Excerpt from Chapter One of Decisions, Dollars & Sense

Book Three in the Dollars & Sense Books series

Front Cover of Book: Decisions, Dollars and Sense

What’s Your Money Type?

  • factors that shaped your money beliefs, attitudes, and behaviors
  • strategic skills that influence financial success
  • setting goals as important to following your dreams

Before starting any journey, it helps to know where you are going and to know that you have what you need for the trip. Passport—check. Wallet—check. Phone—check. Think of this chapter as a bit of a pre-trip checklist. To properly chart your financial future, you need to take an honest look at your current financial habits and, in particular, assess your “money type.” Knowing more about how you relate to money and the status of your “money skills” will help you to assess your financial literacy. You will realize what you know, what you think you know, and what you need to know better, which can guide your financial education.

Everybody knows about personality types. Thousands of tests assess them; perhaps you took some of these tests in high school or college. The popular Myers-Briggs Type Indicator (MBTI) test classifies personalities into sixteen different types based on Jungian psychology. It identifies personal preferences based on four dichotomies: extraversion or introversion, sensing or intuitive, thinking or feeling, and judging or perceiving.

When it comes to money types, we can start more simply, with only two basic types. In a nutshell, are you a spender or a saver? Of course, as with most things in life, the answer is not black and white. But try to visualize a horizontal sliding scale with the extremes at either end. On the far left side is 100 percent saving—a penny-pincher like Scrooge—and on the far right is 100 percent spending. Where would you place yourself on that scale?

Even more vital, think about how you spend money. Do you carefully research consumer purchases, track online sales, and buy items only when you have the money in the bank? Or are you more of a spontaneous spender? Are you able to window-shop and keep your wallet closed, or do you always pull out your credit or debit card, even if you had not planned to spend money that day? Assessing your spending behavior will help you to see whether you are at heart a saver or a spender.

Knowing your basic money type is only the first step. From there, you can think about the factors that shaped your attitude to money as a young child (see next section). But if you are a spontaneous spender, you will also need to find ways to curb this behavior. You may need to avoid online shopping and stay out of stores. Alternatively, you could shop with a friend who is more of a saver and will stop you from spending. To build your savings, you will need to set up and stick to a plan. Stepping back and taking time to “sleep on” big financial decisions is always wise, especially when your latest purchase is only a click of the mouse away. (For more on being a smart consumer, see chapter 2, and for more on saving for the future, see chapter 10.)

You might well ask: Am I stuck with my money type? Really?! Yes! Which is why “big spenders” need to put parameters in place. Note also that your money type may be different from that of your siblings—or your partner—which can lead to conflict, but could be good overall. What’s key is to understand that there are different types, and negotiation between partners is almost always necessary to keep everyone happy.

On the topic of saving and spending, a key consideration is your “burn rate.” This term gets used in the business world to describe how fast a new company is spending its venture capital. A startup’s burn rate measures negative cash flow and is usually expressed in dollars per month. I like to apply the concept to personal spending, to describe how fast you “burn through” your income. For more info on how you can manage your cash flow or “burn rate,” see chapter 10.

Gaining Personal Insights

Your personality type affects your beliefs, attitudes, and behaviors with regards to money. This much is clear. And, just like your personality, these thoughts and behaviors were also shaped by your upbringing. How did your parents or guardians relate to money? What positive or negative lessons did you learn as you were growing up? These influences affect your comfort level and confidence in talking about money and also in managing money.

To gain some insight into the sources of your current attitudes, complete the following sentences quickly. Simply fill in the first word or words that come to mind. Only you will know your answers, but your responses will help you better understand the various factors that have shaped your attitudes about money. Such self-assessment and self-knowledge are both essential to financial success.

  • When I was a child, my parents or guardians taught me that money was . . .
  • The first time I earned money was . . .
  • As a child, my biggest concern about money was . . .
  • As a teen, my biggest concern about money was . . .
  • My biggest concern now about money is . . .
  • For me, talking about money is . . .

Another way to think about the factors that shaped your money attitudes is to consider the values your parents or guardians demonstrated as you were growing up. Have a look at this list and circle the “economic values” you witnessed or learned as a young person. This list includes both negative and positive values, both of which can have an obvious impact. If you missed out on some of the positive values, don’t despair. Educating yourself through reading this book is an important first step in adopting positive financial values.

  • budgeting / cash flow management
  • careful saving
  • charitable giving
  • comparison shopping
  • credit card debt
  • delayed gratification
  • financial planning / coaching
  • buying things on sight
  • investing earnings
  • living paycheck to paycheck
  • strong work ethic
  • buying used

Besides childhood experiences and parental values, emotions and stress can have a profound impact on money beliefs and behaviors. For example, say you are upset because of stress on the job or a relationship setback. You want to forget your problem, and—whether consciously or not—you think buying a new pair of shoes or eating out at your favorite restaurant will do the trick. Unfortunately, spending money in an effort to overcome negative emotions can get to be an expensive habit. And such behavior leaves the original problem unresolved.

At the other end of the emotional spectrum, positive feelings such as love and generosity, if unchecked, can also lead to overspending, so it’s important to monitor how emotions affect the flow of money in your life.

©Paul W. Lermitte

But wait! There’s more! To get the whole book so you can read the rest, please for a copy in your local library, or visit our Order Page

The rest of Chapter One addresses:

  • Assessing Skills, Setting Goals
  • Money Skills Inventory
  • Identifying Your Dreams
  • Summary of Paul’s Key Points

And you can see what the whole book covers by viewing our Table of Contents.

For a set of free, downloadable worksheets you can keep and use with your own family, including an Part-Time Job Inventory to help your teen get started with his or her first job, visit our Worksheets Download Page.

“The Future Based Self is who the individual imagines he or she is going to be: this is influenced by powerful goals.”

Dan Sullivan,
Founder, Strategic Coach™