive and negative aspects. By understanding what type of financial personality you are, you can overcome some financial obstacles and better prepare for your future.
Remember that we all start somewhere, for better or for worse. Knowing your financial disposition can help you make better choices down the line and understand any potential financial landmines, which can help you avoid problems and strengthen your overall financial situation.
What financial personality are you?