What’s Your Money Personality?

Have you ever wondered why you use money in a particular way? For example, maybe you’re the type of person who overanalyzes every purchase even though you have plenty in savings. Or maybe you can’t seem to say no to your teenager’s request for a new computer when you’re losing sleep over the amount of your credit card debt. Many people find themselves stuck in an illogical pattern with money, but why?

It’s what’s known as your money personality, or a powerful set of ideas formed early in a person’s life that govern spending, giving and investment decisions.

Your early experiences with money cause you to cling, usually unconsciously, to specific strategies that make you feel secure and happy about your financial decisions. But, these strategies may not always provide the best options or results. If you want to make lasting changes in your relationship with money, you have to first understand your money personality.

One thing to note, you may find certain money personalities named differently depending on the source. But the key to remember is that there are standard characteristics to each that are consistent no matter what it’s called. Reviewing the list below, which personality are you?

If you’re still not sure, here’s a short test to help you identify your money personality.

Just like a balanced diet makes for a healthy body, a balanced money personality makes for a healthier relationship with your financial life, and ultimately, a happier you. But, the reality is that most people have one or two dominant personalities that keep them stuck with unsatisfying financial habits.

Let’s use investing as an example of how one’s money personality can be detrimental. The Risk Avoider will prefer ultraconservative assets such as CDs and bonds, and will tend to trade too much to avoid losses. The best plan for this money personality might be to create a long-term investment plan that requires minimal adjustment.

But quite the opposite is the case with the Money Star. This person may choose funds because he/she likes to appear very knowledgeable and “in-the-know” of the latest investment opportunities, such as the tech stocks of the late 90s, real estate and hedge funds more recently, or “green” companies. The best plan for this personality might be to invest the majority of the person’s net worth in a more balanced portfolio and allow only a small amount for those “in-vogue” investments to still give him/her something to talk about.

Additional suggestions for money personalities:

1. Hoarders, Planners, Risk Avoiders—as they say, you should enjoy everything in moderation. For you, this is particularly good advice. Don't let all of the fun parts of life pass you by because you didn’t carefully account for every expense or just to save a few pennies. You can work on your savings efforts, too. While minimizing risk is anyone’s prime goal, minimizing risk while maximizing return is the key to investing success.
2. Spenders—while you have the propensity to spend, you should seek long-term value, not just short-term satisfaction. Before you splurge on something expensive or trendy, ask yourself how much that purchase is going to mean to you in a year. If the answer is "not much," skip the purchase. In this way, you can try to limit your spending to things you'll actually use.
3. Avoiders—yes, you may be uncomfortable with money, or even confused, intimidated or embarrassed by it, but the upside is that you’re not consumed by money and you focus on more important things in life. The key for you is to use automation, such as online bill payment or automated debits, direct deposit, etc., so the burden of working with money is lightened. And the end of the day, though, you’ll need to face your finances and be sure to set goals so your avoidance tendencies don’t bring surprises for you later on.
4. Money Stars—where you may find trouble is choosing to spend more than you have, particularly by way of credit card usage. If spending and/or giving is something you do to compensate for other areas of your life you might feel are lacking, think about what these might be and work on changing them.
5. Dreamer—fulfilling your dreams may more likely get you into debt without a plan on how you'll get there. You may also tend to be overly trusting or optimistic. One of the ways you can work with this personality is by seeking the help of a financial expert who can help you set a plan to reach your goals, even if it means starting small.
6. Risk Takers—as a risk taker, it’s always a thrill when take a gamble and score big. But obviously, it’s no fun when you lose big. If you absolutely love the thrill of the risk, think about keeping an account or two that allows you take those risks while keeping the majority of your assets in more stable funds. Otherwise, the game may land you in financial ruin.

Ultimately, it’s not about how much money you have or not. It’s about understanding your money personality so you know what your most imbalanced tendencies are with spending, saving, giving and investing, and what’s motivating those habits. Once you identify your personality and put some thought into how you approach money, you can make meaningful and lasting changes to create the financial life you want. Sometimes making just small changes can yield big results.

If you need help getting yourself onto a more balanced financial track, Vantage offers Accel, a financial education and counseling program, free to all members. The Vantage Investment Services Group is also ready to help you with financial and retirement planning.