14 September 2016

Understanding Your Money Personality

My Money Matters |

Each and every one of us have a unique personality profile. Our profile determines the way in which we get energised, how we prefer to gather information in order to make decisions, how we prefer to make those decisions, as well as determining our general approach to life. It therefore also influences the way in which we deal with our personal money matters on a day-to-day basis.

The theory of psychological type was introduced by the Swiss psychiatrist, Carl Jung, in the 1920’s. Today the Myers-Briggs Type Indicator is one of the best known profiling tools used to determine an individual’s psychological type. This model was developed on the basis of profiling individuals according to four psychological functions. The four functions represent our focus of attention and source of energy, our source of information, our decision-making process as well as our interaction with the world. Each function has two possible indicators, or outcomes, based on our specific preferences. These four functions tell us a lot about how we go about managing our personal finances.

1. Introverts and extroverts

Where you put your attention and where you gain your energy from, would determine if you are more of an introvert or extrovert. Introverts generate their energy from within rather than being dependent on other people to energise them. Due to their inward focus and the fact that they prefer dealing with ideas in their head, reflection comes easy to them. The ability to reflect, is a great attribute to have when evaluating or learning from the financial decisions you are about to make or have already made.

Extroverts on the other hand, are energised by the people around them and the environment in which they find themselves. Experiencing things and engaging in activities with others are important to them. Although it is true that life also needs to be lived, they always need to keep moderation in mind given the reality of their financial position. Impulsive purchases should be avoided by creating the habit of a time out before important financial decisions or commitments are made.

Blog-Visual-representation2. Sensors and intuitives

As human beings we either have a preference to gather information using our five senses or we rather choose to trust our intuition. A more sense-orientated individual generally focuses more on the details contained in facts and figures. This provides a sound base from which important financial decisions can be made. However, one must never underestimate the value of our intuition, or gut feel, as financial matters and situations are not always as simple and linear as they may seem. Intuitive people prefer to trust their intuition as a source of information by seeking the meaning in things that are not always clear. Although gut feel is an extremely valuable source of information it should be balanced with factual and detailed information in order to make more informed and objective financial decisions. This will also assist you in ensuring that you remain in check with reality as you are inspired by your dreams and can get carried away when taking on financial commitments.

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3. Thinkers and feelers

When making decisions we prefer to either base our decisions on impersonal facts and objective principles or to put more weight on personal concerns and people that might be involved. A person’s natural tendency to think things through properly indicates a preference for making decisions in a logical, objective and more impersonal way. The need to conduct a proper analysis and evaluation is important when it comes to making financial decisions that could affect our future financial well-being. However, money is not a neutral force and sometimes considering softer aspects related to money such as relationships is also important to consider.

On the opposite side of the spectrum we find people who prefer to make decisions based on their feelings and considering the interest of others that might be affected by their decisions. Their strong personal principles and values provide them with a guiding light when it comes to making decisions around the important and sometimes sensitive topic of finances. One should, however, be careful not to make decisions purely based on your feelings or emotions and should sometimes allow time to pass so you can think things through in a more calm and rational manner.

Blog-Visual-representation34. Judgers and perceivers

The final function concerns our preference for leading a more structured and predetermined lifestyle or a more flexible and adjustable lifestyle. If you prefer to live your life in a more organised and orderly manner it should make the discipline required to make complex personal financial decisions easier for you to master than most. Your need to be in control and to work in a structured way provides a good base from which to manage your personal finances which is an ever evolving part of your life. However, one should guard against being so disciplined and in control that you miss out on opportunities to experience life.

As an alternative you might prefer to live your life in a way that sees a potential surprise hiding behind every corner, which makes you more flexible and adaptable. Keeping your options open and going with the flow is a wonderful attribute, but it should be balanced with a healthy sense of your ability to finance your social activities. Your approach to understanding rather than controlling the various aspects of life can be used positively to be aware and act on the financial needs of your community and the people around you.

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In conclusion, being aware of our personal preferences, as well as our strengths and weaknesses when it comes to our personal money matters, can assist us in taking better control of our financial destiny. It is also important to note that a sound set of personal values is required to guide us when making important financial decisions. Understanding our personal money profile within a sound values-based decision-making framework will ensure that we establish a healthy relationship with money on our journey towards financial freedom.

Disclaimer: The advice contained on this blog is for general purposes only and does not take into account individual circumstances, objectives or financial needs. Accordingly, readers are advised to seek appropriate advice from licensed professionals prior to making any investment, or taking up a financial product or service.

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