What’s Your Money Personality
Understanding your money personality is the first step toward financial health. It can help you uncover your approach to how you spend, save, and invest money—and where you may need to take action to increase your investing confidence.
- Our personality largely dictates our response to money. It should be no surprise that personality significantly affects the way we deal with money and investing.
- Typically, we fall into a combination of personality types, and not just one. Identifying the drivers of your money personality can help you find your natural financial superpowers and can help you achieve your investing goals with greater confidence.
- A little education can go a long way in helping us leverage the strengths of of each personality and achieve our financial goals possibly a little sooner.
What is a money personality?
Like almost everything else in life, our personality largely dictates our response to and relationship with money. So, it should be no surprise that personality significantly affects our personal finances and the way we deal with money.
But how much thought goes into how we behave regarding our finances? Or how that behavior affects our bottom line?
Understanding our money personality is the first step in financial planning and will help all of us shape our approach to spending, saving, and investing.
We each have our own beliefs and emotions about money. They are mostly shaped by our individual life experiences (e.g., passed down from our parents or influenced by our current situations).
Typically, we fall into a combination of personality types, and not just one. Identifying the drivers of your money personality can help you find your natural financial superpowers and can help you achieve your investing goals with greater confidence. Understanding your money personality can also help you uncover your money management and wealth-building skills.
Some Popular Money Personalities
Depending upon which article you may read, there are several variations of terms to describe a variety of money personalities. Some authors use phrases like “Big Spender” to describe personalities that like to spend on flashy items like cars, clothes and gadgets. They use “Savers” to describe personalities that get more satisfaction out of clipping coupons and seeing their savings account accumulate slowly.
While most of these authors have focused on the spending habits of these personalities, we have focused on how money personalities may be attracted to or repelled from the act of investing.
Sarah Saver’s tend to shy away from risk because their priority is “not to lose money”. As the name would imply, Sarah Savers usually prefer to save money rather than spend money in order to reach their financial goals. Creating a budget is a high priority, as they tend to be more interested in living within their means rather than taking risks.
This can mean Sarah Savers is attracted to investment vehicles considered lower risk. This usually means lower expected returns as well. They might prefer retirement accounts to the stock market. Sarah Saver is largely concerned with a secure future and building wealth over time. As a result, the finances of a Sarah Saver will be more susceptible to changes in inflation and interest rates compared to other money personalities that are more comfortable with risk taking.
On the other side of the spectrum is Mr. Big. Like their name, their financial decisions also tend to be big. For them, risk is a thrill and the key to enjoying life. Finding opportunities is the priority, while “never stop” is their mantra. Mr. Big is quick with money and seems to be in the right place at the right time.
It’s important to remember, Mr. Big can also be susceptible to big losses. This can make emotions like “fear of missing out” (FOMO) a potential kryptonite to the long-term plans for personalities that are dominated by traits of Mr. Big.
In between Sarah Saver and Mr. Big, there is a spectrum that includes money personalities stretching from Purposeful Pam to Arthur the Avoider. Each of them is motivated in different ways.
For Purposeful Pam, freedom and empathy are thrilling. Purpose-driven investors want to be free and empathetic with what’s going on in the world. Therefore, they like to see their investments aligned with “doing good,” because that’s the priority—and “doing right” is the mantra.
One weakness a Purposeful Pam can fall into is getting hung up on their ethics or ethos. Education becomes important. A good advisor can provide Pam with research they may need to feel confident their investing is in line with their beliefs.
Arthur The Avoider
Arthur the Avoider is one of my favorite people because coming from behind is a thrill to Arthur. That’s what he’s built to do. And really, it all stems from a fear of making a mistake. Typically, Arthur the Avoider is fearful of looking stupid or making a mistake.
Arthur would rather start investing a small amount to gain important experience. More importantly, being good is their mantra; they want to be good people, which is very honorable.
Arthurs tend to benefit dramatically through education because a lot of that education will help add to confidence. And, as confidence builds, then the concerns of making a mistake or the concerns of not being a good person should subside. So, for Arthur the Avoider, one of the big leverage points is education. Arthur the Avoider may work better with an advisor or financial coach that helps them stay on track with their goals.
In each personality, education is key. Sarah Savers need knowledge and tools to balance their personality with the risks of inflation. Mr. Bigs do well with education on risk management. Arthur the Avoiders and Purposeful Pams tend to thrive when they have a clear path laid out in front of them that aligns with their personality.
Want more information about money personalities—or a test to discover what type you are? Check out Smart Guys Guide here: https://www.quiverfinancial.com/the-smart-guys-guide