An individual’s personality is defined as the characteristics or qualities that form a person’s distinctive character. It would be fair to say that a personality can have a lot of influence on someone’s life – including the way they interact with others, their chosen lifestyle and career paths.
Similarly, we all have different ways we interact with and think of money – which can be thought of as our money personality. Much like being described as outspoken, reserved, confident or timid, we can categorise ourselves into several key money personalities. Having an understanding of how we relate to money can give us insight into our financial strengths and blindspots – which can allow us to be better with money.
So what’s your money personality?
#1 The Hoarder
If you’re a hoarder, putting money away for a rainy day gives you instant gratification and satisfaction. You’re probably the type that loves logging into their banking and admiring their balances. For hoarders, money means security. Spending money is not as enjoyable, even painful, as for other personalities.
Tips for hoarders:
From the outside many would describe hoarders as being good with money. However sometimes hoarders are so focused on saving and very conservative with finances that they miss out on opportunities to make their money work smarter for them, in investments for example. Check out our tips here.
#2 The Power Spender
If you’re a power spender, you get satisfaction when spending money. Chances are, you have a hard time saving money and prefer to live in the now. Which probably equates to living in ignorant bliss about the future. Those designer jeans? You deserve them, right? You also somewhat subconsciously believe it will buy you a level of respect from others – something which is often important to power spenders.
Tips for power spenders:
Have a good hard look through your bank statements so you can see where all your money goes – and what can be cut back on. It can be worth categorising your spending – and calculating an annual amount. You might be shocked at how much of your hard earned annual income is spent on dinners out or a shoe addiction. Set small savings goals to start getting motivated, and you could be pleasantly surprised how quickly your mindset can change.
#3 The Ostrich
Also known as the avoider, the ostrich is someone who would rather bury their head in the sand than get sorted with their money. These people tend to spend now, consider later (if at all) – often it’s easier just not to look at your bank account.
Ostriches find making no decision is easier than the possibility of making the wrong decision. The personality tends to avoid any big money decisions, so miss out on financial opportunities such as investing.
Tips for ostriches:
Ostriches should slowly take their heads out of the sand, taking small steps towards being financially aware – and having the confidence to improve their situation. Set aside a small amount of time to assess your finances, look at what’s coming in and going out and for any opportunities to do better.
#4 The Anxious Investor
Anxious investors love to trade, and do so frequently. Their overconfidence means they overtrade, preferring to take action over not taking action, despite the conditions! This money personality is common among affluent investors, but often results in underperformance. In the case of trading, because investing and trading can fire up pleasure centres in the brain, it can be an addictive environment. This all makes you prone to bad decisions and previous bad decisions cause anxiety, leading to overtrading and therefore more anxiety.
Tips for anxious investors:
Before taking part in any major financial decision (investing, trading, bidding) it’s best to decide on your rules, write them down, and stick to them. Keep records of the results of any financial investments – rather than winging it, which means you tend to only remember the positive results. Remember it’s best to spend money strategically, rather than instinctively.