Understanding your financial personality can help you make better money decisions. Here are four common types and some tips for each:
#1: CONFIDENT MONEY MANAGER
You’re excited about managing your finances and likely a long-term thinker and planner. You prefer traditional strategies like having a retirement savings plan and planning future investments. However, you might struggle with seeking a second opinion, moving too quickly, or overanalyzing options.
Questions to ask yourself:
1. Do I regularly review and update my financial plans?
2. How comfortable am I making investment decisions on my own?
3. Do I have a detailed retirement savings plan?
4. How often do I seek advice on financial decisions?
#2: SHORT-TERM STRATEGIST
You’re a careful planner who does thorough research, often taking your time to make well-informed decisions. Flexible and adaptable, you focus on short-term goals rather than long-term ones like retirement. As a strategist, you might miss opportunities by over-evaluating options. Creating timelines or automating finances can help.
Questions to ask yourself:
1. How often do I adjust my budget based on changing situations?
2. Am I more focused on immediate needs than long-term goals?
3. Am I comfortable researching before making financial decisions?
4. How frequently do I automate my savings?
#3: VALUE-BASED PLANNER
You’re future-oriented, charitable, and make financial decisions based on your values. You prioritize donating to charities but may neglect your own daily finances. Consider working with a financial advisor to stay on top of your finances.
Questions to ask yourself:
1. How often do I prioritize charitable donations in my financial planning?
2. Do my financial goals align with my values?
3. Am I proactive about supporting causes that matter to me?
4. How regularly do I review my daily finances?
#4: LAID-BACK BALANCER
You have a relaxed approach to money, prioritizing living your life and intuition over strict budgeting. You keep an eye on your money but may not be up-to-date. Financial planners and advisors can help. It’s important to stay informed and set future goals. Budgeting apps for beginners can make this easier.
Questions to ask yourself:
1. How comfortable am I without a strict budget?
2. Do I rely more on intuition than planning?
3. How often do I review my overall financial status?
4. Am I open to using budgeting apps to track my finances?
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SIMPLIFIED CATEGORIES
If you find these categories complex, consider these simplified types by Dean Deutz, a private wealth consultant at RBC Wealth Management:
A. Savers: Prioritize saving now to enjoy financial security later, often paying off debts like mortgages early. They should balance caution with potential high-return investments, seeking diversified portfolios that align with their long-term goals.
B. Spenders: Enjoy their money presently, often borrowing and saving less. Spenders benefit from reducing discretionary spending to increase savings and build emergency funds for future financial stability.
C. Sharers: Enjoy sharing money with family, friends, charities, or their community. They should manage their generosity wisely, setting clear boundaries and budgets to sustain their giving while ensuring their own financial health.
Understanding your financial personality can clarify your decisions, reveal patterns in your financial habits, and highlight areas for improvement to achieve greater financial well-being over time.