We all know that financial health is important. Learning to budget, spend wisely, manage credit, and save for both short-term and long-term goals (like retirement) can be the keys to preventing many missteps in life.
At the same time, you need to honor your own value system and personality. What works for your cousin or neighbor might feel very uncomfortable for you, so understanding your personality type and relationship to money can be critical to making wise choices.
Research on finance and psychology has revealed that most of us fall into one of the following seven personality types, according to finance and psychology expert Ken Honda.
- Compulsive savers view money as a source of security. These people save every penny possible, and reduce their expenses by becoming expert bargain shoppers.
- Compulsive spenders frequently respond to certain emotions by making irrational spending choices, often followed by regret.
- The compulsive moneymaker believes that earning more money is the key to happiness, and they crave recognition for their lifestyle, too.
- The financially indifferent often have plenty of money, but don’t like to think about it.
- Saver-splurgers share traits with both savers and splurgers, experiencing cycles of saving following by splurging episodes.
- Gamblers share traits with both spenders and moneymakers, taking large risks in order to make more money. However, these individuals often experience regret and depression after losses.
- Worriers are constantly worried about losing money. Perpetually stuck in preparation mode, these people often lack the confidence to make choices that would lead to financial freedom.
All of these financial personality types come with their own combination of potential strengths and obvious weaknesses. The trick is to identify areas that are pitfalls for you, and work on them, while maintaining the beneficial parts of your personality.
We understand that different personality types prefer different strategies with regard to planning for the future. Schedule an appointment with us, and we can discuss the options available to you. Then we can help you proceed with a financial plan that works with your habits and preferences.