Mind your money
HOW YOUR FINANCIAL PERSONALITY CAN AFFECT YOUR LONG-TERM WEALTH
If you’ve ever wondered why some people always have money while others struggle, the answer could lie in their personality. Evan Lucas, one of Australia’s leading economists and market analysts, and author of the new book Mind Over Money, says that when it comes to money we are all different.
But identifying your “money personality” will give you a better understanding of why you do what you do and how to use your strengths to meet your financial goals.
Lucas says there are five primary money personalities but no “one size fits all” scenario.
“You might be predominantly an ‘investor’ but also the first person to buy a round at the bar making you a ‘spender’ too,” he says.
Additionally, there are key elements that influence your attitude towards money including your childhood and relationships.
“There is evidence that we learn the majority of our money behaviours by the age of seven, but that external shocks, life experience and culture can shape them as we enter adulthood,” he says.
And he says one of the key things to remember about money is that it gives you time.
“If you can think of money in a time continuum that your money will be there for today, tomorrow and beyond, the management of it will become that much easier,” he says.
THE FIVE MONEY PERSONALITIES The Saver
If you never pay full price, pay for purchases with cash, you’re conscious of turning off the lights when leaving a room, and you have very little personal debt then you may be a saver.
This shows you have discipline, you can overcome wanting an instant return, and you have a strong tendency towards rational financial decision-making.
No one ever went broke being a saver, and that’s good, but savers also miss out on opportunities. Penny-pinching doesn’t build wealth.
The Spender
Spenders generally enjoy the latest of everything from new tech gadgets to flash experiences. All of this costs money, yet none of us has unlimited cash resources, which can leave spenders facing debt. Spenders can be driven by different forces, including fear of missing out (FOMO), but studies have also found that a spender is not averse to investing or growing wealth, but many tend to see investing as something they’ll get around to eventually.
The Debtor
If you regularly max out your credit cards, live from payday to payday, or you’re juggling multiple personal loans, you may identify with the debtor personality. Debtors continually spend more than they earn and use borrowings to sustain their spending. The debtor is similar to the spender, but they are more likely to not just overspend but to use debt that can lead to significant financial hardship.
The Investor
The investor is someone who has a clear picture of their financial situation and is actively working towards achieving their goals by spending less than they earn, saving the difference, and investing those savings. Investors tend to be more assertive and are willing to forgo a level of certainty to get what they want.
They are also more likely to spend on assets they see as beneficial in the long term, like doing work on an investment property.
The Ignorer
This personality ignores their finances and pleads ignorance about any problems. They won’t check their bank balance, credit card statements or retirement account. This doesn’t necessarily mean they don’t have money; it’s more that they are nonchalant about their finances and often have an underlying fear or anxiety about them. They also fail to make long-term investment decisions, let opportunities pass, and miss out on assets like having a family home.
Mind Over Money, by Evan Lucas, Major Street Publishing, $32.99 from all good bookstores.