What’s your money personality?

February 04, 2014 | Paul Brucker

"Know thyself" is a key to wisdom, according to ancient Greek philosophy. It's also a key to becoming wise about how to achieve your financial goals. Do you have a clear sense of your attitudes, emotions and behaviors concerning money? In short, do you know your money personality? If so, you may be able to use that knowledge to help make smarter decisions in how you spend, save and invest your money.

To get the gist of your money personality, ask yourself

  • How organized am I?
  • How comfortable am I in taking risks?
  • Am I more inclined to spend or save my money?

Your answers provide clues to your relationship with money. Meanwhile, here are four common money personalities and strategies to help each type achieve and maintain financial well-being. See if you recognize yourself or part of yourself in any of these types.

The hoarder 

Hoarders like to save money, perhaps too much so. Worried about losing their funds, they are conservative, thrifty and risk-adverse. They are keen to "save for a rainy day," even if that means failing to enjoy today. Hoarders are great at avoiding debt and getting the best price for value. But spending money on entertainment, vacations, something trendy or even on practical items for themselves can feel like a luxury they cannot afford. Although hoarders sock their earnings away so they can feel secure, they often have a nagging feeling that an unexpected event will take all that money away. 

Strategies for hoarders: Pinching pennies can be penny wise, but pound poor. Highly cautious, hoarders choose safe investments with low returns. That means they miss out on financial growth they might enjoy by taking calculated risks. To grow their nest egg, hoarders need to do more than focus on minimizing risk, they must also focus on maximizing return. That means taking steps, at least baby steps, in risk and exploring one's investment options.

The shopper

Shoppers get a high from spending money, especially if it involves seeking and finding a bargain. They are generous, enjoy buying gifts and may purchase something they don't particularly need or want simply because it appears to be a bargain. Developing and sticking to long-term financial goals is a challenge for them. Extreme shoppers are always in debt or at risk of being in debt because they get a thrill from spending most of the money they make. 

Strategies for shoppers: Shoppers need to change their focus from short-term satisfaction to long-term value. Before making purchases, they should ask themselves how much use or value they really expect the item will bring them today and throughout the year. Shoppers should keep a diary of all their purchases to see where their money is going. Then, they should develop a budget and keep careful control of their credit card use. One suggestion: leave a portion of their budget as discretionary spending, to use any way they want.

The big-shot spender

A lot of Americans try to keep up with the Joneses, the people at the top of the pecking order in terms of status symbols. Big-shot spenders are the Joneses or Jones wannabes. They believe nothing but the very best in material goods is good enough for them. They're the proverbial conspicuous consumers – show-offs who buy high-end labels, trendy, top-of-the-line electronic gadgets and drive around in top-dollar luxury cars. Without a hefty bank account to support their lifestyle, big-shot spenders risk diving into deep debt, and they remain especially vulnerable if they are hit with an unforeseen big-ticket financial emergency.

Strategies for big-shot spenders: Big-shot spenders should consider scaling back, developing a budget and funneling some of their money into steady investment vehicles rather than quick-win, high-risk situations. It's OK for them to keep making quality purchases, but they should take their time to ensure they can afford what they want and that they'll get a good sale price or price per value.

The avoider

Avoiders don't fully understand the ABCs of handling their finances – and they'd rather not. When it comes to money management, they are like ostriches who stick their heads in the sand. Avoiders coast through life – and their financial life. They may have ample money, but they typically avoid keeping a budget, balancing their checkbook or even having a clear sense of the money they have, owe or spend. They often feel overwhelmed and balk when they must make consequential financial decisions.

Strategies for avoiders: Avoiders need to be open to the idea that managing one's day-to-day finances isn't such an obnoxious chore. They should take some time to develop a series of financial goals for their near- and long-term future. It's beneficial for them to take financial education courses (or read about personal financial topics online) and to make an appointment to discuss their money situation with a financial consultant.

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