Financial Personality Types: Which One Are You?
It’s wildly true that your personality vastly affects your financial decisions
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It’s wildly true that your personality vastly affects your financial decisions.
Sometimes, even people who are struggling with why their strategy isn’t working (or is too stressful!) may find it’s because the strategy at hand simply isn’t suited to their personality.
Your personality affects your relationship to money, but it also affects your goals, which are generally the whole reason people try to wrangle their money in the first place.
Many, many finance websites have profiled “the” four, six, or nine different personality types when it comes to investing and finance. They all go by different names according to which site you look at, but almost all of the labels fall into about four broader categories based on different goals.
This is the person who seeks peace of mind from money — knowing that the future is secure, that any unexpected surprises won’t rock the boat too much, and that the nest egg is sufficient to provide for whatever may come in the long term.
Different sites can profile this type as everything from conservative, cautious investors who may get jittery about taking too much risk or simply don’t like to think (read: worry) about money, to meticulous planners who enjoy budgeting and saving, all the way to the “preservers” or “guardians,” who are the stewards who seek first to ensure the financial legacy of their family.
Regardless of the label, those who approach money with the goal of achieving security generally aim to direct their finances with a measured level of control. For some, however, that may mean an autonomous approach — usually for those more confident with finances and future planning — while for others it may mean finding a great financial planner to partner with, as someone who can assist in navigating the financial waters in order to secure their long-term needs.
Names that could be included in this category are saver, budget guru, planner, and protector — as well as avoider or “ostrich,” implying those who may be nervous about the potential insecurity of facing finances. These personalities also ultimately benefit from having peace of mind when it comes to money.
The financial freedom seeker is looking for exactly that — the ability to pursue their desires and dreams free from financial constraint. To this type, money is a kind of modus operandi, facilitating choice, whether it be traveling, choosing a home, opting for flexible work, or even simply living free from stress without having to think about when and where each check will come from.
Due to this group’s varied nature, many sites profile this type as “individualist” or “independent.” This category can also include savers and budgeters using the tried and true tools to achieve their dreams, though it also often refers to those with increased investment appetite who like to dive in to projects through their own research and analysis, seeking out individualized solutions.
Because their goals are each unique, pragmatists or planners tend to prefer taking control of their finances first. However, they can still benefit from getting a second opinion or additional advice later.
Often utilizing a host of various solutions to connect the dots in their financial picture, personality types whose primary goal is financial freedom can include many variations or even combinations of variations, from labels such as frugal saver to careful spender, cautious breadwinner or innovator.
These are people who may be willing to take more financial risk or plot out a carefully crafted combination of strategies in order to reach their financial goals.
Goal: Social Influence
For those in this category, money (and the spending of money) is a direct influence in social situations. For some, money may mean the ability to buy a new car, house, or other item that brings with it the feeling of a certain social status.
For others, money can mean feeling happy or generous through the spending of money on others. “Big spenders” or “status spenders” are often the headliners in the social influence category, but it can also include those who are simply social spenders or even compulsive or stress shoppers.
Using money as a means of social influence on any level usually implies spending money versus saving it, and social spending is often categorized as inherently more impulsive than other types. Depending on one’s financial situation, spending in social situations may achieve one’s goals — to enjoy money with friends, family, or loved ones — though potential pitfalls can include overspending through lack of planning, while other types of spending may or may not achieve the desired result.
For social spenders, careful budgeting can be a helpful tool in allocating social spending without unwanted surprises.
This type of financial personality is a thrill seeker, using money as a means of challenging themselves or keeping score with others. Labels like “VIP” or “accumulator” are sometimes used to describe those for whom financial acquisitions provide a feeling of power or a sense of personal achievement.
“Gamblers,” meanwhile, is often used to refer to the investors who get an adrenaline rush from success. Taking on riskier investments in order to tackle them through intense problem solving, gamblers or innovators seek out the challenge itself rather than the ultimate financial reward.
Depending on the financial situation of this personality type, using finance as a challenge can be positive or negative. Moguls and innovators with significant financial backing may enjoy navigating a mentally fulfilling challenge, while those against a backdrop of weaker finances can find themselves facing unforeseen large debts due to spontaneous behavior.
The financial gambler-type, while ambitious, is likewise the most prone to risk. Balancing the financial activities or portfolio of those who like to keep it interesting on the financial front with other risk-averse strategies, along with a healthy dose of discipline, can help keep an even keel in the event a gamble doesn’t pay off.
Personality types aren’t likely to change, but your financial strategy can. Understanding your financial personality type can help you choose what approach is right for you as well as where your weaknesses might lie.
Enlisting help to cover your bases, coming up with a new approach, or simply understanding what’s maybe not working for you with your current strategy based on your personality and goals may be the key to making your finances work for you.
This article was originally published by Megan Caitlin aslan on medium.
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