The best money tips for your personality type

Do you know your money personality type? If you don’t, it may be the reason why you can’t quite grasp how to get into a good place with your finances. While some personal finance advice is one-size-fits-all, having a better understanding of your own approach and emotional responses to money can help you to best achieve your money goals.

The Compulsive Saver

Compulsive savers feel compelled to save even when there is no end goal in mind because it makes them feel secure. Compulsive savers often live very frugally.

“I have many clients who fit this bill and to be honest, the biggest issue I see is with couples who have mismatched savings styles,” said Alex Klingelhoeffer, CFA, CFP, wealth advisor at Exencial Wealth Advisors. “After all, if you’re single and want to save 50% of your income for no particular reason, do so to your heart’s content — no one will have an issue. Often, there is one spouse who may be a compulsive saver and the other who might be more liberal in their spending habits.”

“The best advice I have for these couples is to map out their true priorities with life — what is important and what makes us feel secure,” he continued. “Once we work together in establishing those priorities, it’s much easier to balance trade-offs of living a little now versus putting enough away for the future to be comfortable.”

The Compulsive Spender

If you find yourself making unnecessary purchases, buying things as a way to deal with stress or sadness or often experiencing buyer’s remorse, you may be a compulsive spender.

“This is one I see quite a bit,” Klingelhoeffer said. “The best tip I have for compulsive spenders is to look for ways to generate additional income. I know, you were probably expecting a wealth advisor to come in and say you need to cut out the Starbucks, skip the avocado toast and focus on keeping expenses low. Well, here’s a reality check: Most truly compulsive spenders have a level of spending that doesn’t change much — either they earn their way out of their habits or go down the debt spiral.”

“Budgets are like restrictive diets — you rarely see them work long term,” he continued. “However, if you start making additional income, then the spending is less destructive to your long-term financial success. As a bonus, if you are spending more time earning, you’re probably spending less time… well… spending.”

The Compulsive Money-Maker

For this money personality type, growing wealth and making more money is the top priority. The compulsive money-maker believes they need to make more money to live a better life, and often seeks outside validation for their financial success.

“For those of you who fall into this camp, don’t feel bad,” Klingelhoeffer said. “There are lots of folks motivated by money and that’s OK. The best piece of advice I have for these folks is to understand the concept of being ‘work-optional.’ Most of the time, that means mapping out how many dollars your family needs to save to have all your goals taken care of and live your life to its fullest. At that point, you have a firm idea of how much you need to work and how much is just extra work that you do because you find it meaningful.”

Once you understand how much you actually need to earn, you can make the decision about how much you really need to be working and why you are continuing to work if it goes beyond that need.

“I have plenty of clients that continue to work well after being work-optional just because they enjoy the routine, comradery and identity that comes from their position,” Klingelhoeffer said. “I have other clients who have been feverishly making dollars that come to me for a consultation and are surprised [to find out that] they could have retired a few years ago without blinking an eye. Once you have an awareness of what you are working for, your natural inclination towards work and success will be a better guide than anything I could offer.”

The Indifferent-to-Money

If you rarely think about money and don’t believe it should be factored in your life decisions, you may be the “indifferent-to-money” type.

“If you’re indifferent to money, that’s generally a healthy attitude,” Klingelhoeffer said. “After all, money isn’t the most important thing in life. What is most meaningful to 99% of my clients are family, meaningful occupation and recreation. Money isn’t the why for these people, it’s the how.”

However, you do need to acknowledge that money is a factor in your ability to enjoy life the way you want to.

“If you find yourself feeling like money is the enemy or have been raised to think it isn’t important, remember that it’s a tool to help you enjoy and accomplish the things that do make life meaningful, and thus, is an important thing to have goals, priorities and habits built around,” Klingelhoeffer said. “This simple change in mindset can turn an enemy into a friend.”

The Saver-Splurger

If you’re sometimes a “saver” and sometimes a “splurger,” you may be this dual personality type. Saver-splurgers tend to save and be mindful of money for the most part, but will give into spending impulses and splurge.

“If you find yourself in this category, don’t worry — you’re in good company,” Klingelhoeffer said. “Many successful individuals save most of the time and splurge a little here and there. The best exercise to balance these tendencies is a priority checklist. What I want you to do is write down the 20 things in life that are most important to you and what you want to accomplish. Next, go ahead and rank them 1-20. Last, I want you to draw a big circle around 6-20. Those are the things that will keep you from accomplishing 1-5. Once you are aware of what matters most, it’s much easier to resist the urge to splurge on things that don’t move the needle.”

The Gambler

Gamblers often take big risks with money, and so they experience lots of emotional highs and lows — they get happy when they have a financial win, but can become deeply depressed when they inevitably suffer a loss.

‘The key to being a successful investor with the gambler personality type is to create a ‘sandbox’ — a space where you can make mistakes and not get hurt,” Klingelhoeffer said. “A common solution is taking 10% of your assets and putting them into a brokerage account that you manage and having 90% of your assets professionally managed. You can do whatever you want in the sandbox. Go crazy. Buy speculative stocks, invest in cryptocurrency, take it to Vegas and literally bet it on black. Whatever happens with the sandbox money is fine because all of the important dollars are outside the sandbox, growing to provide financial stability for your family over the long term.”

The Worrier

Do you constantly worry about your financial stability? Do you lack confidence in your ability to manage money? Are you always in “preparation mode” when it comes to your finances? You may be a “worrier” type.

“Being a worrier is like walking a tightrope. If you look down (in this case at your overall financial picture) you might feel uneasy about where you are going,” Klingelhoeffer said. “If you find yourself constantly worried about finances there are two keys to focus on: [your] cash balance and [your] long-term plan. The key here is to have a couple of things to focus on when you’re feeling anxious about dollars.”

When it comes to your cash balance, find some amount in your checking account that makes you feel comfortable.

“For some folks this is three months’ expenses, for others, it’s a fixed amount, say $50,000,” Klingelhoeffer said. “No matter what, you always know you have cash to get you through whatever life throws at you. Is it ideal to keep that much cash at a low interest rate? Probably not. If it keeps you from worrying about money, it’s a great investment.”

When it comes to your long-term plan, figure out where you want to be in five, 10 and 25 years, and know what you need to save to get there.

“There are a million financial calculators and online tools that can be helpful, or see a financial planner that can help you with the math,” Klingelhoeffer said. “As long as you’re saving and investing according to plan, everything else will take care of itself.”

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