You may have noticed that the way people behave around money is totally different. There are people who are very ‘liquid’ with their money and feel free to spend large amounts of money without proper financial planning. Then there are those who are more emotionally attached to their money. Some of us just like to see a huge sum of money in our bank accounts.
I’m sure that just by reading this, you can identify different people with these traits. Welcome to the concept of money personalities. Simply put, this is the relationship each personality has with money.
As we grow old and start to make a living for ourselves, conversations surrounding money may increase. For this reason, it is important that we learn as much as we can about personal finances so that we can make money work for us rather than working for money. Here are the 7 money personalities and what each one entails.
1. Investors / Compulsive Moneymakers
You’ve probably met investors. Just like the name suggests, these are the people who tend to seek a day when passive investments will provide sufficient income to cover all of their bills. These people believe that earning more money is the secret to happiness. They spend most of their energy trying to make as much money as possible.
The downfall to this money personality is that they can enter dangerous territory if they start neglecting important relationships to prioritize growing their wealth. They may neglect their social lives or even families, which ultimately lowers the quality of their lives.
2. The Compulsive Savers / Hoarders
You have probably met the savers. They are also known as hoarders. They may opt to have many savings accounts including SACCOs and pure save accounts in banks. These people hardly ever have liquid money as most of it is usually stored away with no actual financial end goal in mind. Just like the hoarder, a compulsive saver derives security from the belief that saving money is the only way to feel more secure in life. In addition, a compulsive saver is frugal and risk-averse.
If it isn’t too obvious, the problem with this money personality is that they don’t enjoy their money. they’re constantly concerned about saving that they forget to live life. These people are conservative in nature and hardly take risks.
3. Compulsive Spenders
The main characteristic of compulsive spenders is that they seem to have a lot of liquid money. An asset is said to be liquid if it is easy to sell or convert into cash without any loss in its value. These people love luxury things. Big cars, big houses, designer clothes, and the likes. They end up spending on things they don’t necessarily need and are more concerned with immediate gratification.
In extreme cases, compulsive spenders can be at risk of going bankrupt if they consistently spend more than they earn. Again, when suddenly they don’t earn as much as they did previously, they end up in big trouble.
When I think of debtors, my mind immediately goes to shylocks where more often than not, the same people borrow money from the pool. Debtors don’t seem to have emotional ties to their finances. They don’t spend to feel better or feel low when they see a low bank balance, they simply don’t spend much time thinking about their financial situation.
Another fascinating thing about debtors is that they aren’t trying to make a statement with their expenditures, and they don’t shop to entertain or cheer themselves up. They generally spend more than they earn.
The problem with this money personality is that they can land themselves into deep financial trouble especially when they are no longer deemed as credit-worthy.
5. The Money Monk / Indifferent To Money
It’s hard to meet this kind of person. This money personality comprises of those who have no attachment towards their money. A money monk will rarely think about money and when they do, they may treat it as dirty, evil, or that it would be corrupting by having too much of it. Such a person feels that money should not 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 for their finances.
The problem with this money personality is that those who belong here are oblivious to the fact that money is actually an important tool.
It’s hard to convince yourself that you don’t actually need to buy certain items when they’re shining in the shops. This money personality type comprises people who develop great emotional satisfaction from spending money. They can’t resist spending, even if it’s to buy items they don’t need.
Their mood often dips and increases with their bank account. Shoppers find it particularly difficult to resist spending their money, even if they are buying items they don’t need.
The problem with this money personality type? They can easily overspend without planning. They may compromise on important bills for shopping.
7. The Gambler
The gambler thrills in risking because of the promise of reward and the pleasure that such a reward could bring. At times, a gambler could risk gambling away their money to escape boredom. Gambling – Myths And Dangers
It’s not unusual for Gamblers to encounter sudden windfalls or devastating losses. The most obvious risk is when the gambling gets out of control and they borrow against things like their retirement money or children’s college fund to make up for losses along the way.