The Benefit of Understanding Your Money Personality
In our last blog entry we introduced readers to “financial archetypes,” the concept that different people think about and prioritize money in different ways. There are two reasons we think this is important. First, as the famous words written over the entrance to the Temple at Delphi say, “know thyself.” By understanding the pros and cons of your money personality, you may be able to dodge the pitfalls and trouble spots. Second, you can use your personality traits to steer the financial planning process.
For example, Pleasure Seekers, those who value enjoying life over penny pinching, may fall into the trap of spending too much on frivolity and shirk “adult” expenses like mortgage payments and utility bills. If you can identify yourself as a Pleasure Seeker, you may put together a budget to help control your spending habits and ensure those pesky bills get paid on time. Conversely, a Saver (one who prioritizes accumulation) may need help having fun and could benefit from opening a separate account for vacations or a little bit of impulse spending.
Money personalities can have a considerable impact on the development of financial goals as well. Stars and Empire Builders, people who use money for recognition, may want to include a goal of donating a significant sum of money to their alma mater. Innocents, those who just want to know everything is going to work out fine, may value the process of “stress” testing their financial plan - dialing in the correct amount of spending to ensure their plan succeeds under even the worst of circumstances.
The purpose of this exposition is not to suggest that any particular archetype is wrong, right, or even best, but that understanding one’s money personality is a vital component to building a successful investment and financial planning strategy. If you'd like to learn more, check out the book It’s Not About the Money by Brent Kessel, or contact us to discuss further.