Money makes the world go round. That’s the way I heard it anyway. But who makes the decisions about how the money gets spent? The ultimate truth to this question is that each of us decides for ourselves what we will choose to buy or not buy. I mean, it’s our money. So, the purchasing power is ours.
Another truth: the Coronavirus pandemic has revealed a lot about us to ourselves. How we react to our surrounding circumstances can help us understand our personality type and the natural tendencies that go along with it. Did you immediately hop online and start shopping when we got confined to our homes, start cutting expenses and stashing away your money, or somewhere in between? As we learn more about our financial personality type, we can recognize an impulsive decision and trade it for a better one that will help us on the ultimate journey to financial independence.
Did you know there are 6 basic financial personality types? See if you can recognize yourself in the descriptions here. Or maybe you are a combination of two or three. While these descriptions tend to lean to an extreme, you’ll get the idea!
The Anxious Investor
Taking risks tends to give this personality type a boost. They often believe they have the edge over others even to their detriment. Overconfidence often gets the better of them since they are more prone to buy high and sell low because of the chance at a big reward. Think day trader here. They make trades based on instinct a lot more than with strategy in mind.
The Hoarder
Opposite of a risk-taker – they like the security of knowing exactly where their money is. They may stockpile cash in an effort to feel in control. Ironically, out of fear of loss, they often lose out on opportunities to grow their nest egg or are afraid to begin using their retirement assets when the time comes.
The Social Value Spender
Their love is best spoken by giving gifts. They like to shower others with things “just because”. They may make purchases to boost self-esteem and enhance their sense of value by having nice things. For women with this type, they usually spend on smaller items like clothing. For men, they often go for a single, large purchase like a new car. Credit card companies love this financial personality type.
The Cash Splasher
A cash splasher tends to spend money on others in a very visible way. They feel happy and generous by covering the bill at the restaurant or giving to a charity. While not always the motive, they can be flashy with their money often in hopes that they will be admired more by those around them.
The Fitbit Financier
These financial personalities check bank balances and track spending habits more than fitness gurus check their calorie intake and resting heart rate. They don’t like unpredictability. They obsess over credit card points and have a really good idea of when the optimum time will be to refinance their mortgage. The overcompensation to control money matters could be due to a loss of control in other areas of this type’s life.
The Ostrich
Stacks of bank statements lay unopened in a pile on the kitchen counter. They may have money, but long-term plans sound like decisions to this type, and decisions are not their forte. Decision-making is synonymous with anxiety for this type, so like an ostrich, they would rather bury their head in the sand than organize their finances. Often no decision at all feels better to this type than the possibility of making a wrong decision.
So…which financial personality type are you? If you still aren’t sure, contact one of our advisors to find out!
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Reference: Financial Times
