So much of our finances are determined not by money, but by our personalities. Financial planning is often driven by the emotional side of things — our goals, values, priorities, and needs. And, once we define our goals and priorities, getting to them is very much affected by our money personality. A person who loves to plan may have a different attitude towards comprehensive financial planning versus a person who loathes planning anything.
Here’s a brief overview of 4 types of money personalities and some tips based on them.
1. The Big Saver
Some people love to save. It may have started in childhood when they were rewarded for putting pennies in a piggy bank. Or, they may have traveled with parents or grandparents to open their first savings or investment account, with great fanfare. It stuck with them that this is a significant and important thing to do!
Since saving is a crucial component of realizing goals and priorities, this is an excellent personality type to have. It’s very likely that this type of personality has set up a 401(k) with a match if it’s available where they work. (And if it isn’t, they likely will have an Individual Retirement Account) They may follow their financial advisor’s monthly, quarterly and yearly reports on investments with great interest.
The tips for this personality type? To realize that there is a time and place for spending as well as saving! This type shouldn’t become someone who lives so frugally that they never realize the fruits of their labors.
It can help to have specific spending goals as well as savings goals. Is owning a second home or travel important? Set a specific amount to achieve that objective, and then take the money out and spend it once you’ve hit the mark!
2. The Spender
Spenders are the opposite of savers! Their idea of what to do with money is to spend it. They see a paycheck or dividend check as an opportunity to buy what strikes their fancy — clothes, gifts, home decor. And the big stuff too: houses, vacations, luxury items.
It’s fine to spend money if you have it. We’re not against spending! But the fact is, spenders can run into several problems. The first is potential overspending. Overspending can happen to people in any income bracket. Spenders sometimes buy for emotional reasons, such as stress or worry — or even to celebrate.
Spending driven by emotions can potentially wreak havoc on a budget. The key? Once a person knows they like to spend emotionally, keeping a surplus for a certain amount of emotional spending in your monthly spending may be a good idea.
The second problem with an overspending personality is that spending can take the place of saving. It’s important to have enough saved to meet goals like retirement or setting up a foundation.
By working with a financial advisor who specializes in holistic financial planning, including experience with working with various money personalities, to set up a comprehensive financial plan can help this type of personality stay on track.
3. The Big Planner
Yes, there are those of us who love spreadsheets! Planners enjoy planning, and they enjoy working with advisors and coaches on planning. It’s a joy to sit down and consider their values and how to meet them financially.
If you’re a planner, lean into it! Most financial advisors are similar types and will enjoy discussing how to further financial goals. Setting up a system (spreadsheets, face-to-face meetings, software, reports, or a combination) that works for this type of personality is key.
Planner personality types can run into potential pitfalls, however. First, they shouldn’t try to go it alone. Everyone can benefit from financial coaching and advising. The topic of “finances” is simply too complex, covering everything from investments to estate planning and taxes. Work with trusted professionals rather than trying to be one.
Second, be careful of mismatches with significant others. If a planner’s spouse isn’t a planner, they may see planning as a source of leaching the joy from life! They may want to be surprised or rely more on process and flow than you. Communicate openly about times when they want to be spontaneous (as in trip planning) or relatively plan-free.
4. The Roll With the Flow
You guessed it: The “roll with the flow” personality is the opposite of The Big Planner. Roll with the flow personality types don’t like planning. They aren’t comfortable with it.
It could be that they grew up in a family in which not much planning was done — or, perhaps planning dictated everything and they are still in rebellion against it. Or, it could be that their financial needs have always been met without much planning, and they see no reason to change.
Rolling with the flow can be fine, of course. But to meet their goals and live in accordance with their values, they can benefit by having some planning.
Plus, working without sufficient planning carries some risks. Retirement planning, for example, is best done decades before an actual retirement date, so that retirement funds can grow optimally.
A “roll with the flow” personality type may fail to plan in ways that impact themselves and their family. Educational savings, for instance, are another category in which tax-advantaged savings can grow for years with the right investments.
It’s advisable to work with coaches and advisors to plan for areas such as retirement, investments, education, and estate plans. Devoting some time to discuss values and objectives with your financial advisor can lead to a plan that endures. The plan operates in the background, providing a backdrop against which this type of personality can happily roll on as they please.
If you’re in Libertyville, make an appointment to discuss your personality type with our financial advisors and coaches.
At Prism Planning Partners, we are CERTIFIED FINANCIAL PLANNER™️ Professionals committed to facilitating important questions so that we can help you explore all of your opportunities. We offer a broad array of holistic financial planning and consulting services for our clients-including retirement, investment, and estate planning.
Contact us today and let us illuminate your possibilities!