You are in your favourite shopping mall in town, with no particular plan but just strolling to while away the weekend. There is a gadgets store displaying the latest thingamajigs. Through the crystal clear glass lit by tiny but bright xenon lights, you see some irresistibly hot wearable tech. Hypnotized by the lights, you saunter in to the temptation display. Immediately your tech geek mode goes active. You take a few minutes admiring the cool gadget and asking the sales lady some curiosity questions.What do you do next? Well, it will depend on your money personality. Yes, we all have different relationships with our money, depending on our upbringing, friends and the living standards of our society.
While some people would have no reservations about splurging their cash on a temptation like that vanity of a high-end gadget or car, others would think twice, even thrice, and then walk away. Think about how you relate with your money and how that relationship affects your overall financial behavior. What does money mean to you? How do you behave in a situation that requires you to make a financial decision?
I recently listened to a personal finance expert talk about money personalities and realized, just like temperaments, they can point us to how we act and why.
Discovering your money personality could help you make better spending decisions, save and invest your money, even enjoy it.
The speaker classified people according to their relationship with their money: Hoarders, spenders, avoiders and Money Monks.
So which one are you? Let’s look at each one of them in detail, and see if you’ll identify your money personality and possibly improve your money habits to make the best of your finances.
The Hoarder: The animal kingdom gives us many metaphors for human hoarding, including “squirreling things away.” But squirrels often lose track of just where those treasures are buried and so we at least get new, nut-bearing trees out of the deal.
While some people see money as a means to buy nice things, hoarders see it as a means to obtain security. No matter how much money a hoarder has, he will always fear that one false move or unexpected disaster will make him a pauper.
How do you know if you are a hoarder? Do you like to sneak your own popcorn in to movie theatres or love bargaining even in supermarkets? Does the sight of a fat bank account balance make you do a happy dance, or do you fast the whole day because there’s an evening party at work just so you can save? Does the discovery of a where to buy big but inexpensive mandazi behind the office excites you? Do you shudder at the thought of investing a few thousands in a groceries shed in your neighborhood? If you answered yes, I have news for you; you are a hoarder!
Now that you know, to improve your financial future, you need to take the first baby steps toward loosening up your purse strings. Just enough. Take a few risks in your investments. Once you realize that such “risky” behavior doesn’t necessarily lead to disaster, you’ll become more comfortable with exploring other investment options that can grow your nest egg and allow you to enjoy your hard-earned cash.
The Spender: This is the clan that paints all town streets with rainbow colours with shopping bags. You can call them shopaholics. Do you like hop from store to stall, boutique to supermarket? Or are you always see in parking lots pushing full-load trolleys in a carnival mood and inexhaustible energy, with happy kids in tow, ice cream dripping from their happy faces and chocolate bars melting in their full hands? You are a spender.
Buying things is a common behavior that helps spenders feel important, loved, and validated. Their inner voices scream, “I deserve this; if I don’t spoil myself, who will.” Shopaholics are status seekers who associate extravagant belongings with sense of worth. Whether or not they can afford it, that Louis Vuitton bag, or Gucci pair of sneakers, or the Bugatti Veyron Supersport will make them feel respected.
Spenders be like, who cares if you have a closetful of handbags? You deserve that new smart TV! They like to wow friends with fabulous gifts, but wowing with their gorgeous home and luxury car is even better. They never meet a sales offer they don’t like.
Is that you? Well, if you belong to this clan, to get your spending under control, you must set limits and stick to them. The temptation will be strong, but you need to kick it. Keeping an inventory of all your purchases can also help you see where you’re leaking cash and put a seal. This might sound cliché, but so is shop-till-you-drop! Draw a budget, chop your credit cards and give yourself a not-too generous weekly cash allowance. Before you make any purchase, dear Spender, ask yourself that classic smart shopper question: Can I do without this? Do I need or do I just want it? Then watch your account balance grow, and thank me later.
The Avoider: Money talk gives you hiccups! Either because you are not interested, are uncomfortable or you just feel there are more important matters to talk about. Sometimes you don’t even know how much is in your bank account and planning for retirement feels too far away to worry about. You prefer a “see no evil, hear no evil” approach to managing your financial affairs. Raise your hand, avoider. But by not staying informed about your finances, you are, unknowingly, missing out on opportunities to set the foundation for a more financially secure future.
Avoiders can also be called ostriches. They like to bury their heads in the proverbial sand. They’d rather find reasons to not discuss money all together. In fact, the less they know about their finances, the better at home they are. Thoughts of money as a subject gives them headaches, and they are likely to let their bills pile up because they dread the mechanics of sorting out what is unpaid, what is priority, what can wait or what can be negotiated.
Advice for avoiders: Change! No matter how you feel about money, you just can’t avoid the subject. So much in life depends on money and dodging the issue won’t make it go away. If anything, you’d be opening up to lots of trouble. So if it’s peace that you so much desire, confront the elephant in your life- money. Actually, compared to life’s other unpleasantries, managing the nitty-gritties of your finances isn’t so bad after all. Take up courses on financial education if you must, and set a few goals for your near-term future. Then draw a simple savings plan and follow it to guide you towards your goals, not avoiding them!
The Money Monk: We know monks for their deep religious convictions and austere lifestyles. Money Monks are not very different; they have strong beliefs about money (as root of all evil) and they’d wish for a life free from the need for money. Handling money in any way makes them feel like they’re giving in to its seductive power.
A Money Monk would never ask for a raise – needing money makes them feel greedy. They believe the desire for money chips away at people’s moral values, so they try to avoid dealing with their finances as much as possible. When they get a windfall, Money Monks will hasten to get rid of it; they’ll either give it out to charity or to financially needy friends.
If you are a money monk, you need to accept that money isn’t all bad – it affords you a roof over your head, allows you to care for your family, help friends, and support charitable causes. To make it easier for you to deal with money, set your finances on autopilot mode. Set automatic transfers (standing orders) on your account for bills, savings, investments and other payments. This will minimize your interactions with your finances but still cover your back in terms of financial obligations and responsibilities.
So which money personality are you? Let us know in the comments section below.