There are different kinds of people in the world, and even in terms of finance, there are various types that you can be categorised in when it comes to your response to money. Understanding the kind of spender you are can help you know why you are spending the way you do, if you need to change anything, and what approach you should apply to your spending, saving and investing habits. You could be the type of person who can be a little careless with your expenses or someone who is updated with the latest offers on personal loans in Australia. Either way, there is a reason why you spend the way you do.
Different Ways of Seeing Money
There are four distinct ways people look at money:
- Status Symbol – Some people see money as a status symbol. This means that they use money as a tool to impress or influence others. This can also say that they, themselves, are controlled or impressed by cash. They are also people who are not afraid of debts. You can see them using their credit cards like it’s no big deal and probably applying for personal loans in Australia to buy a new trendy gadget or a trip overseas.
- Security – Some people see money as a source of security. Individuals who see money as security are natural savers. They feel comfortable while saving money, even if they are not really saving for anything specific.
- Independence – Some people see money as a means for liberation. Most of the time, people who believe that money means freedom, live in the present without really having any plans for the future.
- Gift – Some people see money as a means to give. They love spending money on others to show their love, affection and appreciation.
To be quite honest, most of these views seem to be problematic except for seeing money as a security. As you can see, the other views on cash may not be convenient unless you have a tree that grows money overnight or a goose that lays golden eggs.
Shopping Behaviours Concerning Different Views
The different views on money are just the tip of the iceberg. These views affect an individual’s behaviour when shopping. Here are different kinds of shoppers based on different views on money:
- Fanatical Shoppers – This type of shopper goes shopping frequently. They are the ones with the tendency to accidentally purchase more than what they originally planned. They are prone to impulse buying. For instance, you may have entered a bookstore to buy one single pen, but ended up going out with five pens, two sketchpads, three notebooks, and four fiction books.
- Frugal Shoppers – This type of shopper will do anything in their power to be able to save money. They would take a lot of time comparing prices in-store, or online, to ensure they get the best deal.
- Escapist Shoppers – This type of shopper believes in retail therapy. This means that they shop to escape from the stress of their job or personal life through shopping and spoiling themselves.
- Reluctant Shoppers – This type of shopper is uneasy about spending money. They would put off buying an item until the last minute. For instance, they will not buy a new bag until their current bag is absolutely worn out. They would not buy an item until they are sure that they really need it in their life.
- Self-esteem Shoppers – This type of shopper uses their money to boost their self-confidence. They feel more confident about themselves whenever they buy expensive items for themselves, even if it means depending on their credit cards or personal loans in Australia. For instance, they might prefer a cappuccino from a coffee shop versus the cheaper homebrew cup of coffee.
You can see how a person views money by the way they spend their cash. Apart from types of shoppers, there is a separate money personality that you can identify yourself with, which can help you know how to deal with your spending habits.
Five Main Money Personalities
The behaviours discussed above can help you identify what your money personality is and how you can improve your spending habits. The major money personalities are big spenders, savers, shoppers, debtors, and investors.
1. Big Spenders
Big spenders are a type of person who loves splurging on beautiful cars, new gadgets, and branded clothing. They are the kind that does not bargain. They are typically fashionable, and they always want to be on top of the trends. They have a strong desire to own the latest and greatest mobile phone, the biggest 4K television, and a beautiful home. They feel comfortable spending money and are not afraid of debts. They are also not fearful of significant risks when investing.
Based on that, you can tell that this money personality may be tied to being a fanatical, escapist or self-esteem shopper. A person may be these three all at once. They can see their money as a status symbol and/or a means of freedom.
The savers are the opposite of big spenders. They are cautious with their expenses. They make sure that they don’t incur additional fees by turning off their lights when they are leaving a room, shop only when they need to, and they try to avoid credit cards as much as possible. They may be seen as cheapskates, but you have to respect them for having little to no debts.
They are not too concerned about having the latest gadgets or clothes. They get more satisfaction from seeing how much their savings have grown. Savers are conservative investors—they don’t like the idea of significant risks. You can associate this money personality with frugal and reluctant shoppers. You can tell that they view their money as a source of security by the way they try to save as much as they can.
The shoppers get a rush of happiness from spending money. They cannot resist their urge to shop even if it means buying things that they don’t need. However, unlike big spenders, the shoppers are actually concerned about the debt that they are creating. Sales make them happy even if they are on items that they did not initially think they’d be buying.
Shoppers can be associated with escapist and fanatical shoppers. They see their money as a form of independence, and it helps them keep their mind off the stress of their daily lives.
Debtors don’t necessarily try to make a statement like big spenders. They don’t buy things to make them happy like shoppers. It’s just that they are simply not mindful about where their money is going and what they are spending it on. They spend more than they can afford, which puts them deeply in debt. Debtors are like lightweight shoppers who happen to have more debts than they can handle. Some debtors may even end up with bad credit and no longer eligible for a standard personal loan in Australia, which can be quite a predicament if they happen to need more funds.
Investors are financially aware and informed. They like making their money work for them. So, regardless of their financial situation, they try to find passive investments that can help them cover their bills. They understand that if they want to be in a stable financial condition, they must carefully make decisions about their investments. But they are not as hesitant to take on some risks, unlike a saver. You can associate them with a frugal shopper who sees their money as a security.
How to Improve Your Spending Habits Based on Your Money Personality
Once you know what your money personality type is, then you can put some thought into how you should approach money. It would be easier for you to make a plan depending on your views and behaviours with your finances. Here is how you can improve your spending habits based on your money personality:
1. Big spenders should shop less and save more.
This is easier said than done. If you really love to shop and spend, then you are going to keep on doing it until you no longer can. So it is better to budget better now than to regret it later. You should seek long-term benefits and not settle with just short-term satisfaction. Before buying any expensive item, you should ask yourself what that item will mean to you in a year. If you don’t think that it is something that can improve your life for the long run, then don’t buy it.
Channel your spending energy to saving instead. This will allow you to think of long-term opportunities.
2. Savers should loosen up a bit.
There is nothing wrong with wanting to save, but there is such a thing as too much. What is the point of saving money if you are missing out on the great things that life has to offer for a few coins? Try to balance saving and treating yourself every once in a while.
3. Shoppers should not buy things that they don’t need.
Shoppers should stop buying things just because they are on sale. If you do not need a set of pillows, then do not buy them just because it’s 50% off. Instead of focusing on the fact that there is a sale, think of saving the money you have instead. Try learning about a savings plan.
4. Debtors should start planning their finances and investing.
Debtors need to get their finances in order. They need to start caring about where they are putting their money. If you are a debtor and you are having a hard time doing it on your own, you can try and find someone who can help you be on top of your finances.
5. Investors should continue to learn before they invest.
Generally, investors are financially educated, and they are aware of their financial capabilities, habits and potential. However, it is still advisable for them to keep on learning as the world of finance and investment is an ever-changing realm. Also, loans are not inherently bad, they can even improve your credit history if you manage them well. Also, loan providers like Fundo offer a rewards system for their loyal clients which turns your loans into investments as well.
The Bottom Line
Changing your money personality may be something that you cannot do, but at the end of the day, you can control your habits and be more financially prepared for the future. It will not be easy, but you should still try for the sake of financial stability.
The opinions expressed in the Blog are for general informational and entertainment purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific investment product. It is only intended to provide education about the financial industry. The views reflected in the commentary are subject to change at any time without notice.