Like everything in life, your financial decisions are also affected by your personality. For ages advertisers and marketers have made use of this, to tempt you into spending more. Understanding your financial personality may help you change your financial behaviours, in favour of rational decisions. It could also help you to recognise unhealthy patterns and the root cause for such behaviour.
Types of Financial Personalities
Character traits regarding financial decisions can be classified into various groups. Experts have identified different groups. You can be a mix of these, or change from personality to another, depending your circumstances. We have shortlisted five major personalities. The key is to find the one that matches closest with your behaviour.
- Spender - Spender means the ‘giver’ or ‘risk-taker’, these are the impulsive buyers. Buying gifts and taking big risks while investing is a common trait. Debts do not bother them.
- Saver - The ‘hoarder’ is the opposite of the spender. They watch out for deals and will never shy from a bargain. They will have an emergency fund, a contingency fund, a retirement plan and maybe some more saving for the rainy day. They don’t like big risks with their investments.
- Shopper - The ‘compulsive buyer’ will find any reason to shop. They look for excuses to buy things they don’t need. They know of their addiction, hence, are on a look out for discounts and offers. Their investment can be anything from a regular plan to a sudden investment.
- Debtor - They usually end up spending more than they earn. They don’t keep a tab on how much they spend and where they spend. They don’t invest much as they don’t spend time thinking about their money.
- Investor - Like the ‘saver’ these are careful with their finances. They take a stock of their financial situation and put their money to good use. They are careful with their financial decisions and invest with calculated risks.
How to Change Your Financial Personality
Once you identify the traits of your personality, you can start working towards making some changes. Making small changes in habits can help achieve big goals. Let’s find out how you can change your financial personality.
- Spender - Shop a little less. Delay the purchase. Abandon the shopping cart. Before giving in to the impulse of buying, question yourself, if you really need it. Build an emergency fund and avoid credit purchases.
- Saver - You are careful with your money and have good ‘financial habits’. But you need to enjoy the perks money can buy, also. Learn to loosen up a bit. You can take your savings also to the next level. Try investing in low-risk, high return options.
- Shopper - Forget about your credit cards. Especially for any unscheduled expense. Use a fixed fund or a debit card for unplanned, impulsive buying. Also, start with small savings and continue to grow. Set the savings aside, before you splurge.
- Debtor - Start saving and investing. Making a budget will help you prioritize your expenses. We will discuss more about the benefits of prioritizing your expenses in the coming chapters.
- Investor - Keep up the good work. You have learnt how to balance your earnings and expenses. Continue doing what you are doing.
It is difficult for a person to completely change their personality, but they could modify parts of it to address the financial challenges.
