How your money personality shapes your financial future

Knowing yourself and your financial goals is a crucial first step if you want to create a fruitful retirement.

Published on:

11 Jul 2023, 3:00 am

*This content is brought to you by Brenthurst Wealth

By Tanita Conradie *

Do you know yourself? I mean, do you know yourself? Sure, you can name your favourite food or pastime, but when did you last sit down and think about your financial goals? Do you know what they are? Can you list them?

Knowing yourself and your financial goals is a crucial first step to creating a fruitful retirement. So, why do so few of us take the time to figure out what we want? Even worse, we often make financial decisions that harm our plans rather than help them.

One lesson I share with my clients is how to identify what their 'money personality' is. By understanding these personalities and the traits they display, you'll be in a much better position to manage your finances to suit your true self.

To better understand these personalities, here are four of the most common ones:

1) The Socialite (aka "Spender")

If you find joy in spending money and don't mind a little bit of debt, you might be a Spender. Status is important to you, and you might find market volatility exciting because it often presents opportunities for increased investment and returns.

Your high-risk tolerance and active investment approach might lead you to investments such as:

– Stocks

– Cryptocurrencies

– Startups

However, beware of the pitfall of chasing high investment returns. Over the long run, this strategy could end up costing you more than you expected.

Read also: Split-decision: are you ready for the two-pot system?

2) The Minimalist (aka "Saver")

As a Saver, you value financial security and prefer to keep your money in low-risk, stable investments. You might not always have an end goal in mind, but the act of saving gives you a sense of comfort and peace of mind.

Suitable investments for you might include:

– Interest-bearing bonds

– Money market funds

Be careful, though. Being too focused on low-risk assets can cause you to miss out on investment opportunities that offer more substantial long-term benefits. In other words, while earning interest can be a safe strategy, it often fails to outpace inflation, hampering your growth opportunities.

3) The Realist (aka "Avoider")

If you feel stressed or overwhelmed when dealing with finances, you might be an Avoider. You tend to procrastinate on financial decisions and prefer conservative investments to limit potential losses.

However, this can hold back your financial growth and wealth accumulation opportunities. If this sounds like you, consider speaking to a financial advisor. They can guide you through what you need to do, how to do it and which investment products to use to reach your goals.

This level of guidance will go a long way to setting up your financial future without having to worry about the details.

Read also: Don't delay investing

4) The Enterpriser (aka "Financial Planner")

As a Financial Planner, you are goal-oriented and disciplined. You have self-control over unnecessary spending and tend to invest thoughtfully and diversely. When the market dips, you don't panic; you stick to your long-term strategy.

Your balanced risk profile and goal-oriented approach might lead you to investments like:

– Retirement annuities

– Collective investment schemes

– Blue-chip stocks

– ETFs

However, remember not to get too caught up in investment performance or trends. Focus on your personal financial goals and make sure your investment strategy aligns with them.

Hopefully, breaking down these money personality traits and suitable investment types will help to give you a better understanding of who you are, and how you could apply this to your retirement saving strategy.

And remember, everyone is unique. Your relationship with money is personal, and a greater understanding can lead you to financial well-being. You're not just any investor—you're your investor. So, get to know yourself, and let's make the most of your financial future together.