How to identify your financial personality

Whether we like it or not, money makes the world go round and our spending habits play a big part in our everyday lives. With this in mind, we all think about our money differently and have developed different spending and saving habits over time, which are usually influenced by how we were raised.

Understanding your thoughts on money can help you identify your financial personality and your relationship with money. We’ve outlined four common money personality types, which might help you better understand your bank balance and how to manage it better.

Understanding your financial behaviour can help you overcome any bad habits so you can improve your financial wellbeing.

The carpet sweeper

If you find yourself feeling a little bit worse every time you think about your finances, and you actively avoid reviewing your finances, then you may fall into the “carpet sweeper” category. These people choose to avoid looking too closely at their bank account statement or researching different financial products, which means they’re often paying the “lazy tax” in many aspects of their life.

To avoid sabotaging your own financial wellbeing, it’s important you get your head around your own financial situation. Set aside some time each week to sort out all your bills and start making a budget for yourself so that you can better track your spending. You can also set some short-term savings goals to get the ball rolling. Once you get started, you should find that organising your money can actually make you feel more in control – remember, failing to plan really does mean planning to fail!

The rewards seeker

With over 70% of Australians currently owning a credit card, many of us feel that we may as well earn points while we spend. Signing up for a rewards credit card or loyalty program with a retailer allows you to be rewarded for your purchases in the form of points, access to special offers or discounts on your birthday.

While this sounds good on paper, these programs can actually make you spend more than you really need to out of fear of missing out on that special deal! Don’t forget that rewards programs can come with additional costs. For example, some rewards credit cards can have annual fees as high as $150-$200.

Before making a purchase to earn points, consider whether it’s something you really need and refrain from spending money simply because of the rewards factor.

Luxurious spender

Treating yourself is great every once in a while, but if you already have three bottles of perfume and decide you need to go and buy the newest one, then you might be a little too indulgent with your purchases. Luxurious spenders enjoy the glitz and glam and will only buy “the best” of everything. To justify this expensive taste, you might even find yourself lying about how much you earn.

It’s important to kick this exxy habit before you find yourself turning to big amounts of debt to fund your impulsive shopping ways. These people need to “think twice and act once.” Learn to separate needs from wants, and practice self-control when you feel tempted by an expensive purchase.

Cutting back on this high-brow spending will allow you to put your money towards long-term goals like saving for a house deposit!

The dollar counter

If not a cent comes in or out of your hands without you carefully thinking about it, then you may identify as a “dollar counter”.

You might even tell people that you earn less than what you actually do to justify your frugality. These people love to save and stress out if they don’t have enough stashed in their rainy-day fund. They’re unlikely to pay for things on credit and believe that if you don’t have the money to buy something outright, then you should save up for it (rather than taking out a loan).

While this is a great way to think about money, don’t forget to treat yourself every so often and make sure it doesn’t interfere with your social life.

Any financial problems you have can make a whole lot more sense if you understand how you think about money. Identifying your financial personality can help you overcome any unsavoury money habits so you can make changes for the better.

Bessie Hassan, money expert at finder.com.au