There are so many books and sites telling you about how to budget better, pay off de.bt, and invest in an IRA. I’m sure many of you reading this newsletter have tried them to no avail. I often compare our money habits to diets – not every diet works for everyone (trust me I’ve tried my share!). If you feel frustrated with your money progress, perhaps it’s time to step back and just examine your money type. I did this exercise and it was a real revelation! By seeing which type you are and relating to it, you are taking an important step towards understanding why you handle money the way you do and how you can change it. Many of us aren’t just one money type, so don’t feel bad if you relate to more than one. I read about these money types in an Olivia Mellon book (http://www.moneyharmony.com/) and added my own descriptions.
Hoarder. Saving is one of your most important objectives. Your initial instinct is that spending is wasteful. As a result you might feel that you don’t deserve to spend money on yourself or your loved ones. You also have no idea how much is enough as you just want to save more and more. You may not be investing your money aggressively enough because you are afraid to take on too much risk, if any at all.
Spender. You hate to budget and feel very constricted by any plan that tells you what to. You are the opposite of a Hoarder. You are most likely to spend on anything your heart desires. As a result, you may have cre.dit card de.bt, the latest fashions but not much in your savings account. If you are investing in an IRA or 401k, you are probably overaggressive.
Money Worrier. You are constantly worrying if you have enough money. As a result, you tend not to spend on your self and you may live in a state of depravity. You may not know the current state of your finances which causes you to worry more. You tend to worry about things that are out of your control (i.e. banks going out of business).
Money Avoider. You are in a money fog. You aren’t necessarily worried about your money, but you do not know what your expenses are, the current balances in your 401k, what de.bt you have or even how much your paycheck is. If you are in a relationship, your partner or spouse tends to take care of all the money issues.