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) to 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 financially successful if they can save a little bit consistently. 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 to spend their money on first. Since an impulsive can be hot and cold when it comes to their financial decision-making, working with a financial professional and impulsive will need to build a solid upfront relationship, enabling their interactions to flow smoothly.
4. Cautious Savers: although they are skilled at saving, cautious savers tend to be very careful when investing. They find it easy to save a set amount of money each month but will typically consider conservative investments. Cautious savers are incredibly 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 in their financial outlook because they have a well-defined saving/investing plan. Planners are extremely goal-oriented, which drives them to monitor how much they are saving/investing regularly.
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.