We frequently emphasise the value of financial literacy, including developing a solid understanding of how money functions and having the information necessary to make wise decisions.
However, most people overlook their money personality type, or their approach and emotional reactions to money, when it comes to establishing financial health.
Understanding the 5 Money Personality Types and being aware of each type’s drawbacks might help you have a far better relationship with money. It can assist you in reducing your spending on impulsive items, improving your budgeting skills, making good investment decisions, and ensuring a comfortable retirement nest egg.
Table of Content
1. Compulsive Saver
A Compulsive saver continually sets money aside, occasionally without any specific objective in mind. They think that the only way to feel more secure in life is to save money. They’re really thrifty.
Friends will frequently ask you for advise on which phone provider is the cheapest, which point cards are worthwhile, or the best times to purchase airline tickets. Some people who are compulsive savers live their entire lives without ever touching the money they have worked so hard to accumulate.
For instance, they might decide against engaging in interests or pursuits that could provide them meaning and enjoyment. It’s a good idea to understand how to strike a balance between enjoying life and saving money.
2. Compulsive Spender
Spending compulsively often leads people to buy things they don’t actually need. They are gregarious and enjoy giving people special treats, sometimes without any particular reason. If you have a spending problem, buying things will help you feel better emotionally, especially if you want them right away.
Compulsive Spenders frequently continue their spending binges despite having significant debt. They might even try to keep expensive purchases from their loved ones and friends. If they continuously spend more than they make, they may, in the worst situations, be in danger of becoming bankrupt. Making a budget plan will enable you to approach situations differently.
3. Compulsive Moneymaker
If you think that the key to happiness is more money, you are a compulsive moneymaker. Making money is where you focus the majority of your energy. You enjoy receiving compliments and praise from others for your professional accomplishment.
While Compulsive Moneymakers are often well on their way to financial independence, they run the risk of slipping into perilous area if they start to put key connections last in order to increase their money (e.g., choosing to work on weekends over spending time with loved ones).
4. The Worrier
No matter how much money you have, you are continuously concerned that you will misplace it. You don’t have faith in your capacity to reach financial independence. You are perpetually preoccupied with the worst-case scenario of what might occur if you run out of money.
Knowing what might occur if you don’t plan for the future is a wise move. But it’s never a good idea to let concern and stress sap your joy in the here and now. A solution to this is to focus on the positive aspects of financial conversations.
5. In different to Money
You rarely think about money (and just the idea of creating a budget makes you nauseous). In extreme cases, you believe that money is inheritably bad or evil. You feel strongly that money shouldn’t influence important decisions in life.
Many people who are indifferent to money feel they only need a modest amount of money to be happy, which is a healthy mindset. But things can get ugly if they’re not responsible with their finances (e.g. depending on a partner or spouse to do the work for them).
Even if you are financially comfortable, make it a point to know things like where your money is going, what your monthly expenses are, and where you stand on debt.
Your money personality type has a huge impact on how you manage your finances. It is worth knowing what we are like and why we act the way we do. Although there are no good or bad, correct or incorrect money personality types, all of them have some positive aspects and drawbacks.
Therefore, certain things (such as saving or spending money) will come easier or harder to some people.
The Finkel and Eastwick suggest instrumentality theory in place of the helpful but rather constrained reward, evolutionary, and attachment theories. They contend that people are driven to accomplish a variety of objectives in life, including having confidence in oneself, beginning a family, and feeling safe and secure.
The dating partner who is most helpful in achieving the objective that is most essential at the moment is probably the most beautiful. Future research is required to evaluate the instrumentality theory, however it Is conceivable that the definition of attractiveness may vary based on the outcomes a dater seeks.
