Somehow, the odds are finally in your favour and you win a million dollars.
What would you do with it?
How would the win make you feel?
Would you immediately get to ordering that iPhone 11 pro-max? Or would you take a step back and try to plan first? For some, money brings joy and excitement while for others the thought of money brings anxiety and they would rather not think of it.
How we react to money, much like any other experience, is influenced by our personality. Think about how you relate to your money and how that relationship affects your overall finances.
More often than not, we cling to beliefs about money without even thinking about where they stem from or why we hold them. Is it based on your family history? Did you have a traumatic money experience that gave you those beliefs?
Understanding your money personality will enable you to understand your strengths and weaknesses. You will identify how your habits are either progressing or inhibiting your financial success. Based on these insights, you will be able to form structures and modify your habits. This is critical when creating a financial plan.
Experts have analyzed various behavior trends and have categorized these trends into 5 main personality types. The aim of these categories is for you to identify the one that closely matches your behavior and adjust your habits accordingly.
- The Saver
If you are a saver, you enjoy checking your bank statements — the balance which is often a large sum brings you extreme joy.
- You are organized — you have a budget and stick to it. You will not touch your savings to pay anything that is not a need.
- You would rather die than be in debt. You avoid debt and pay off all your bills on time.
- You are careful with how you use resources. You spend time looking for the best deal before making a purchase. You switch off the lights when you leave the room and would never be caught brushing your teeth while the tap is running.
- You have a plan for your future — you allocate resources to cater for your future expenses.
Pro Tip: Create a fun fund — This will enable you to spend on leisure items without any guilt. Plan and allocate some of your income to go into having some fun (you are already excellent in planning). Once in a while eat out and enjoy having someone else make you dinner.
2. The Spender
Spenders are happiest when spending money.
- You often go on shopping sprees without a budget or list — When the saver is looking through thrift stores for the best deal, the spender is on the high street getting the latest trendy items.
- You have no plans for the future and often live from paycheck to paycheck
- You could be in debt as you spend money impulsively to stay on top of trends
- You enjoy buying gifts for others and are often spotted buying several rounds at happy hour.
Pro Tip: Create a savings fund and automate a portion of your income to the fund. This way you contribute to your savings even before you pay for your bills and expenses. You will pay yourself first before dealing with all the other items.
Set a savings goal or reward and work towards achieving that. This will keep you motivated and will funnel your money towards an exciting reward. You really do not need that many flimsy handbags — finally, save up for that Chanel bag!
3. The Avoider
Avoiders believe they do not have what it takes to understand their finances.
- Have no retirement plan — You view retirement as a far off idea and have no interest in creating a plan.
- You have no idea how much balance is left in the account. I understand it’s a bit stressful going through all the numbers.
- You view money as the root cause of all evil and therefore have no interest in understanding it.
- You are a bit all over the place with keeping up with your bills as you feel overwhelmed with managing your expenses.
Pro Tips: Read a finance article once a week — Expose yourself to the available finance content online. If you are intimidated by all the finance words(don’t worry we all are still recovering from the trauma caused by calculus), you could seek out websites or podcasts that have easily digestible material.
(Ps: we have a library of content that’s simple and easy to understand. Check out our social media @africaspocket)
Consult a financial advisor: There are life-changing opportunities that you are missing out on. Reach out to a financial advisor who will debunk all the finance jargon and help you make better financial decisions.
4. The Hoarder
Hoarders are happiest when building wealth for security. e.g Homeownership
- You are careful with your money and research heavily before making any investment decisions.
- You are very trustworthy with your money and you’ll not dip into your savings to fund any random want.
- You have invested in your future by having clear plans for all aspects of your life: retirement, children, emergencies. You will rarely be caught in a financial crisis.
Pro Tip: Life is more than just amassing wealth: Most hoarders are typically workaholics and have no work-life balance. They are constantly obsessed about acquiring assets that they forget to stop and enjoy life. Set aside time and money to spend on things you enjoy with loved ones. Pay for that vacation — your kids are growing faster than the interest rate of that investment you made.
5. The Giver
You believe there is a limited amount of wealth available therefore you choose to give out a portion of yours to help others.
- You are always sending money to your friends and family
- You feel guilty having a lot of money
- You participate in every charity ball or run.
Pro Tip: Create a financial plan and map out your contributions before you give out your money. Set a foundation for yourself first and allocate any surplus to charity.
In conclusion, while it is impossible to change your money personality type, self-awareness is important for you to make conscious positive decisions about how you spend your money to enable you to achieve your financial and life goals.
Take these insights and go a step further by investing in your future. We recommend our flagship course: Your Roadmap to Wealth that will enable you to better understand your money, evaluate the various investment opportunities available to grow your portfolio and using our intuitive worksheets you will create a financial plan that works for you.