Knowing your money personality helps to shape financial and life goals

Knowing your money personality helps to shape financial and life goals

Your money style, whatever it may be, can be helpful, but it can also block your progress.

Oftentimes we cling to beliefs about money without even thinking about why we hold them. They may be based on your money history. Or, if you’re on your own after a divorce or the death of your spouse, that big transition can greatly impact your money style

Like almost everything else in life, your response to money is largely dictated by your personality. But have you given much thought to how you behave in regard to your finances and how that behavior affects your bottom line? Understanding one’s money personality is the first step that will help one shape his approach to spending, saving and investing. For one to be able to manage his or her finances efficiently, one must understand his money personality.

Knowing one’s money personality helps shape one’s attitude towards finances and there are various personalities that every individual fall under when it comes to money personalities.

Money personalities have been analyzed in a variety of ways and many people can identify with parts of several of these profiles. The key is to find the type that most closely matches one’s behavior. The major profiles known are: big spenders, savers, shoppers, debtors, and investors.

Big Spenders– Statement Makers!

 

Big spenders love nice cars, new gadgets, and brand-name clothing. Big spenders aren’t bargain shoppers; they are fashionable and always looking to make a statement. This often means a desire to have the latest and greatest mobile phone, the biggest 4K television, and a beautiful home.

When it comes to keeping up with the Joneses, big spenders are the Joneses. They are comfortable spending money, don’t fear debt, and often take big risks when investing.

Savers– the Conservatives!

 

Savers are the exact opposite of big spenders. They turn off the lights when leaving the room, close the refrigerator door quickly to keep in the cold, shop only when necessary and rarely make purchases with credit cards. They generally have no debts and are often viewed as cheapskates.

Savers are not concerned about following the latest trends, and they derive more satisfaction from reading the interest on a bank statement than from acquiring something new. Savers are conservative by nature and don’t take big risks with their investments.

Shoppers– the Spendthrifts!

Shoppers often develop great emotional satisfaction from spending money. They can’t resist spending, even if it’s to buy items they don’t need. They are usually aware of their addiction and are even concerned about the debt that it creates. They look for bargains and are happy when they find them.

Shoppers are varied in terms of investing. Some invest regularly through 401(k) plans and may even invest a portion of any sudden windfalls, while others see investing as something they will get to eventually.

 

Your money style, whatever it may be, can be helpful, but it can also block your progress. Oftentimes we cling to beliefs about money without even thinking about why we hold them.

They may be based on your money history. Or, if you’re on your own after a divorce or the death of your spouse, that big transition can greatly impact your money style

Like almost everything else in life, your response to money is largely dictated by your personality. But have you given much thought to how you behave in regard to your finances and how that behavior affects your bottom line? Understanding one’s money personality is the first step that will help one shape his approach to spending, saving and investing. For one to be able to manage his or her finances efficiently, one must understand his money personality.

Knowing one’s money personality helps shape one’s attitude towards finances and there are various personalities that every individual fall under when it comes to money personalities.

Money personalities have been analyzed in a variety of ways and many people can identify with parts of several of these profiles. The key is to find the type that most closely matches one’s behavior. The major profiles known are: big spenders, savers, shoppers, debtors, and investors.

Big Spenders– Statement Makers!

Big spenders love nice cars, new gadgets, and brand-name clothing. Big spenders aren’t bargain shoppers; they are fashionable and always looking to make a statement. This often means a desire to have the latest and greatest mobile phone, the biggest 4K television, and a beautiful home.

When it comes to keeping up with the Joneses, big spenders are the Joneses. They are comfortable spending money, don’t fear debt, and often take big risks when investing.

Savers– the Conservatives!

Savers are the exact opposite of big spenders. They turn off the lights when leaving the room, close the refrigerator door quickly to keep in the cold, shop only when necessary and rarely make purchases with credit cards. They generally have no debts and are often viewed as cheapskates.

Savers are not concerned about following the latest trends, and they derive more satisfaction from reading the interest on a bank statement than from acquiring something new. Savers are conservative by nature and don’t take big risks with their investments.

Shoppers– the Spendthrifts!

Shoppers often develop great emotional satisfaction from spending money. They can’t resist spending, even if it’s to buy items they don’t need. They are usually aware of their addiction and are even concerned about the debt that it creates. They look for bargains and are happy when they find them.

Shoppers are varied in terms of investing. Some invest regularly through 401(k) plans and may even invest a portion of any sudden windfalls, while others see investing as something they will get to eventually.

Debtors– Impulsive Spenders!

Debtors aren’t trying to make a statement with their expenditures, and they don’t shop to entertain or cheer themselves up. They simply don’t spend much time thinking about their money and therefore don’t keep tabs on what they spend and where they spend it.

Debtors generally spend more than they earn and are deeply in debt while not putting much thought into investing. Similarly, they often miss taking advantage of the company match in their 401(k) plans.

Investors – The Frugal!

Investors are consciously aware of money. They understand their financial situations and try to put their money to work.

Regardless of their current financial standing, investors tend to seek a day when passive investments will provide sufficient income to cover all of their bills. Their actions are driven by careful decision-making, and their investments reflect the need to take a certain amount of risk in pursuit of their goals.

In the above narration, every one earning money falls in the various categorization. The big question then is: where do you fall?

Once you determine which of these personality types describes you the most and have put some thought into how you approach money, it’s time to see what you can do to make the most of what you have. Making small changes to your personality can often yield big results you least expect.

Spenders should Shop a Little Less, Save a Little More

Statement making becomes a habit that one can easily let go over time. So, if one loves to spend, it’s likely that one is going to keep doing it. But for one to benefit tremendously from this, one should seek long-term value and not just short-term satisfaction. Before one splurges on something expensive or trendy, one should ask himself or herself how much that purchase is going to mean to him or her in a year. If the answer is “not much,” one should obviously skip it. In this way, one can try to limit his or her spending to things he or she will actually use.

When one channel his or her energy into saving, one has another opportunity to think long term. Look for slow and steady gains as opposed to high-risk, quick-win scenarios. If one really wants to challenge oneself, consider the merits of scaling back.

Savers should Use Moderation

Ben Franklin once recommended “moderation in all things.” For a saver, this is particularly good advice. Don’t let all of the fun parts of life pass you by just to save a few pennies.

Tune-up your savings efforts, too. Pinching pennies is not enough. While minimizing risk is any investor’s prime goal, minimizing risk while maximizing return is the key to investing success.

Shoppers should not Spend Money they Don’t Have

A critical step for shoppers is to take control of their credit cards. Unchecked credit card interest can wreak havoc on finances; so think before you spend– particularly if you need a credit card to make the purchase.

One should try to focus his or her efforts on saving the money one has. Learn the philosophy behind successful savings plans and try to incorporate some of those philosophies into one’s own. If spending is something one does to compensate for other areas of life that one feels is lacking, think about what these might be and work on changing them.

Debtors should Plan their Finances and Start Investing

If one is a debtor, one needs to get his or her finances in order and set up a plan to start investing. One may not be able to do it alone, so getting some help is probably a good idea. Deciding on who will guide one’s investments is an important choice, so choose any investment professional carefully.

Investors: Keep Up the Good Work

Congratulations! Financially speaking, you are doing great! Keep doing what you are doing, and continue to educate yourself.

While you may not be able to change your money personality, you can acknowledge it and address the financial challenges that it presents. Managing your money involves self-awareness; knowing where you stand will allow you to modify your behavior to better achieve your financial and life goals.

 

Bank of Japan is opting for additional monetary stimulus measures next week as the coronavirus outbreak continues to wreak havoc on the economy, it was learned Thursday.

In a move to mitigate the impact of the pandemic, the central bank is likely to launch additional stimulus for the second month in a row when the BOJ Policy Board meets next week.