We often believe that financial literacy is the driving force behind financial success. That if we just knew where to invest, how to save, or when to spend our money that everything will come out right.
Unfortunately, it’s rarely that simple, and financial literacy is only one of many contributing factors to our financial wellbeing.
Another factor is our money personality.
It’s our personality that drives how we behave with money – whether we spend it, save it, invest it, hoard it, or give it away.
Because I’m sure we all know ‘how’ to save money. You take a portion of the money you earn from your job, and you put it into a dedicated savings account. Done.
But it’s our personality that influences whether we set up an automatic payment, or just try to remember to do it every time we get paid (or “forget” and spend it instead). Our personality also decides whether we leave it there, or whether we justify taking it back out to spend on watching Maverick for the 5th time. This week. With popcorn. And a choc-top.
If you’ve spent enough time on Google you’ll undoubtedly come across more money personality quizzes than you can wave a $5 bill at – each promising to unveil your money personality type so that you can use this information to improve your financial situation.
You’ll also discover just how many variations on the theme of money personalities there are – 5, 7, 16…
But, here at enable.me, we like to keep it all a bit simpler. We’ve narrowed it down to three core money personality types: the Shopper, the Saver and the Plodder.
Here’s what each of them means:
The Shopper:
The shopper is energised and gets emotional satisfaction from spending money. They have no problem splurging on the latest fashions or gadgets, but this doesn’t necessarily mean they’re constantly swiping their credit card. Some shoppers are frugal day-to-day but then splurge on a large purchase, while others shop simply because they don’t have a reason not to. (Carrie Bradshaw anyone?)
And it’s not that they can’t save. It’s just that in the absence of a compelling savings goal, shoppers prefer to spend.
The Saver:
Savers, on the other side of the ledger, are energised by saving. If they don’t have a reason to spend, they don’t. Instead, they relish watching their savings grow.
Savers like the security that having money in the bank brings, but this does mean their money may not be working as hard for them as it could – say if they invested. And if they are investing, it’s unlikely they’re taking a sufficient level of risk for their situation.
The Plodder:
Finally, there’s the plodder. A plodder believes that they’ll be OK if they just keep doing what they’re doing. The world will provide, and it will all work itself out for the best.
Surely willpower has something to do with it?
Absolutely. Our willpower allows us to withstand short-term temptation in exchange for achieving long-term goals. Accountability also plays into it. Some people have the willpower to stay accountable to themselves, while others need to be accountable to someone else to motivate them to take action.
What does that look like? Gretchen Rubin identified four personality tendencies. Each identifies how likely – or unlikely – we are to respond to the expectations we have of ourselves, or that others have of us. These are:
The Upholder – This is someone who can deliver to both internal and external expectations. For them to see financial success, they just need to have a goal – whether set by themselves or someone else – and they’ll steadily work towards achieving it.
The Questioner – This is someone who, when faced with competing goals and objectives, will try and evaluate which is most important. They’ll need convincing that reaching their financial goal is their key objective.
The Obliger – This is someone who finds it easiest to deliver to goals and objectives set by others. Roughly 70% of people sit in this camp. An obliger would do well with a financial coach who can set their goal and dictate the actions they need to do to achieve them
The Rebel – Finally, the rebel is someone who doesn’t set goals for themselves and doesn’t appreciate having their goals set be someone else. Rebels enjoy thwarting expectations and if you were to tell them they couldn’t do something, they’d be itching to prove you wrong.
And what about our willingness to take a risk?
The final piece of the puzzle is your money strategy – how willing are you to take a risk?
A Safety Warden tends to be risk-averse, preferring to take the safe route when it comes to their finances and stay the course they’re already on. An Adventurer is energised by a big goal and willing to take a risk – after all, ‘nothing ventured, nothing gained.’ A Dreamer, meanwhile, believes that the universe will provide so there’s no real need to act – even if that approach hasn’t really been working for them to date.
Why is knowing all this useful?
Knowing your money personality helps you get a better understanding of what lies behind your spending habits, how you make financial decisions, and what you should focus on if you want to get ahead. Each personality requires a different approach.
A spender, for example, will require a compelling goal to get them to start saving, a saver will need sound reasoning why a risky investment choice is in their best interest, while a plodder will need some good solid data on why continuing to contribute the minimum 3% to their KiwiSaver account isn’t going to let them live like a Kardashian during their retirement. I mean really!
Once you factor in your willpower tendencies and propensity for risk you can start building out the strategies you can use to reach your financial goals. Because, if you’re a shopper, being told to just spend less than you earn isn’t going to be enough. However, if you’re also an obliger, having a plan and someone to be accountable to will see you smash whatever goals have been set for you.
Not sure which personality type you fall into, or how you can adjust your tendencies to get ahead financially? Not even sure you need to get ahead (looking at you Plodders)? A financial coach can help you identify your money personality and come up with a plan that works to your strengths so you can have the financial future you didn’t know you could have.
Book an initial consultation and kick off the conversation with an enable.me coach today. (A fee applies).
Disclaimer: This blog post is for informational purposes only and does not constitute individual financial advice. If you’re interested in receiving personalised financial advice, you can book in a consultation with an enable.me coach. Costs apply.
