What is your money mind?

Sticky and Slick are long time colleagues but with opposing money habits. Sticky has an amazing ability to refrain from spending money unless it is absolutely necessary. For instance although Sticky owns a car he only uses it during emergencies like when it rains and it is not possible for him to get to office in time or when his son falls sick in the night and he has to rush him to a medical facility. Slick on the other hand is a happy go lucky fellow who spends so freely that you would be forgiven for thinking that he holds the title deed to a piece of land in the Albertine rift that has proven oil reserves.

Now psychologists have found that the possible cause of the difference between the two characters is a result of their money personalities; which is also referred to as their unconscious money mind. A person’s money personality is those tendencies that can drive their financial behaviour with regard to income, expenditure and investments.

Four different money personalities have been identified, namely: Guardians, who tend to be cautious with their money; Artisans, who are freewheeling and daring; Idealists, who care less about money than other goals; and Rationals, who make most decisions by the numbers. Most of us, of course, are a mixture of these tendencies. Still research shows that most of us will find a strong affinity with one or at most two of the categories. Each of the money personalities has weaknesses that ought to be overcome and strengths that you can take advantage of.

Guardians, place greater importance on financial security than on getting rich. Guardians are usually disciplined and patient and enjoy organizing and planning ahead. A Guardian is the kind of person who would rather invest a salary bonus than spend it. And when it comes to investments, a Guardian tends to investigate them thoroughly before committing any money.

A Guardian’s predisposition to self discipline can be used to define specific financial goals and chart a long term financial course. The major weakness of a Guardian is fear of taking risk, so they tend to have safe but low return investments.

For Idealists, money just is not the top priority. Idealists tend to focus on assisting others and improving society rather than on building personal wealth. According to research, sixty percent of Idealists agree with the statement "I feel compassion for the needy," almost triple the rate of Rationals (23%) and higher than Artisans (38%) and Guardians (42%). If an Idealist got a salary bonus they will probably use it to help friends (who are their most likely source of investment advice). The price for an Idealist’s lack of interest in money matters can be a failure to reach financial goals--assuming they even set any at all.

If you are an Idealist you need to know that it is possible to have your cause and money too. If you pay little attention to your finances you can miss easy opportunities to save and invest for the future. Idealists can be motivated to improve their finances by knowing that they can do more for others if they are financially secure themselves.

Rationals enjoy problem solving and fact finding and have a deep interest in science and the latest technology advances. Rationals are the type who tend to stay calm when the stock market moves. They are also likely to be a bit too sure of their ability to outthink the market. In the late '90s, many Rationals were certain that technology stocks would continue to climb and lost badly when the bubble burst.

The common undoing of Rationals is lack of appreciation of the truth that investment markets are not always rational. People some times buy or sell a particular investment because they like or dislike that investment or the people managing it and not because of the fundamental value of the asset. If you are a rational you are well advised to reduce investment risks by keeping a little bit of your investments in low risk assets.

Artisans make financial decisions by trusting their gut feeling. Artisans enjoy the thrill of investing; they act quickly on buying opportunities and are comfortable taking risks. When an Artisan retires, they will likely seek out an adventurous lifestyle.
Artisans tend to lack interest in long-term planning and do not posses the discipline needed to reach long term goals. If an Artisan got a salary bonus, for example, she will usually spend rather than save it.
Artisans need to confirm their gut feelings with research and are well advised to diversify their investment portfolio adequately as a measure of protection, just in case their feeling is wrong. Artisans are the type who need automatic investment, where money is deducted and remitted to an investment manager on a regular basis, to help build a strong and diversified portfolio.