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Did you know that there are 6 unique money personalities, with each one playing a heavy role in your ability to handle and manage money? In this article we’re taking a look at each one, helping you not only identify which category you fall into but also recognize where you can improve your money management practices.
What is a financial personality and how does it affect money management?
A financial personality looks at the big picture of how you handle your money. From how you think about money, the views that guide your actions, and the actions that stem from your beliefs. It's not just about how much money you have; it's also about how effectively you handle the money that comes into your life.
Money management is a learned skill so don't feel disheartened if this doesn't come naturally to you. Sure starting early influences financial habits, but that doesn't mean that these skills can't be learned over time.
These financial personalities are built around a set of traits and characteristics that shape a particular style of money management. They're designed to help us become more aware of our behavior, keep our personalities in check when red flags trigger a knee-jerk reaction and assist us in achieving a healthier financial future.
These personalities coincide with the five main personality traits that are often used when reviewing someone's financial status: conscientiousness, neuroticism, extraversion, agreeableness, and openness to experience. Used by researchers, these traits help to shape how one might handle money.
Each top 6 financial personality reflects traits of the following
The six types of financial personality are based on your personal financial habits and include The Saver, The Spender, The Investor, The Dreamer, The Optimist, and The Pessimist. Each financial personality speaks volumes about how one views and acts with money.
1. The Saver
If you're a saver, you've already established yourself as someone who is good at saving money. You have a natural ability to save money and concentrate on long-term objectives. You know exactly how much money you want to save each month, and you stick to your plan even when tempted away from it.
You are practical with your savings as a saver. One of the things you might have done is to make direct debits from your bank account to a savings account or wealth management solution.
2. The Spender
Spenders are impulsive and rash. They're not great at handling money, either. They don't save well, invest, or budget. They're more interested in ways to generate income versus growth. You're likely a spender if you struggle with these financial decisions.
Spenders are focused on short-term pleasures and luxury items. They find it difficult to save since they're so concentrated on pleasuring themselves right now.
3. The Investor
You can take advantage of investment opportunities as they arise, even if they appear risky or complex. You keep an eye on the market and stocks to make sure that any investments that aren't performing are removed from your portfolio. They're down for both aggressive or conservative investments.
Investors are enticed by the potential return on investment; they desire high returns without too much risk—so, if they see two alternative investment options with equal potential gains but one with greater risk, they'll pick option B every time.
4. The Dreamer
Dreamers are usually content with what they have and understand how to manifest their desires. The difficult part is not allowing emotions to control spending or budgeting decisions. Instead, dreamers develop a plan and stick to it - no matter the temptation.
If you consider yourself a Dreamer, your financial habits are likely to be the ones that will make you financially successful. Dreamers are usually intuitive and have a clear idea of what will make them happy in relation to their finances. They come up with creative ways to put their plan into action.
5. The Optimist
Optimists are individuals who believe that good things will occur. They tend to have a happy disposition and see the silver lining in every situation. Optimists are more likely to be wealthy financially than other personality types since they save money and make investments, take calculated risks, and generally have a talent for making money.
Surprisingly, optimists tend to have not only better physical health and happiness but also greater financial success! It may sound too good to be true, but there is data to back this claim up. Studies show that optimism and wealth often go hand-in-hand. For example, one study found that people who are optimistic about the future make more money than those with a negative outlook.
6. The Pessimist
The last distinctive financial personality on the list is the pessimists. They are always looking for ways to save money, and they don't just stop at finding opportunities. Financial wellbeing is important and they always anticipate needing to save. If you're a pessimist, then you're probably thinking of ways to cut costs right now.
Although pessimists might come across as boring, they have great financial stability because they never spend money on unnecessary things and shy away from risks.
Pessimists always think ahead. The Boy Scouts of financial personalities, they're cautious and they plan for the worst-case scenario so that they'll be ready to handle it if it ever happens.
How these financial personalities can help with managing money
Understanding which category (or categories) you fit into will give you a greater understanding of how you might react in a situation demanding your attention.
With greater self-awareness comes a greater understanding of how one might make decisions pertaining to their finances. If you want to make more informed decisions about your finances, begin by taking the time to learn about your relationship with money.
