Americans are more in debt than ever before, and our money personality might be to blame. Local financial professional Scott Braddock from Scott Braddock Financial is here to discuss different personality types and ways to modify our behavior to achieve our money goals.
Our money personality is our viewpoint and behavior on money, which impacts the financial decisions we make. Understanding your money personality is important right now. We’ve experienced tremendous volatility on Wall Street, which can trigger emotions like fear and anxiety. Actions you take with your finances can be tied back to your money personality, and identifying yours can help shape your approach to spending, saving, and investing.
Different Money Personality Types
Compulsive Spenders - A compulsive spender has no trouble parting with his or her dollars. They might make rash decisions when it comes to money, often getting caught up in the moment by spending first and thinking about it later. If this sounds like you, Braddick recommends making an effort to save. Set up automatic withdrawals from each paycheck for emergency savings. This way you’ll have money set aside in a safe place to hopefully keep you from spending it. Also, consider implementing the wait rule. When you want to make a big purchase, give yourself a mandatory 48-hour waiting period to prevent impulse buys.
Careful Saver - A careful saver loves finding a bargain, but also avoids spending money and may have a hard time parting with their cash. Once you approach retirement, this personality might come into play if you are afraid to spend what you’ve saved or are afraid of running out of money. Having a financial plan is important no matter your personality type, but it can really benefit the careful saver by spelling out how their hard-earned money will work for them. Sit down with a financial professional you trust who can create a long-term plan and help you understand it. Braddocks' specialty is helping retirees worry less about their money. With the disappearance of pensions and the introduction of 401(k)s, people have to learn how to properly save and manage their money. He shows his clients how they can use and enjoy their money responsibly. You can learn more about the retirement planning process on his website.
Money Avoider - An avoider is the type of person who believes money is bad or they don’t deserve it. Someone with this mentality tends to sabotage their financial situation. They ignore bank statements and struggle to stick to a budget. This personality type might not even keep a budget! A budget helps you track how much money is coming in every month and how much is going out. You cannot ignore your bills and expenses and writing it all down can help you understand your financial situation. You can find a budget worksheet on Braddock's website to help you get started.
RiskTaker - A risktaker is not worried about the details; they are excited about the possibilities and often make quick decisions. If you consider yourself a risktaker, you’re likely not afraid of investing your money. It’s important this personality type works with a financial professional to keep their portfolio diversified. Your risk should be appropriate for your age and how close you are to retirement. A diversified portfolio will be less susceptible to major events on Wall Street like we experienced in the first quarter of 2020.