We bet at some point, you've taken an online test that promises to give you a greater understanding of your personality, right? But while these tests often hone in on areas like work and relationships, they don't tend to focus on money in the same detail. Did you know that it's generally agreed there are distinct financial personality types, too? And that working out yours could be a key step in managing your finances better?
Five key money personality types to know about are: Spenders, Savers, Investors, Debtors and People who rarely think about finances. Knowing which type, or types, you identify with can be super useful.
"Most of us won’t fit neatly into one, but we may recognise more of ourselves in one over the other. No one personality is better than the other, but it’s always good to understand our blind spots and learn how we can improve," says Abigail Yearley, spokesperson for TopCashback.co.uk.
If you don't know the different types, or the category you fall into, it's worth taking some time to get a better idea, according to Ellie-Austin Williams, Financial Coach and Founder of This Girl Talks Money.
"Understanding your money personality can help you in all sorts of ways, from getting clearer on why you feel and behave as you do with money, why you find it hard to break old spending or saving habits, and it can help you with navigating money in a relationship, too," Ellie advises. "Like many things, having a better understanding of our own behaviours allows us to become more self aware and make changes more effectively if you’re finding it tricky."
How to identify your financial personality type
There are lots of quizzes online which can help you narrow down your money personality, but Ellie advises you can begin to figure it out through observing your own thoughts and actions with money. A few key questions to ask yourself might be:
Does spending a lot of money stress you out? Or do you feel comfortable spending lots of money on things you value?
Are you happy taking risks for the potential of great reward? Or are you happier playing it safe and avoiding risk?
Do you get a high from spending money, followed by a dip in mood when your bank balance drops? Or do you simply not think about your financial situation?
Are you focused primarily on the long term when you make financial decisions, rather than looking for short term reward?
One you've gone through this thought process, it's likely you'll be well on your way to identifying your financial personality type. And then, it's all about understanding your financial 'blind spots' and managing money in a way that suits you. Here, Abigail and Ellie share their advice.
Love nothing more than a good old spending spree? You could fall into this category.
"With COVID restrictions having fully lifted, there may be more of us sliding into this camp than before. Typical ‘spenders’ will tend to find squirrelling money away completely unnatural and will live more carefree with their cash. It’s not necessarily about being selfish, this personality also loves to be generous with others as well. If the word YOLO could apply to a financial personality type – this would be it," Abigail says.
"You can still spend your money, just learn to do so mindfully. For example, before heading to the virtual checkout, leave the item in your basket for a day or so. Also, use cashback sites like TopCashback to help you save even when you have to spend," she adds.
"For spenders, having a budget is key to staying within your means and ensuring that all of your expenses are met before you start spending on non-essentials," Ellie advises. "Get clear on how much you earn each month and set aside the funds. Try automating savings, too, so that each month you put aside a slice of your income for the future."
If you get more of a high from sending cash to your savings account than doing an ASOS haul, it's very possible you're a saver at heart.
"This type of personality has different connotations. On the positive end, savvy and sensible but on the negative, shrewd, or even tight. A keen ‘saver’ type may be willing to go to extremes to protect their assets or recoup costs, they will also love a bargain and won’t be shy to try and haggle a better deal," Abigail says.
For people who fall into this camp, the message is: don't sweat the small stuff.
"Remember that your time is also money, so try to let go of the minuscule things. It’s great to make savings wherever possible, especially if you have specific goals in mind. Bottom line, though, don’t be too hard on yourself if you fancy an occasional treat," Abigail adds.
If you're super set on your money goals, it's also worth seeing things from other people's perspectives, too. Ie, try not to get too annoyed when your friend want to splurge on dinner and cocktails as a group.
"It’s important to understand that others will have differing money personalities," Ellie says.
As the name suggests, this money personality type likes to make a profit on their cash through investing.
"They will be financially adept and like to keep themselves educated about different markets consistently. Some investing types might err on the more cautious side but there are also those that will be happy to take a risk if they believe the payoff will be worth it in the end. If you’re one of many people that have recently started investing (perhaps through an app), don’t assume you are this personality type. Just because you have investments it doesn’t mean you are an investor by nature," Abigail advises.
She adds that it's important to keep your investments in check. "If you’re more of a gambler, remember that no investment is risk-free, and only invest what you can afford to lose. It could also be helpful to set short-, mid-and long-term goals to help you decide where to put your finances. If you’re just starting out, make sure you do lots of research before you invest in any particular market and don’t blindly copy others," she says.
And, similar to savers, investors need to remember it's important to enjoy the present moment, too.
"Whilst making prudent financial decisions for the future and making your money work hard is financially wise, it’s important to keep an eye on the here and now too and enjoy the present - after all, we don’t know what’s around the corner. Aim to set aside a chunk of spending money each month so that you can enjoy your day to day, and keep some cash in savings to spend in the near future, as well as working on building wealth for the future," Ellie says.
Not to be confused with a spender, this money personality type is about using borrowing to continue spending.
"This type of person won’t be as in tune with their finances as some of the other personalities, it’s likely that they may borrow, take out loans, and live paycheque to paycheque. There is no shame or blame in living like this but there are things that these types can do to become more financially aware, which is always a good thing," says Abigail.
"It’s easier said than done, but it’s vital to stop any habits that are putting you into more debt or creating anxiety every month. It’s fine to take out a loan or pay on a credit card as long as you have a handle on your finances, know that you can repay it, and understand how your actions will affect your credit score. Do open up to friends and family if you are worried and remember there are many free sources of financial advice out there [like StepChange] if you feel like you don’t know where to begin," she adds.
"Debtors often get into monthly cycles of spending more than they earn and it isn’t always as a result of overspending; sometimes, they simply don’t earn enough. If you identify as a debtor, try tracking your spending on a daily or weekly basis, and if possible, use cash to manage your spending as it can be far easier than budgeting virtually," Ellie says.
The 'Rarely Thinks About Money' Type
"This category can encompass a couple of types of people. Some might be ‘bury your head’ types who don't want to face reality, perhaps for negative reasons. They would rather ignore a potential problem than address it outright. Others might never have to think about money simply because they are financially well off," Abigail explains.
"It obviously depends on whatever camp you sit in, but the most important takeaway here is to try and stay in tune with your money, regardless of whether you have a little or a lot. If you’re someone that believes money isn’t the be-all or end-all to life, it’s a good mantra to have, but only when you have a solid grasp on your finances."
Ellie believes that for people in this category, getting more regimented about money management is a good habit to start building.
"You’re not alone if your financial situation isn’t number one on your priority list, yet it’s important to pay attention and know if any financial crises might be around the corner. If you avoid dealing with money, try implementing a money date with yourself each month. Check your bank account, ensure you’ve made any payments due and refresh your budget for the month ahead. That way, you’ll start to gain more insight into your finances gradually over time," she says.
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