There Are 7 Money Personality Types, says psychology expert—how to tell which one you are (and the pitfalls of each)

Published Wed, Apr 28 2021 Ken Honda, Contributor

We often stress about the importance of financial literacy, such as gaining a strong understanding of how money works and having the resources to make informed decisions.

But when it comes to establishing financial health, one thing most people fail to consider is their money personality type — or their approach and emotional responses to money.

We each have our own beliefs and emotions about money, and they are mostly shaped by our individual life experiences (e.g., passed down from our parents or influenced by our current situations).

In my 10-plus years of researching the psychology of money and happiness, I’ve found that there are seven distinct money personality types. Typically, we fall into a combination of many types, and not just one

Identifying which types you fall under, and understanding the pitfalls of each, can significantly improve your relationship with money. It can help you do things like spend less on impulse purchases, be better about budgeting, invest wisely and ensure a nice nest egg for retirement.

1. The Compulsive Saver

Signs you might be a Compulsive Saver:

You put away money endlessly, sometimes with no actual end goal in mind.

You believe saving money is the only way to feel more secure in life.

You’re very frugal. (Friends will often come to you for advice on which phone company is the cheapest, which point cards are worth it, or when to buy plane tickets at the lowest price.)

Pitfalls: Some Compulsive Savers are so afraid of losing money that they go their entire lives without spending any of what they worked so hard to save. For example, they might choose to skip out on hobbies or activities that could bring them happiness and purpose.

Money advice: It’s all about moderation; learn to find a balance between saving money and enjoying life. Think about where you see yourself in the future and how you can use your savings to get there.

To continue reading, please go to the original article here:

https://www.cnbc.com/2021/04/28/7-money-personality-types-and-the-pitfalls-of-each.html