What type of money person are you? Do you horde, spend what you haven’t got or worry that what you have got isn’t enough? You’ve probably a bit of all the seven types of money personalities buried somewhere within…
IT is not just about the numbers, the incomings versus the outgoings. If it were just about that, then each and every one of us could be taught the proper skills at school. Good money management, however, involves several complicated issues beyond the amounts you earn and spend.
Of equal importance to understanding how the numbers work is knowing yourself, for better, for worse, and when it comes to finances, potentially for richer and for poorer.
For some people the self-knowledge and self-control needed to manage their money come easily. Others struggle. They struggle to understand the basic arithmetic or maths involved. And they struggle with their own desires.
With six siblings, lots of other relatives in my extended family, and a large, varied group of friends, I can say I have probably encountered, up close and personal, many different money personalities.
One close relative stands out in my mind and in my fears. No matter how much money she earns or has given to her, she always spends every last penny of it and more! And then she ends up in a mess of excessive debt, bad checks, and bill collectors.
Actually I’m not being totally forthright. This relative’s messes qualify as full financial disasters. This happens again and again and again. Why? Because she will never take time out to change her ways.
The key to it is knowing your basic money personality and taking control. This is true whether you have a lot of money or a little. My goal is to help you to understand not only your money personality, but also that of someone else in your life who may be struggling with their finances. These are the breeds you may encounter:
The Big Spender
Shopping and buying are stimulating, meaningful, self-defining activities for you. You use phrases like “I just had to have it”, “It was so cheap it was irresistible” and “I just love a good bargain”.
A Big Spender will, and more than likely does, go shopping every single day of his or her life and always find something to buy. Some shop impulsively. Some shop out of boredom. Many run off massive credit or store card debt.
Two core issues are typically at the heart of a Big Spender’s problem. First, they refuse to distinguish between what they want and what they need and shopping gives them a buzz – buying gives them the satisfying thrill of a mission accomplished.
They interpret these tingles as intuitive confirmation that their decision to buy is a good one. Second, they frequently use shopping and spending as a quick, feel-good fix to some emotional inadequacy.
Big Spenders need to keep themselves and their money out of harm’s way. Before buying anything, they must always ask themselves: “Do I really need this? Do I REALLY need this?”
Beat this compulsion by finding another activity to fill the time that you usually spend shopping; limit your shopping trips (including the grocery store visits). Test yourself by leaving your credit cards, store cards, and debit cards at home. And use cash instead of plastic.
Spending money is hard for you. In fact, it is almost impossible for you to let even a 5p coin out of your grasp. If you have to pay full price for anything you almost always come up with an excuse why you shouldn’t. My favourite statement by a Cheapskate is “Money is tight right now.” In truth, it isn’t the money that’s tight!
A Cheapskate cannot understand why people enjoy spending. Acquiring anything other than money and a modest degree of comfort means little or nothing to them; it is not part of their emotional make up. Cheapskates die with lots of money in bank accounts, although they have lived restricted or very modest lives.
When a Cheapskate is social, they enjoy the company of others, but will always divide the bill, pay for only their drinks at the pub, and sometimes try to pay you back when you treat them. They do not enjoy treating anyone else because they don’t know how to treat themselves.
The good thing about a Cheapskate is that you know they will always be able to take care of themselves. They won’t ever overspend or be on the verge of losing everything, despite their appearance of not having two pennies to rub together. The difficult part for most people is being around a Cheapskate.
Accept a Cheapskate’s fundamental personality. They are doing no harm to themselves (except in extreme examples) or others. Don’t expect them to be like you. After all your money is yours and theirs is theirs.
Limit your time or activities with them if you find the situation frustrating. Alternatively suggest new activities that are within the Cheapskate’s comfort range of spending.
Avoidance is the central component of how you deal with most financial matters, especially problematic ones. You really want to believe that no news is good news. Whether passively or actively, you ignore, hide from, or deny the full reality of your money problems.
The tone of an Ostrich’s response may suggest that being financially aware is a kind of a moral flaw that they are proudly shunning. Or more stubbornly, they avoid all discussion of money. Ostriches feel they should not have to deal with such issues and will not do so.
In general an Ostrich knows in his or her gut that the situation is not good, but wishes to totally avoid dealing with it until they are forced to and as soon as things get better, their strong tendency will be to put their head right back in the sand until the next crisis comes along.
Ostriches need to manage the emotions that cause them to repeatedly take the “see no evil” approach. Because this reaction is so deeply emotional, they must make each step manageable and capable of being completed in a limited period of time.
To do this they need to schedule time to deal with their finances at a time when they are least likely to get frustrated .
If you are an Ostrich, then you are fearful and easily frustrated when it comes to finances and probably other things in your life. It is important that you try not to live in anticipation of fear or frustration.
The False Optimist
You always have glasses with rose-coloured lenses covering your eyes when you look at your finances. “Oh, it will work itself out” is the de facto mantra of a False Optimist. False Optimists believe the fates always intervene to correct or ameliorate their financial problem.
Parents or grandparents will suddenly decide to give them money to alleviate their financial distress.
Another type of False Optimist tries to buy time for the situation to work itself out. This person eagerly signs the next credit card offer that comes through the post or arranges another consolidation loan. If they can keep the wolf from the door for another few months, something (anything) will surely come along to make things right.
False Optimists are experts at delaying.
False Optimists can be one of the most difficult money personalities to help see and deal with the reality of their financial situation. To remain optimistic when they are in such dire circumstances, they must be stubborn. When the truth is told to them, False Optimists often wave it away with a gesture of their hand.
Patience is required to help them; don’t show them the full picture of the total situation all at one time. A False Optimist has a well-constructed view of their life. If confronted, he or she is likely to morph suddenly into Paris Hilton, saying in that flat Valley Girl accent while at the same time rolling their eyes, “Whatever.”
Tell the person only one truth at a time and do so in a constructive way. Don’t be surprised if they come up with their own action plan for solving their financial problems that sounds very much like the suggestions you made in the first place!
Your partner or spouse owes you. Your family owes you. Your employer owes you. The government owes you. In fact, the whole world owes you. You should be able to go shopping when you want and spend what you want. You should not have to deal with budgets.
Deservers never like being told what to do. In fact, if they are told, they are likely to do it anyway or something totally opposite just to show that they can and will. I call the spending associated with this behaviour vengeful spending. I have seen it in marriages or relationships where one person feels they are not getting the money, lifestyle, or emotional support they feel they deserve. The spender is saying that if I can get what I want from you, then I’ll take what I deserve from your bank account.
Deservers are often the same people who try to keep up with the Jones’s. They constantly compare what they have to what others have.
People with a deep sense of entitlement rarely see financial problems as being caused by themselves. They are always the victim. They can sometimes change on their own if their situation gets so bad that it is impossible to ignore their culpability. When family members or friends help, it will require the emotional strength of a saint in adversity and the patience of Job.
The answer is to completely remove their ability to spend without any pre-thought. Next they need to stop thinking that someone, somewhere owes them anything more than emotional support.
You have an adversarial view of financial institutions and the people who work in them. You have no doubt that they are just out to use your money, giving you nothing useful in return. And to quote the famous line from the movie “Network”, you are “mad as hell and you are not going to take it any more”.
Hustlers, in their most aggressive guise, want to show the Big Boys that they can beat the system. They take pride in cleverly using money borrowed from banks and credit card companies to make money for themselves, mostly without working.
Hustlers are involved in an elaborate financial tango in which they are dancing with a partner (a financial institution) that is much bigger than they are. For a while they may appear to lead the dance; however, eventually they try to be too clever by a half and therein lies the beginning of their decline.
People who are cynical about the financial world fall into two camps: those that want as little involvement with it as possible or those that want to subvert the system. It is this second group that usually become Hustlers.
They believe that there is a strategy, a loophole, or a trick that will essentially let them get something for nothing. The hustler can control these dangerous urges by keeping it simple. They need to establish a more positive relationship with their money and their time.
You are eternally fearful of losing everything and ending up in poverty. This worry probably comes from something in your past. If you are not working and earning money, you have nightmares and panic attacks about losing everything and ending up destitute. No amount of money ever seems to take that worry away.
Worriers are not like Cheapskates. They will spend money on a good house, nice vacations, education for their children, and nice gifts, but they always live substantially below their means.
Worriers are usually highly motivated. They find work when others cannot. They will do just about anything to survive. And they are often secretive about how much they have in the bank, even with close family members.
The good thing about a Worrier is that their fears seldom become reality and they can sometimes laugh at their parsimonious ways. However, you don’t want to push the humour or teasing too far. Worriers have to heal themselves. Some will know that they need to loosen up a bit, while others will never see the need to change.
The Balanced Person
Do you see yourself in any of the money personalities I’ve described? Perhaps yours is a combination of two or more types. This means your struggle with your pounds and pence will be more complicated and, perhaps, difficult. Being aware of your financial personality and its foibles is the first step to attaining some balance.
The second is establishing practices and mental tricks that will help you mitigate or control the impulses that cause you to victimize your financial security. Then you must monitor yourself on an ongoing basis. You, in essence, become your own financial therapist.
The most important key is that you must want to make the changes for your money and your life. Thus you enable yourself to establish the financial balance that works for you. Luckily there are many paths to becoming a financially Balanced Person. Some people do so easily, others only become balanced after going through difficult times or bad experiences.