Sometime last month, I conducted a small personal finance workshop. One of the things we discussed is how our personality types can affect how we handle money. The diverse ways people approach money comes down to things like our upbringing, education, employment status, and where we are in life.
It’s often overlooked that how we behave as a person affects how we view money, spending, saving and investing. I’m a firm believer that in order for us to be better at managing money, we must first understand what makes us tick. There are five common personality types we can broadly categorize ourselves into.
1) The Spender
We all have that one friend who’s got the nice car or handbag, goes on luxurious holidays and buys the latest iPhone (can you believe that damn phone retails at RM5k now?). These people are the Spenders.
Spenders generally come from families who are pretty stable financially and are able to afford material things growing up.
These households often don’t discuss money in a negative way or even at all. As a result, they grow up with little anxiety over their financial future and spending money without much forethought comes easier to them.
Spending & Saving Style
The Spender is someone who approaches money with a nonchalant attitude.
Spenders tend to derive self-esteem from spending money lavishly. They are usually quite sociable and confident people. Their weekends tend to be jam-packed with outings and activities. They’re one to insist on picking up the tab at the dinner table. They’re always on trend for the latest fashion or gadgets.
Saving is not a priority to the Spender. Whatever disposable income they receive goes to spending on daily expenses and lifestyle expenses first.
They value quality over price. They can see value in spending a little bit more money for more convenience. A Spender would pay for valet parking instead of looking for parking at a crowded mall because it saves them more time.
In that sense, Spenders understand the time-money trade-off much better.
As investors, they tend to have a high-risk appetite and are confident in their investment abilities. This makes them risk takers as investors.
Coupled with some investment knowledge and keen business sense, Spenders can profit big time when they take risks.
However, due to their overconfidence, Spenders have a tendency to take unnecessary gambles. This can expose them to large losses that could lead to financial hardship.
Maintaining social status or appearances is something Spenders value deeply. They believe that how you present yourself impacts how society accepts you. Because of this, they may be prone to excessive lifestyle spending. It’s possible that their spending habits can lead to accruing huge amounts of debt.
If you fall into this category, it’s important to be aware of how much you’re spending and why you’re spending money lavishly. Is it to make yourself feel good? Is it to show off? Is it to feel accepted by society?
You should also reassess the risks that you’ve taken and ask yourself will those risks pay off exponentially more than the losses that you could potentially sustain.
2) The Hoarder
A Hoarder is someone who likes to accumulate cash. They’re the people that are secretly stashing away money into fixed deposit accounts fearing the next big financial crash or some catastrophic emergency.
A Hoarder can come from a background where money is not a pleasant topic to discuss. They grew up acutely aware of their family’s financial struggles. In some cases, money issues caused major problems in the family’s relationship.
So, Hoarders grow up with a lot of anxiety over their financial future and spending money becomes an act that worries them.
Spending & Saving Style
Generally, Hoarders are frugal. They put a lot of thought into saving money all the time. On the other hand, they don’t like to think about spending money, not knowing how or what to spend money on. There’s a lot of second-guessing and self-doubt that stems from the uncertainty of how an expense can benefit them.
Sometimes, the indecisiveness leads to sudden impulsive spending decisions just to ease the anxiety.
They also have a negative view of debt. They are reluctant to take on loans because they feel that it can be burdensome. For instance, this may stop them from purchasing a property, even though they can afford it.
Hoarders are extremely risk-averse and cautious. This can lead to missed investment opportunities because they are unwilling to lose money in an investment. So, they end up concentrating most of their wealth in low-risk low return vehicles such as fixed deposits.
Hoarders have a hard time dealing with unpredictability because they tend to have an emotional attachment to money. Because they’ve experienced how unpleasant it is to struggle financially, they seek ways to prevent that from happening again. They rationalize this by keeping cash safely for “just in case” reasons.
One of the ways to avoid being an anxious Hoarder is to educate yourself on different investment strategies and risks involved. As you learn more, you can weigh the pros and cons of each investment against each other. Try to detach your emotional insecurities from money and you’ll become more comfortable taking calculated risks.
3) The No-Eye-See
These are people who have no idea what is going on in their bank account. They don’t keep track of what’s coming in or what’s going out. They are neither flashy spenders nor do they make any active effort to save money. But somehow, these people are constantly just getting by.
Growing up, having zero clue what goes on in their homes financially is both a blessing and a curse for the No-Eye-See. Once they become adults, they typically feel overwhelmed when faced with the idea of managing money.
Spending & Saving Style
The No-Eye-See doesn’t like to think about money. So, it’s also likely that they’re not as careful about spending or saving money. When the need arises to spend, they won’t hesitate to do so.
Many people who fall into this category can get by pretty okay in life. People in this category tend to focus on earning more income over time to sustain their lifestyle. They leave the financial decisions up to a family member or a partner or a financial advisor.
Being oblivious to your financial standing can lead down a slippery slope. While you’re focused on earning more, debts can also accumulate without you knowing. Over a long period of time, this can end up hurt your bank account.
The No-Eye-See tends to relinquish control over their finances to a financial planner. Faced with financial products, jargon and “bank speak” they don’t know where to start looking so they don’t even try to understand.
As investors, they can have either high or low-risk tolerance. They let the financial planner decide for them. There’s a danger here that they may be advised to invest in a product that isn’t suitable for them.
A lot of people fall into this category because financial education is scarce in Malaysia. We don’t learn about good money habits at an early age. When we become adults, we feel powerless so we don’t even attempt to control our finances.
One way to combat this sense of powerlessness is to start educating yourself slowly and gradually. Question what your goals are and then work towards them. Do you want to own a home? Do you want to pay for a wedding? Or for your children’s college?
Having a curious mind helps. Ask your financial advisor all sorts of questions, no matter how stupid you think these questions are. They should take the time to explain things to you. Talk to your friends about money, read personal finance blogs and watch some video tutorials on Youtube.
Over time, you will start to learn more about how the financial systems work and eventually feel more in control about your finances.
4) The Lalang
The Lalang is someone who has a hard time sticking to a budget. They are easily swayed by a sales pitch or peer pressure.
They tend to be the ones who follow whatever everyone else is doing. Often, they will be the ones spending money on the latest trends as well.
Spending & Saving Style
The Lalangs often fall into the “social media trap”. They are the target demographic for social media influencers and advertising companies because it’s easy to convert them into customers for a brand.
The main difference between the lalang and the spender is that the lalang may not necessarily spend in a way that can bring added value to their life. They don’t have the ability to discern quality or value because they’re looking to other people to do it for them.
Like the No-Eye-See, the Lalang is also a person that doesn’t keep a budget or take active control over their spending. Because they’re constantly trying to keep up with the Joneses, they can be in danger of falling into bad debt.
They’re the type to buy into stocks based on other people’s advice. Whether the advice they receive is valid or fits their profile as an investor isn’t relevant to them. If they’re not careful, they can sustain huge losses because they did not do any research into an investment.
Do you equate being wealthy and happy with having as many things as the next person, if not more? Are you spending beyond your means to show off to your friends? Are you making spending or investing decisions based on what other people tell you?
If you feel like you are constantly feeling the pressure to adapt to what society believes is acceptable, chances are there is a little bit of Lalang in you (hey, I’ll admit, I have some in me too). What you need to ask yourself is how is this affecting you financially.
5) The Calculative Bugger
A Calculative Bugger is constantly looking for the best deal. A close relative of the Hoarder, someone who’s calculative likes to keep a close watch on their finances as well.
Spending & Saving Style
They track their spending and saving almost obsessively. They will weigh their options, do research before considering a purchase. They’re constantly on the lookout for a bargain, the best credit card deal, discounts on ShopBack, and so on. In this sense, they navigate consumption spending much better than most people.
You can find them in the sale section of a store. A flaw of being a Calculative Bugger is that sometimes they trade quality for a cheaper price. As cheaper goods have lower quality and lifespan, these Buggers may end up spending more over the long term.
Buggers tend to be cautious investors. They’re willing to take calculated risks especially given that they’ve done research into a certain investment. Unlike the Spender, they are much more likely to diversify some of their risks into different investment vehicles.
However, there’s a threat of over-diversification and excessive trading with Calculative Buggers because they are trying to maximize their dollar as much as possible. Sometimes, this can cause them to have lower returns overall.
They like to have complete control of their finances and have a 360-degree view of all of their money. They’re eager to learn about personal finance and investing.
For the most part, that is a good thing. However, Buggers need to be careful that this behavior doesn’t turn obsessive. Ask yourself, does the constant expense tracking take up valuable time and effort that can be used instead to earn more income? Do you feel out of control if you don’t open your bank account for a few weeks to check the balance? Are you able to trust the judgment of your financial advisors?
Like Hoarders, Calculative Buggers also have a hard time dealing with uncertainty. Just make sure it’s not affecting you negatively.
Which One Are You?
“Until you make the subconscious conscious, it will direct your life and you will call it fate” – Carl Jung
While this list sections people off into distinct categories, I believe we’re more on a spectrum when it comes to these personality traits. I can see a lot of Calculative Bugger and Hoarder tendencies in myself but I also have a splash of Spender as well.
More importantly, this list may not be the truest representation of yourself as a person but it’s a good starting point to help you identify and reflect on.
Our financial psychology is a microcosm in which the way we view money signals much larger questions in our psyche. What are our anxieties about life’s uncertainties? How do we view our self-worth in relation to material things? Where do we derive satisfaction/happiness from; saving or spending or neither?
It is hard for a lot of people to confront these questions but in the context of money, it becomes much easier to tackle these issues. That’s because money is quantifiable and tangible. You can see it, you can count it.
It’s important for us to acknowledge that our habits, emotional responses, and behavioral biases contribute to our financial health. Once you know yourself, only then can you take measures to cultivate good financial habits and then adjust other bad habits accordingly.
So, which financial personality type are you? What steps have you taken to combat your bad money habits? Let me know in the comments.
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