Have you ever thought about your financial personality? Everyone has one. Some people love to save. From the time they were small, they have been socking away pennies in the piggy bank. Others spend on experiences. Travel, fine dining and a great wardrobe are more important to them than the figures in their bank account.
Figuring out your financial personality can be very important to your personal, professional and financial life. It heightens your self-knowledge and enables you to make wise choices.
If you’re a saver, for example, you may not feel comfortable with a life partner who loves to spend. If you’re a spender, you will need a career that can support you in the style you want. Savers may need some encouragement not to put all their disposable income into the bank. Spenders, on the other hand, may need some encouragement to put some of their disposable income in a retirement account.
Some aspects of your financial personality are influenced by your motivation. Is family the most important aspect of life to you? Or do you want to start your own business? Most people are a blend of several types. Here is our guide to the four types of financial personalities.
1) The Security Keeper
The security keeper likes money in the bank. They know exactly how much they have. Their checkbooks are always balanced and never overdrawn. If they want upgrades to their home or a new car, they plan for the purchase. No impulse buys here. They are methodical and oriented toward savings for down payments on homes and retirement, even at a young age. They would rather save than buy a second pair of shoes.
Their motivation is planning for life’s unpredictability. They enjoy feeling prepared. If they are investors, they may need to be encouraged to put some in the stock market. After all, equity markets are unpredictable. They like certificates of deposit, which come with a guaranteed return.
2) The Opportunity Seeker
Opportunity seekers are motivated by opportunity. They like to earn money, both to save and to spend. They may be drawn to the entrepreneurial life. As a result, they may be interested in saving to start a business or be engaged in a small business that requires spending. They want to maximize opportunity in their careers, own businesses and investments.
Opportunity seekers do very well when their opportunities pan out. They may need some help, though, in ensuring they don’t take on too much risk in pursuing opportunities. That goes for both business ventures and investments. They may need to be counseled not to take on a lot of debt. Prudence needs to be mixed in with their pursuit of opportunity.
3) The Relationship Protector
For a relationship protector, human relationships are paramount. Their financial personality’s motivation centers around providing for their family and other people close to them. In a relationship, they will be concerned about providing for their partner. In a larger family, they will focus on providing for children and older relatives. They may also be concerned about their communities and contribute to charity. They are idealistic and altruistic folks.
A relationship protector may need some help in setting up realistic budgets and plans, because they may put relationships above practicality. They may also need encouragement to take care of themselves as well as other people.
4) The Freedom Finder
Freedom finders prize experiences over money. They want to be free to travel, shop and make art. They are generally not motivated by careers or salaries. For them, work is a means to an end. They love to plan parties and long vacations. They are less enthusiastic about the details of their checkbook. They do, however, like ease and convenience related to money, such as ATMs and online banking. Those streamlined banking methods offer more freedom.
The risk for freedom finders is pursuing freedom at all costs, including racking up a lot of credit card debt. Sometimes expensive clothes and trips to Paris become their priority, whether they have the money for them or not. They also focus almost entirely on the future. They may need counseling about budgeting and planning for today’s expenses. If they have taken on too much debt, they may need a plan to pay it off. They could use advice about savings. After all, a nice savings account offers long-term freedom.
Figuring Out Your Financial Personality – How to Plan for Your Personality
Do you see yourself in these four financial personalities? Once you’ve identified the one you most identify with, think about the benefits and risks of your personality:
- Do you hold onto a dollar until the eagle screams?
- Do you focus too much on your relationships and not enough on yourself?
- Are you pouring money into the new business that needs to be spent on retirement?
- Do you spend without regard for how much money you actually have?
Once you’ve identified your personality, you can plan to benefit from the good side and control any challenges.
Anum Yoon is a personal finance blogger and writer. She created and maintains her personal finance blog Current on Currency. You can subscribe to her blog newsletter right here for her weekly updates.