Like your general attitudes, your approach to money takes shape from birth. Your environment, parenting, genetics, psychology, education and how you process events all play a part.
Hence why one person’s retail therapy is another’s rainy day fund. Why one person picks up the tab and another carves it up with forensic precision.
Big dollops of nature and nurture (plus habit) have built your unique attitude to money … and changing tack can be a tall order.
Who are you with money?
According to a 100,000-person survey compiled by the BBC, Open University and University College London, we all (very broadly) fit into one of four money archetypes:
Status Spender – money is power
Generous Indulger – money is for spending
Secure Saver – money is security
Independence Lover – money is freedom
Why not take the test yourself.
But even if we do have a natural state with money, it’s not carved in stone. Events, experiences, setbacks and opportunities can all force a radical rethink.
Good or bad, so can the influence of others.
“My friends called me tight”
In his review of the most recent episode of the Money Means Podcast, behavioural finance specialist and international speaker Herman Brodie closely examined our guest’s quote: “my friends called me tight”.
To set the scene: our guest was trying to change her financial behaviours to prioritise saving and paying debt. But she found herself at odds with a peer group who wanted to go out and spend.
“Even among friends, tight is a disapproving moniker,” says Herman.
“This guest’s friends, although undoubtedly well-meaning, were encouraging her to either spend money she didn’t have (consequently going into debt), use money she had reserved for some other purpose (undoing an earlier wise decision), or indulge in spending that was unsustainable (myopic).”
Basically, other people with different money priorities were jeopardising her own.
Balance your priorities
Herman’s insight chimes with a University of Chicago study which found that people would rather risk their financial security than the security of their social group. In other words, we’d rather stay part of the group even if it costs us.
But solutions don’t have to be a binary choice between one or the other. With the right planning, motivation and management, our guest did two key things to get back on track:
1) Careful budgeting helped her build financial health (but still allowed for the odd blowout with her friends).
2) She found solidarity and support in a new friend group of investors – a group whose reward system praises and encourages shrewd financial behaviour instead of ridiculing it.
Can you have your cake and eat it too?
Many things can get in the way of your financial goals. Life. People. Yourself, even. But good financial planners help you to build the right contingencies into your plan so you can balance what matters.
Good planners help to identify blockers — and practical solutions — so you can live the life you want today … while staying on track for the tomorrow you’re dreaming of.
Financial planning doesn’t start with “how rich d’you wanna be”, it builds a gradual understanding of who you are, what matters, and where you want to be before charting a practical, workable and balanced path from A to B.
We’re proud that, through Money Means, we’re soon able to open this up to everyone – regardless of your starting point.