There are, of course, a million variants in the way people deal with money. In all likelihood, you will share attributes with some, maybe all, of the following types. Chances are, however, you’ll most easily fall into one category. Knowing that, and the consequent strengths and weaknesses of the type, will give you a lot of power when it comes to finances. Inspired by the famous categories of Olivia Mellan.
There’s frugal, and then there’s taking it too far. Hoarders tend to be extremely careful with money, love saving it and rarely spend it. While this is a fantastic approach to money, it can have a tendency to go too far and resolve in people saving all their money and never spending any of it, on themselves or others. Tip: Write down a list of your financial goals and what you would like to achieve with your money. Promise yourself you’ll achieve one by the end of the year, and make sure the list comprises of things you actually do with money as opposed to solely having savings goals.
The lover of instant gratification, the spender finds holding onto money tricky. In fact, they don’t even know where it goes. Generous to a fault, spenders can do serious damage to their finances by being unable to save any of their money. I wish I knew less about it, but personal experience does tend to make me a complete insider on this one. Tip: Don’t completely cut back, just start a budget. Set up a direct debit from your paycheck into a savings account that you can’t touch for six months. If you can’t see it, you can’t spend it. Oh, and Mellan suggests not dating hoarders as each other’s habits tend to be a recipe for a disaster.
Some people are genuinely uncomfortable with money. They cover their basic needs and are otherwise unconcerned or uncomfortable with the money they have. I know very few monks, but they do exist. Tip: Make sure you’ve covered essential goals; your retirement, your emergency fund and your expenses. Never compromise your own wellbeing because of your personality type. Then, if you’re genuinely uncomfortable, choose a couple of your favourite charities and invest in them. It’s a fantastic thing to be doing with your money.
The Amasser (Or Obsessor)
Think about money all the time? You’re an amasser. You’re serious about money, serious about making it and serious about watching it grow. That’s great, but your obsessive nature can sometimes make seeing the forest for the trees a bit tricky. You’re very in tune with what’s happening with your money, but thinking about it all the time can be more stress than anything. Tip: Set aside a certain time every day to check in with your finances and the stock market and do not, repeat do not, check it outside of this time. You’ll look forward to it, and it will keep your money worries from invading every part of your life.
Three years overdue with your tax? Unable to pay a credit card bill because you haven’t looked at a statement in months? If knowledge is power, the avoider can tend slightly towards the powerless when it comes to finances. Thinking about money constantly is damaging, but avoiding the thought all together isn’t a great strategy either. Tip: Just like an amasser, set aside a time once a week to look at your finances. Like a bandaid, just get it all over and done with in one hit. Automatic deductions that will help you achieve your financial goals without depending on your energies are important.