Do You Know Your Money Personality?

With all of the financial tools and apps available these days, budgeting should be easy-peasy, right? So, why does it feel so hard to get a handle on your finances? 

Tackling money issues isn’t always as straightforward as creating a budget. There’s a whole psychology of money. Believe it or not, money is emotional, one of the most emotional things in our lives. Add to that, we each have a money personality that drives those emotions in ways we don’t realize. Put our unconscious money beliefs in a relationship and things get even stickier. Indeed, a new survey by creditcards.com reveals 40% of respondents have committed financial infidelity with their partner by maintaining a secret checking, savings, or credit card account. 

Do you know your money personality? It could be the thing that’s getting in the way of successful money management. 

Where Do Money Personalities Come From? 

They’re created in childhood, influenced by genes, life experiences, the way we were raised, and the financial education we were taught (or not). These childhood influences create our beliefs about money, also known as money scripts, according to research co-authored by financial psychologist Brad Klontz. Because money personalities are set so early in life, they’re often unconscious and not well-suited to the more complex financial situations of adulthood. The important thing to understand is they’re not set in stone. 

Do you use money as a way to reward yourself after a tough day? Or are you more likely to hoard it and reject an international vacation because it seems frivolous? If you understand your inclinations and how they affect your beliefs about money, you can repair habits that aren’t optimally serving you (or your family). For example, you might not realize that you have a deep-seated belief about money being a limited resource. 

Definitions of money personalities vary a bit, but here are four primary money types with their associated behaviors and how to manage them. 

Emotional spender ("Money Status")

If you’re an emotional spender—or a status seeker—you don’t see a problem with spending on outward displays of materialism or wealth. In fact, it brings you emotional comfort. You’d rather enjoy today and worry about the future later. The social status and emotional boost that come with having the latest material goods are important to you. 

Spending is fine if you’re on budget, but emotional spenders tend to overspend. It becomes a problem if you don’t have money to save for a rainy day, your kids’ college, or most important, your retirement. Emotional spenders may also make risky market decisions based on emotions, like selling low or buying high. 

Tips: Explore the emotions behind your spending to understand your motivations better – and to figure out how to outsmart them. Boredom and loneliness often spur spending, according to Take Charge America, a nonprofit financial education source. Try reaching out to a friend instead. 

Analyze the difference between needs and wants, and put yourself on a 24-hour pause before buying something. Resist bargains and stop scrolling Amazon and other shopper websites. Try using cash instead of credit to minimize impulse buys. Learn about emotionally intelligent investors and how to become one. 

Saver

Also known as guardians or “money vigilant,” savers are frugal, less because they don’t like things and more because they desire the security that comes with having money set aside. Do you turn off lights and use coupons? Skip restaurants as a rule? Maybe you’re an environmentalist, or you may have developed a scarcity mindset from growing up low-income.      

Most of the time saving benefits you, and savers often have well-developed financial habits. But when frugality and alertness about money interfere with the good things in life, it isn’t any healthier than overspending. You could be missing out on experiences that create meaningful memories, like a one-of-a-kind trip with your kids. Savers also tend to be conservative about investing, and that could mean you don’t reach your financial goals with growth-oriented investments. 

Tips: Savers would do well to loosen up a bit. Start small. Take a risk with a small investment to internalize the experience that it doesn’t spell disaster. Learn about your motivations to save to understand them better, and learn how to balance saving for the future with spending on today. Don’t be afraid to spend money on enjoyment. 

Avoiders don’t like the topic of money and would rather talk about anything else. You might be making ends meet by instinct or happenstance, but you don’t evaluate what’s really going on or make long-term plans. Some avoiders unconsciously believe they’re not worthy of having money or that it’s not as important in life as other things. Also known as idealists or “money monks,” avoiders might think money is the root of all evil or they might give away a windfall to charity or needy friends. That’s fine if you’re taking care of your own needs too. The other thing to understand is that avoiding money doesn’t necessarily keep you from quietly worrying about it. Learning about your finances can reduce back-of-the-mind fretting.   

Tips: Start small by figuring out your spending for this month to learn where your money is going. Create a simple savings plan to mitigate nagging worry, and, bigger step, create a retirement plan to foster some long-term planning skills. To put financial obligations at the top of your priority list, put your bills on auto-pay and set up automatic deductions for retirement and savings. Consider taking a financial education course to demystify money planning. 

Risk-taker

If you’re a risk-taker, you’re willing to put your money ahead of financial stability for the prospect of a bigger reward – investing in a new stock in the early stages, for example, or taking a chance on more house than you can afford. Risk-taking isn’t all bad, but it shouldn’t put all your money in jeopardy or take away from your ability to meet your day-to-day financial obligations (including retirement savings). 

Tips: Make sure you’ve got money saved in a conservative and accessible vehicle for ready access while you invest some of your money for the long-term in growth-oriented investments. Consider downsizing your house if you’ve bitten off more than you can chew. Or if you’re renting solo in a high-priced city, consider a roommate. Find ways to safeguard money for financial obligations, including saving.

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