If good personal finance was all about math, there wouldn’t be anything to talk about. The basics — living within your means, the tenets of good and bad debt, saving for retirement — are pretty instinctive and easy to understand. Of course, finance is hardly about math at all. Money is deeply personal, rooted in psychology and personal values. Your spending and saving habits don’t just reveal where your money goes — they come from your choices in relationships, the ways you choose to use your time and energy, and your deepest goals.
Usually, the point of identifying your money personality would be to change yourself to fit the “best” one, turning us all into an army of debt-phobic, budget-building, 15%-saving, soylent-green-eating pod people. Obviously I disapprove. While building sensible personal finance habits is of course important, the more important thing is to know what you’re doing and why you’re doing it. Like any art form, that of managing your money is all about knowing when you’re breaking the rules and why.
Spenders and Savers
This is the most basic way to split people, and if I may throw down a broad, completely unscientific generalization (I am a blogger, after all), just about nobody in the world strikes the balance between these two. Either people can’t or won’t save enough money, finding themselves constantly coming up short or falling behind, or they analyze every purchase in a terrified panic, calculating exactly how much that $3.58 will be worth “in 25 years, assuming an 8% rate of return.”
For a spender, money means the things or experiences it can buy. For a saver, money means safety and security.
A lot of personal finance education, especially that focused on people who have struggled with excessive debt, is about creating savers from spenders. Really, money buys things and experiences and provides security. Overvaluing either is a big mental, emotional and financial mess.
The Four Money Personalities
Money Harmony outlines four money personalities: spenders, who get a thrill from spending; hoarders, who get a thrill from saving; avoiders, who simply don’t think about their money until a crisis; and amassers, who stockpile to feel safe.
This model taps into the truth that financial decisions are not motivated by math, but by adrenaline. We avoid fear, seek safety, and chase thrills-and, although many people fit into one category, most embody elements of each. Controlling these impulses is all about asking questions-why am I afraid? Why does this purchase feel good? What are the real risks I face?
The Nine Money Personalities
Kathleen Gurney breaks these personalities down even further, into nine money personalities. While this system is a little more complicated, it still identifies the same motivators of fear, safety and thrill. It looks in more detail at the different ways we deal with these emotions-after all, the thrill of buying new underwear (just me?) and the thrill of playing the stock market are very different.
Gurney has advice for every single one of these personalities-even the “money master” has room to improve.
In finance, as in everything, perfection is confusing, multi-faceted, and altogether unlikely. Learning the ideal imperfection for you is a great first step.
Melissa Eastlake is a contributing writer at Queercents, a syndicate of personal finance writers serving the lesbian, gay, bisexual and transgender (LGBT) community. Since its launch, Queercents has offered up daily tips and financial commentary to over 250,000 visitors.