‘Spend less than you earn’ may sound simple – on paper.
But if you’re not a natural-born saver, what’s standing between you and reaching your savings goals? It may be your ‘money personality’, ‘attitude to risk’ or – put simply – your ‘emotions’. The good news? Once you identify what drives you to spend, you can learn how to improve your financial habits.
A quick search online will reveal plenty of tools to work out your money personality type, like Sorted Money Personality Quiz .
According to this light-hearted tool, there are 16 personalities, ranging from the Adviser Speculator to the Hedonist. But keep in mind that experts don’t always agree on the personalities’ number and names. Some found as few as three, some identified six or more. US-based psychologist Kathleen Gurney, on her part, believes everyone fits into one of nine personalities, spanning from ‘Entrepreneurs’ to ‘Safety Players’.
Keen to search for your ‘inner spender’ – and maybe tame it? Testing different online quizzes may be an interesting way to spend a few minutes.
“Would you rather take $100 today, or wait a year and get $200?”
This question was part of an experiment recently conducted by Kiwi PhD student Rebecca Olsen (Victoria University), who cut to the heart of an age-old dilemma – the choice between immediate rewards and delayed gratification.
“Many of [the participants] chose $100, even though they also stated that receiving the delayed, bigger amount would make them happier on a separate questionnaire,” she said. “This tells us that we don’t always know how difficult it is to make the self-controlled choice until we’re faced with it.”
Of course, we’re humans – we’re not programmed to be constantly perfect, disciplined and sensible. On the contrary, our subconscious can play a big role in our attitudes toward money – and examples abound. Just to name a few (in random order), high levels of anxiety have been linked to compulsive shopping, while people who believe that material possessions can provide happiness tend to manage their money less. Interestingly enough, according to UK psychologist Dorothy Rowe, introverts are more likely to overspend on their homes, while extroverts may overspend on fun activities and themselves.
On top of this, our upbringing is also a factor – including the money lessons that we may have ‘unwittingly’ absorbed when young.
So, where to start? As we said, understanding the emotions that guide your behaviour is a good starting point. Then, it’s all about assessing how these emotions help or hurt your financial goals – and go from there.
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