People have different ways of dealing with money related issues. The characteristics that drive these differences are linked to your unique personality style. Understanding your money personality might be the first step into better managing your financial affairs.
Let’s take a quick dive into the 5 personalities:
1. Deniers: a denier might say something along the lines of “retirement is just too far away” and they would be considered your procrastinators. A denier feels strongly that getting their financial house in order will take too much time and effort, thus they tend to be pessimistic in their thinking. A denier usually ends up worse off financially at retirement and as a group, tend to have less education and fewer financial resources than the general population. As a denier, you will require simple programs/initiatives (like having payroll deduction so you save money) that will help motivate you to act in your best interest. Keeping the process simple is what you desire.
2. Strugglers: a struggler is someone who lives paycheck to paycheck and is prone to a setback if a crisis were to arise. They will deem themselves to be financially successful if they are able to save a little bit on a consistent basis. An investment program, like dollar-cost averaging, would be suitable for a struggler. With the proper education, planning and a bit of motivation (from an accountability partner) a struggler can avoid a future crisis.
3. Impulsives: an impulsive will make a financial decision on a whim. They are well aware that they should have a financial plan and should be saving regularly, but they always have something else that they will spend their money on first. Since an impulsive can be hot and cold when it comes to their financial decision making, when working with a financial professional, an impulsive will need to focus on building a solid upfront relationship, which will enable their interactions to flow smoothly.
4. Cautious Savers: although they are skilled at saving, cautious savers tend to be very cautious when it comes to investing. They find it easy to save a set amount of money each month but will typically consider investments that are conservative in nature. Cautious savers are extremely analytical and meticulous when it comes to all things financial planning related.
5. Planners: planners are willing to take risks and have the ability to make financial decisions on a gut feeling. However, they have supreme confidence about their financial outlook because they have a well-defined saving/investing plan. Planners are extremely goal-oriented, which drives them to constantly monitor how much they are saving/investing on a regular basis.
No matter which category you fall into, everyone needs to have a financial plan. Many people look to friends, family and co-workers and want to mimic what they are doing, but that’s not always a great course of action. Understanding your money personality will enable you to customize your plan to fit your needs.