At a glance
- We humans, love to put ourselves in a category, be it personality type or horoscopes!
- Editor of Money Matters, Effie Zahos, has categorised people into five money personality types: Peacock, Squirrel, Sloth, Owl, and Ostrich.
- Each type approaches money in unique ways. Which one are you?
It’s always fascinating to think about why we do what we do when it comes to money. Why is it that some of us are always the first to buy a round of drinks on a Friday night, while others are happy to accept a first round but then quietly walk away when it’s their turn to shout the group?
And why is it that some of us on, say, $60,000 a year are better with our cash than those on $160,000 a year? And furthermore, why is it that some of us have no fear when it comes to investing, yet others just keep saying, “I’m gonna do it!” and then don’t?
Knowing what drives your financial decisions is the first step towards reaching your money goals. Getting to know your money personality and understanding why you do what you do is key to helping you shape your approach to spending, saving, and investing.
Research shows that our money mindset is learned, and it’s a reflection of how we have worked out how to survive and navigate the world around us. A study from Cambridge University found that our core behaviours and money habits can be formed by the age of seven. By the time we hit puberty, the lessons we’ve learned around money are pretty hard-baked into our instinctive reactivity. That means that changing our money personality can be a slow process that requires consideration and effort.
But it can be done. Your money personality isn’t set in stone – you can master your money mindset.
There are five dominant money personalities: Spender, Saver, Debtor, Investor, and Avoider. Of course, these five money personalities come in many different shades. The important thing is to be proactive and take the time to understand your own money type.
Some behavioural economists say people’s attitude to money can resemble certain animals, so each personality has an animal match to help bring those traits to life. So, how about we have some fun and take a trip into the wild to see which furry – or feathered – critter best describes your money mindset …
The 5 main money personalities:
There are essentially five dominant money personalities, and people’s attitude to money can mimic that of certain animals. Which furry (or feathered) critter best describes you when it comes to your finances?
1. Peacock (the spender)
- I believe that money is meant to be spent
- I deserve this – so why not spoil myself?
If you’ve ever seen a peacock fan its tail, you’ve almost certainly had a ‘wow’ response. It’s so impressive, but of course, it’s all done for show to attract a mate. A peacock’s gorgeous tail can act as a drag in flight.
It’s much the same with human peacocks. They show off their money, often lavishing gifts on friends and wearing the latest styles to impress everyone.
But all that spending can come at the cost of an empty bank account or a supersized credit card debt.
Of course, there are various levels of spenders, and status spending is just one type of spending.
Tips to break the cycle:
If you love spending, you could be a peacock. But ask yourself, who is benefiting from it all? Retailers, yes.
But probably not you. To break the spending cycle, try the ‘sleep on it’ test. If you’re tempted to buy an item, walk away and sleep on it. Think about why you’re really making the purchase. Is it all part of keeping up with the Joneses? Have you just received a pay bonus? What is the trigger?
Go back and have another look at the item. Chances are it won’t seem so exciting the second time around.
2. Squirrel (the saver)
- I save regularly
- I prefer having my money in cash
Squirrels are cute and fluffy, and excessive when it comes to hoarding nuts. If you’re a super saver, you could be a squirrel. Having some cash behind you makes sense; the trouble is that squirrels can take it to extremes. They can be so risk-averse that they don’t invest any of those savings or do anything to help their money grow.
Tips to break the cycle:
Saving is not the same as investing, and if you relate to the squirrel, a simple way to break through the fear barrier is by taking baby steps. Start small, leaving the bulk of your cash intact. As your comfort levels and confidence grow, you’ll realise that investing doesn’t mean handing over control of your money – it’s about getting more from it.
3. Sloth (the debtor)
- I don’t follow a budget
- I use credit to supplement my income
Besides being super-cute, sloths are known to be slow, but it’s not out of laziness. In fact, it’s a survival mechanism out in the wild. Sloths creep along precisely to avoid being seen by predators that watch for signs of movement.
When it comes to money, human sloths move slowly, too, but typically because they’re weighed down with debt, living payday to payday and regularly maxing out their credit card. That will slow down anyone!
Tips to break the cycle:
Sloths like to spend, but unlike peacocks, they’re not worried about status. They simply don’t put much effort into keeping their financial assets in order.
Some creative thinking can get money sloths moving again. If this sounds like your money personality, use an app to keep track of your daily expenses, check your bank account more often, and don’t allow yourself to borrow too much from friends or fast-money outlets. Set up a regular transfer of funds out of your everyday account and into your credit card or loan account.
4. Owl (the investor)
- I check my investments every day
- I would move accounts for just a 0.5% interest difference
Fun fact: Owls can rotate their necks 270 degrees, letting them carefully inspect everything.
If you get a hoot out of regularly checking your portfolio, you could be an owl. You’re a pretty good money manager; you’d jump institutions for a 0.5% increase in your savings rate, and you swoop in to pick up any hot investment opportunities coming your way.
Tips to break the cycle:
Who needs to break this sort of cycle? If you fit this picture, give yourself a pat on the back. Just remember to keep the emotion out of investing. If anxiety sees you constantly trading and moving things about, your investments could end up underperforming.
5. Ostrich (the avoider)
- I always say, “I’m gonna do it!”
- I’ve never looked at my super statement
The ostrich is someone who would rather bury their head in the sand than organise their finances.
They fail to make long-term investment decisions and leave everything to luck or fate. Out of sight, out of mind! The trouble is that by continually avoiding the real issues around organising their money, ostriches can never be at their financial best.
Tips to break the cycle:
If the ostrich sounds like you, it’s important to have an action plan. Create a simple list with no more than two goals. Set dates to achieve them, have milestones to tick off, and share your goals with a money buddy to help you stay motivated and accountable to your plan.
Why your money personality matters
Maybe you recognise yourself in one of these five personalities. What’s more likely is that you’re a combination of different money personalities. And not only can you have a mix of them, but you can also change over time as you learn to keep the negative and more reactive aspects of these money personalities in check.
Having said that, though, it’s a good idea to start out by focusing on your dominant personality type and creating some simple rules of thumb around that. What matters is that you start thinking about the ways in which you spend and save.
Your money personality action plan
- You can have a mix of different money personalities, but you can also change over time as you master the negative aspects of a certain trait.
- Take the time to get acquainted with your money type.
- When you know your traits, you’ll be less reactive and more responsive.
- Take steps to manage your traits.
- There is no right or wrong trait – just understand the triggers and put fixes in place to mitigate them.
- When money personality clashes happen, don’t focus on the behaviour. Instead, focus on the problem the behaviour is trying to address or solve.
This article originally appeared in Money Matters by The Australian Women’s Weekly. Purchase here.
Information is correct at the time of writing. Any advice provided is general in nature and does not take your personal circumstances into consideration. Readers should seek their own financial advice.
