We all make decisions with our money at one point or another that don’t work out for the best. It’s just inevitable. But if you find yourself falling into patterns of behavior that lead to negative financial consequences, it could be time to examine a little more closely how you make these choices. Continue reading
Experts who study how people make money decisions have identified certain psychological styles for doing so. While no one’s behavior is ever completely encapsulated in a simple description, see if any of the below profiles sounds like you and if so, how that impacts what you do with your money.
Uses monetary gifts to express feelings and connect with people. In some cases, this person may give gifts to others and neglect their own needs.
The soothing spender
Treats money as a tool for self-medicating through difficult times. May make a lot of rash spending decisions that lead to negative feelings later.
The status seeker
Makes money choices based on how it will appear to others and to boost their own self-esteem. Engages in “keeping up with the Jones” behavior to their own detriment.
The bargain maven
Gets a thrill out of finding discounts, whether the product is needed or not. Derives satisfaction not from having a sound financial plan in place, but the emotional boost they get from landing a deal.
Tries to avoid difficult money issues in the hope that things will “just sort of work out.”
Always on the lookout for a get-rich-quick scheme like the lottery or highly speculative investments. Lacks patience and looks for shortcuts at the expense of prolonged security.
Sees money as a way to maximize pleasure right now instead of planning for the future.
Uses money as a way to gain control over people or their own circumstances. Sees money as a way to gain a feeling of safety.
Constantly looks for ways to improve financial standing for self and for family. May believe that with money comes power. Goal oriented.
Financial problems are always someone else’s fault. The system is “rigged” against them.
Is afraid of losing money and opportunities for growth are sometimes lost because of it. May be overly affected by events from their earlier life that cause them to not want any risk in their financial affairs.
The prudent manager
Actively saves money, looks to future and avoids emotional money decisions. Seeks out opportunities to expand knowledge and is realistic about strengths and weaknesses.
No one can ever expect you to be perfect, but think about which of these styles your money decisions fall into and which category you would like to be in going forward.
If it helps, the next time you make a purchase or other money decision you end up regretting, ask yourself what emotions fed into that choice. Being able to identify these feelings will help you find better ways to deal with those situations and put you in greater power over your financial life.