Why understanding your money personality can improve your financial life
Why do you do what you do when it comes to money? Many people have shared with us that the first step to solving their financial dilemma’s lie in understanding their money personality. So what is your money personality? Your money personality is your natural response to money! There are many different money personalities and our money personalities affect how we respond to money situations on a daily basis. One way to understand your money personality is to answer truthfully how you would respond when faced with a money situation, such as the example below.
Imagine you are having a casual dinner with a group of friends. It is not a special occasion, nor is it anyone’s birthday. When the bill arrives, how do you respond? What would you do?
- Pay the bill in full
- Pay for your share after working out the amount with a calculator
- Split the bill equally among the friends
- Avoid the situation by going to the bathroom
- Ask a friend to pay for you
- Feel anxious and unsure
The way in which you react to the situation provides insight into your money personality. People who disappear to the bathroom, may have an ‘ostrich’ money personality, burying their heads in the sand when it comes to personal finances. The ‘big spender’ money personalities will pay the bill in full, regardless of whether they can afford it or not. Those with an ‘accountant’ money personality will calculate and pay only their fair share. While there is no right or wrong answers – there are literally hundreds of money personalities. The exercise simply provides insight into how our money personalities affect our response to different money situations and how this could impact our mental health.
South Africans are experiencing high levels of financial stress, “A 2020 survey of South African’s found that approximately 85 percent of all South Africans need help either financially, emotionally or both as a result of the Covid-19 pandemic.”
Not only is it important to understand your own money personality it is also to understand the money personalities of those who impact you and your personal finances. How would you describe those nearest and dearest to you? Perhaps the following comments may ring true, I think so-and-so is stingy, or don’t you think that this person was born with a silver spoon in their mouth, or on a positive note perhaps you have a friend who is too generous for their own good?
Your money personality is our viewpoint and behavior on money, which impacts the financial decisions we make. Understanding your money personality is important as the actions you take with your finances can be tied back to your money personality, and identifying yours can help shape your approach to spending, saving, and investing.