You may or may not know if you’re a ISFJ or a ESTP, but those are not the personality types we’re looking at here.
According to Ken Honda, author of Happy Money: The Japanese Art of Making Peace With Your Money, your money personality type can help you understand your relationship with money and see where you’re going wrong. It’s easy to assume that being a compulsive saver is good, and a compulsive money maker even better, right? But every money personality has its pros and cons. Which one are you and what can you do about it?
The Compulsive Saver
You may be a compulsive saver if you love saving money, always shop around for the best deals, and hate spending on luxuries or inessentials. What could be wrong with that? The clue is that compulsive savers can also be known as ‘stockpilers’. They stockpile money rather than putting it to good use. They can be so scared of spending that they deprive themselves and their families. They may be too frugal to spend money on travel, hobbies or fun, even though they could afford to. Stockpiling can stem from previous experiences. Compulsive savers have often been poor in the past and don’t want to go back there.
If this is you, you may need to find a way to enjoy your money more and give your loved ones a better life, while still being sensible so you feel financially secure. Saving is great, but there’s little point in money that doesn’t make any difference to your life or anyone else’s.
The Compulsive Spender
As you’d expect, compulsive spenders spend a lot, often on things they don’t need, and sometimes using money they don’t yet have. They’ll justify their spending any way they can. A recession isn’t a time to tighten your belt, if you’re a compulsive spender. In fact, you’ll claim that a bad economy is a result of people not spending enough. Compulsive spenders may suffer low self-esteem and get a sense of self-worth or a feeling of power and control when they spend money. Compulsive spenders were often raised by compulsive savers, and are making up for a sense of deprivation during their childhood.
If this is you, you probably already know you need to get your impulse spending under control, and probably pay down your debt. A financial coach or counselor might be useful to help you address the issues behind your spending.
The Compulsive Money Maker
What could be wrong with making money? Nothing, of course, under normal circumstances. But when taken to extremes, there are drawbacks. Compulsive money makers focus on making money to the detriment of everything else, and believe making money is the only source of happiness. They also put far too much stock in the approval and recognition they get from others when they make money.
If this is you, there’s no need to stop making money, but there is probably a need to put effort into other important areas of your life too. Don’t let relationships suffer because you’re only focused on money, and don’t allow your self-worth to rely 100% on how much you earned this year. Being a great spouse, parent or friend, or contributing to your community can be a worthwhile endeavor as well.
The Indifferent-To-Money Personality
It’s hard to be indifferent to money in this day and age, but not impossible. Some people rarely think about money, don’t attach too much importance to it, and make most of their decisions based on non-financial factors. They probably don’t spend much but also don’t focus on saving. They may have no idea how much money they have or where it is. Some may leave managing finances up to their partner or spouse, others may simply have very disorganized finances. These people were often comfortably off during childhood, and generally still are, as they’re usually gainfully employed and don’t spend much.
If this is you, you’ll be happy to know this is actually a fairly healthy attitude to have, but there are things to be wary of. It’s easy to be indifferent to money while you’re financially comfortable but things can change. Planning for the future is important if you want to be comfortable in retirement as well. And having your partner or spouse look after your money? Often not a good idea. A sudden break-up may leave you realizing your money was not being looked after at all.
This personality type saves and saves, then spends and spends, often irresponsibly. Money in the bank is simply a temptation to give in to the impulse to spend. They don’t enjoy the satisfaction of seeing the numbers in their account go up, but rather feel the need to go out and reward themselves, often with things they don’t need, once they have a lot of money.
If this is you, you may need to address impulsive spending and set better (or more meaningful) financial goals, that will help you focus on continuing to save for the future when the spending impulse hits.
The gambler may literally enjoy gambling, or might simply enjoy taking risks such as starting new businesses or making risky investments. Gamblers love the thrill of the game, don’t employ good risk management strategies and don’t have much self-discipline when it comes to money and investing. Needless to say, gamblers often make big losses, although they sometimes make big profits too.
If this is you, it’s time to take a look at how your decisions are affecting you and those you love. Taking risks is not, in itself, always a bad thing, but wise investors manage those risks carefully and don’t gamble (in any form) with more money than they can afford to lose.
Worriers might have a high income or a low one, lots of savings, or none at all. No matter what their financial situation, they will worry about it, often obsessing over worst case scenarios when it comes to finances. They lack confidence in their own financial literacy and assume they will lose any money they have, or make bad decisions around it. Worriers do not, of course, only worry about money. This is a more deep-seated trait, and they will often worry about everything else as well.
If this is you, it may help to seek help address the general problem, and try and deal with the over-thinking and obsessive thoughts that tend to encroach on every area of life. But it can also help to educate yourself on personal finance (and other issues you obsess over) as more knowledge can give you a bigger feeling of control and a more logical, less emotional view of what you worry about.
By now, you probably have a good idea of what your money personality is. It’s hard to change your personality type, but understanding it can be the key to better financial decisions and less money stress.
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