Like almost everything else in life, your response to money is dictated by your personality. But have you thought about how your behavior affects your bottom line? Understanding your money personality will help you shape your spending, saving, and investing.
Key Takeaways
- Understanding the various money personalities helps with investing, spending, saving, and finances.
- Five common money personalitiesare investors, savers, big spenders, debtors, and shoppers.
- Debtors and shoppers may tend to spend more money than is advisable.
- Investors and savers may overlap in personality traits when it comes to managing household money.
1. Big Spenders
Big spenders love nice cars, new gadgets, and brand-name clothing. People with a "spending" personality type aren't typically bargain shoppers. This often means a desire to have the latest and greatesttechnology 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 risks when investing.
2. Savers
Savers are the 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 debt and may be viewed as frugal. Savers are conservative and don't take risks with their investments.
3. Shoppers
Shoppers often developgreat emotional satisfaction from spending money. Theycan't resist spending, even if it's tobuy items they don't need.They may be aware of their urge and 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 save regularly through 401(k) plans and may even invest a portion of any sudden windfalls to make a purchase.
4. Debtors
Debtors aren't trying to make a statement with their expenditures. They commonly don't spend much time thinking about their money or tracking what they spend and where they spend it. Debtors generally spend more than they earn and are deeply in debt.
The Fair Credit Reporting Act (FCRA) requires that credit bureaus ensure that the information they collect about you is accurate and provide a free copy of your report once every twelve months.
5. Investors
Investors are consciously aware of money. They understand their financial situations and try to put their money to work. Regardless of their financial standing, investors tend to seek a day when passive investments will provide sufficient income to cover their bills. Their actions are driven by careful decision-making, and their investments reflect the need to take a certain amount of risk.
Making Changes
Many spenders and savers share parts of all five personality types. After evaluating your habits, here are some tips to help tweak your dominating trait:
- Spenders: Shop a little less and save a little more
- Savers: Use moderation. Sometimes, a saver who is too conservative may be missing out on high-return investments
- Shoppers: Establish a weekly or monthly budget, and don't spend money that you don't have
- Debtors: Evaluate your debt and credit limits and start a saving plan
- Investors: Keep up the good work and stay mindful of long-term goals and opportunities
How Can Spenders Cut Back on Purchases?
Spenders can limit spending to only things they will use and save more. This provides spenders the opportunity to think long-term and look for slow and steady gains as opposed to high-risk, quick-win scenarios.
What Is a Risk for the Debtor Personality?
Credit scores and credit reports are a concern for this type of spender. Relying on credit or debt can affect long-term goals, such as obtaining a car loan or qualifying for a mortgage.
How Can I Start a Budget?
Start by calculating your take-home pay. Know how much money is coming in each week or month. Begin tracking and categorizing your expenses and what is left for saving and investing.
The Bottom Line
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 achieve financial goals.
FAQs
Five common money personalities are investors, savers, big spenders, debtors, and shoppers. Debtors and shoppers may tend to spend more money than is advisable. Investors and savers may overlap in personality traits when it comes to managing household money.
What is a money personality risk taker? ›
The Risk-Taker: Risk-takers are the ones who love the thrill of financial opportunities. They're not afraid to take calculated risks in the pursuit of higher returns. Whether it's investing in the stock market, starting their own business, or diving into new ventures, they thrive on the excitement of the unknown.
What is financial personality? ›
Figuring out your money personality means learning how you feel about saving, spending, and growing your money. Knowing your money personality helps you make better financial choices that are right for you.
What is a spender money personality? ›
Spenders are those who find pleasure in buying goods and services. This can lead to not following a budget because of their urge to spend. Spenders may also have the tendency to be too generous in buying things for others.
Which personality type is best with money? ›
Debaters (ENTP)
The combination of their adventurous Extraversion and Prospecting traits can make costly, shiny objects difficult to resist. They tend to measure success by wealth, so they are often strong earners and hard workers.
Which personality types make the most money? ›
Traits with the highest earning potential
Based on the above four dimensions, extroverts, sensors, thinkers, and judgers tend to be the most financially successful. Diving into specific personality characteristics, certain traits are more closely correlated with higher income.
Why should I know my money personality? ›
Understanding your money personality is the first step toward financial health, helping you uncover your approach to spending, saving, and investing, and where you need to take action.
Who is an example of a risk taker? ›
A skydiver—a person who jumps from an airplane as a sport— is an example of a risk taker.
Who is a high risk taker? ›
A risk taker is someone who risks everything in the hope of achievement or accepts greater potential for loss in decisions and tolerates uncertainty. In contrast, there are managers who are risk averse, and they choose options that entail fewer risks and prefer familiarity and certainty.
What are the Big Five personality finance? ›
To this end, we describe the Big Five traits – Openness to experience, Conscientiousness, Extraversion, Agreeableness and Neuroticism or OCEAN – and the basic personality science surrounding them.
The Hoarder
A “hoarder” may find it difficult to spend money on what they consider “extras” or pleasures for themselves and their children. They may have a difficult time with the idea that they may have to use some of their savings for paying for expenses for their partner or their children.
Who is a financially stable person? ›
Being financially stable means you have enough money coming in to cover your expenses, as well as some extra funds to put aside for savings or potential crises. You continuously save money, you have paid your high-interest debts and you don't fret about emergencies because you're financially prepared.
What is your money language? ›
A money language is how you view money, and the understanding of how you use money to express yourself.
What is money psychologically? ›
The psychology of money is the study of our behavior with money. According to the author, the key to managing your relationship with money and having a happy and fulfilling life is twofold - Get clear on your financial goals. Design your own game plan that achieves those goals and stick with it.
How can I change my money mindset? ›
Six Steps to Creating a Positive Money Mindset
- Forgive Your Past Financial Mistakes. No one is perfect. ...
- Understand Your Thoughts and Emotions Surrounding Money. ...
- Realize That Comparing Yourself to Others is a Losing Game. ...
- Work on Forming Good Habits. ...
- Create a Budget That Brings You Joy. ...
- Remember to be Thankful.
Understanding your money personality can also help your wellbeing by alleviating the stress and anxiety associated with financial decisions. Work with yourself, rather than against yourself. Which of the following money personalities resonates with you?
