Everyone has that friend who always seems to have the money to go out.
The pal who is constantly skint – you know because they tell you so – but somehow it doesn’t stop them.
They’re there for the parties and the dinners and the after-work drinks. They always have the latest dress or trainers or a new coat. They somehow seem to go on holiday all the time – but you know it’s not because they’re earning loads more than you are.
You’ve probably asked yourself at least once: how do they do it?
Perhaps they’re the savviest of us all – a bargain-hunter extraordinaire, so attuned to the latest deals or giveaways that it doesn’t matter what they make because they sniff out the special offers every time.
Perhaps they have a side hustle that they use for spending money, or a partner or parent who helps fund their habits.
Or perhaps they’re simply impulsive – happy to splurge, willing to spend, to hedonistically go after the things they want and worry about the cost later.
Asking how someone achieves a certain lifestyle is something many of us will wonder at one time or another. After all, we like to know these things about each other because part of us probably feels like if we only knew how, perhaps we’d be able to emulate the things we like about that friend: their spontaneity or their shrewdness or their work ethic.
However, the more interesting question is not how. It is why.
Why seek out a bargain when you could save time and buy something much more quickly for the same money without the hassle of comparing and contrasting a multitude of offers? Why choose to work more than one job rather than living within your means? Why splurge even when you’re already in your overdraft?
The “why” of our financial habits is at the core of our money personality. Why do we feel a certain way when we spend or save? Why do we behave a certain way or have particular habits when it comes to shopping or eating out or buying gifts etc? Figuring out the why isn’t simple, yet it underpins how our financial environments affect us, as well as understand how to better control our cash rather than letting it control us.
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The Money Personalities
You’ve probably heard people describe themselves as a ‘spender’ or ‘saver’ – maybe even used one of these to describe yourself. These are two of the most common ways to think of a money personality, though certainly not the extent of them.
In fact, there are many schools of thought about how many money personalities exist. The Financial Times has suggested there are six financial personas we all fall into; Catherine Morgan, founder of The Money Panel, posits that there are four primary money types; Investopedia has a list of five top line approaches that define our relationship to our money; and Olivia Stefanino’s The Money Type Guidebook looks at a range of archetypes based on psychotherapy that reflect on our attitudes and behaviours.
What they all have in common is that they identify core behaviours and patterns that we recognise in ourselves. They provide great jumping off points for learning more about our emotional relationship with money and how we can all live a more healthy financial life.
Here are a few that may resonate with you:
Do you find yourself setting goals and dreaming big only to find yourself panicking when your budget doesn’t quite cover the whole month? You’re not alone. Aspirational reachers are people who understand their money – they’re self-aware and conscious of what their finances are doing; they enjoy spending but also have good saving habits and probably dabble with investing too. However, they can struggle with their confidence and guilt if they go over budget or find themselves in a crisis.
If you’re an Aspirational Reacher, the key thing is to take time to remind yourself that we’re all human and mistakes can be fixed. Take time to reflect on your finances and consider how mindful spending can help you stay feeling money positive.
Some call this personality type the “big spender” or the “hedonist”, but if this is you that’s because you enjoy rewarding yourself and spending your hard-earned cash is something that brings you a nice little buzz. You probably don’t fear debt in the same way as savers or givers, are attuned to where the best bargains and deals are, and are more likely to feel comfortable taking risks when it comes to investing too.
However, if you start to feel stressed or anxious about your credit, then it’s worth asking yourself whether your purchases are really for enjoyment or motivated by a different, deeper emotional need. For example, a desire to be admired or be perceived a certain way. There’s no shame in loving to shop – but it’s always good to feel in control of your money.
On the flip side of the Spontaneous Spender is our Savvy Saver – you feel in control when you’re saving money – putting plenty away and shoring up against rainy days. You’re the most likely person to have an ISA and savings goals that you consistently work towards, whether that’s a new home or a trip to the Mediterranean. You also likely have a pension and make sure to stash your cash in multiple places just in case.
Of course, one thing you may find you struggle with is taking risks – for instance, investing in more volatile long-term funds. Likewise, you may worry about missing out because you don’t want to part with your money. The trick here is to make sure that you’re saving, not hoarding, so that your money is a tool that empowers you rather than something that holds you back.
Do you ever feel guilty about spending money on yourself? Perhaps you find it easier to spend money on others instead? If so, you could be a Worried Giver. As a Giver, you’re a generous and thoughtful person who finds it easier to prioritise others over yourself. You’re probably the person who always buys a round at the bar or who donates to a plethora of charities, patreons and crowdfunding platforms.
Catherine Morgan notes that many parents also experience this, choosing to spend more on their child than on themselves or their partner. Giving is great, but if you find yourself struggling to show yourself the same level of attention, it could be worth taking a moment to reflect and consider your why. Perhaps you want to feel needed or see it as a sign of status – there’s nothing wrong with this, but if it’s no longer working for you then perhaps it’s time to reflect and see if you can balance this behaviour with some others that can best support you and your goals.
Like the Ambitious Reachers and Savvy Savers, the Proactive Planner is very astute with their finances and actively looks for opportunities to make their money work for them. Whether that’s through bargain hunting or investing smartly, if you’re a Proactive Planner then you’re likely known for doing your research and being unafraid to make decisions. You probably also have long-term goals – personal and financial – that you’re working towards and you may well be the person that your friends turn to for advice.
The primary caution for the Proactive Planner is to make sure you’re not obsessing. Keeping on top of your money is very admirable but, as the FT noted, one underlying reason for wanting such strong control of your finances is that you may find it harder to deal with the unpredictability of life. If this sounds like you, it could be worth ensuring that you regularly take a step back to look at the bigger picture, helping you feel calmer even in turbulent times.
Identifying your money personality
Did you spot yourself above? This isn’t a definitive list and the fact is that most of us sit in more than one category and we may shift from one to another during our lifetimes.
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