About this video
Sal describes five common money personalities: the saver, the investor, the spender, the balancer and the avoider. Each has strengths and downsides, and he suggests using them as a framework for reflecting on your own habits rather than as a fixed label.
You'll be able to
- describe the saver, investor, spender, balancer and avoider money personalities.
- explain a strength and a downside of each money personality.
- reflect on which money personality fits me in different areas of my life.
Key words
- Saver
- Someone who is frugal and tends to bring in more money than they spend, keeping it secure.
- Investor
- A saver who is willing to put money to work, taking on more risk for a chance of more return.
- Spender
- Someone who lives in the moment and spends without thinking much about their money or goals.
- Balancer
- Someone who is balanced across saving, spending and investing, though they may be prone to indecision.
- Avoider
- Someone who doesn't like to think about money at all, often because it stresses them out.
Transcript
- So let's talk a little bit about money personalities, and take it all with a grain of salt. Anytime I see any of these personality tests that try to classify you in one way or another, I'm like, "I'm a complex human being. I have many different facets to my personality."
But they do end up being helpful for just making us reflect on how we're behaving or how we tend to behave at certain times. So the general money personalities are the saver, the spender, the investor, and then someone who's pretty balanced in all of the above.
And maybe there's a fifth category of the avoider. Now, the saver, and I think I fall under this, tends to be a little bit frugal. They're good at saving money, so they bring in more money than they necessarily spend, and that's generally a good thing, but it can have some downsides.
Sometimes the saver doesn't put as much money as they need to enjoy life. After all, what is the money for, at the end of the day? Now, related to the saver, we could think about the investor, which I kind of view as a saver who is willing to put their money to work a little bit more.
Now, when you put your money to work, it often involves a little bit more risk. So if you're a pure saver, maybe you just like to a little bit hoard that money, but you keep it really, really secure, while an investor maybe takes a little bit more risk, which could be a good thing, 'cause a little bit more risk, a little bit more return, potentially, but it's also more risk, which means you might lose some.
So if you're an investor, as long as you're investing prudently, it could be a very good thing, but you have to be aware of how much risk you're actually taking on. You might be taking on too much risk. Now, the third category is the spender. You can imagine what that is.
I think we've all been in that mode a little bit. But I think you're a classic spender if you're kind of living in the moment. When you spend, you're not really thinking about how much money you have or what your goals are. And spenders can get into a good bit of trouble, out of all of the categories, probably the most trouble, where they can overspend, not be able to keep up with their bills.
And obviously, if you're only thinking about the moment, you might be doing some harm to your future self. And then you have the balancer. Now, the balancer, overall, sounds like a pretty good category. It means that you're balanced across all of them. But even there, you might wanna make sure that, you know, you're not prone to, maybe, indecision.
"Oh, do I save, do I spend? What do I do?" But overall, it sounds like a pretty good thing. Now, avoider is someone who just doesn't like to think about money at all. Now, probably, spenders and avoiders might have some common characteristics. If you're a real spender, you might not wanna think about financial literacy.
You might wanna avoid thinking about money altogether. And that's what an avoider's doing, to some degree, is to say, "Well, let me just not think about it. Money kinda stresses me out." And obviously, avoiders, similar to spenders, when you just live in that moment, you can get yourself into a little bit of trouble.
So think about what financial personality you are. Maybe you're evolving in your financial personalities. Maybe at different moments of your life, and certain dimensions of your life, you're more of one or the other. I tend to be a spender when it comes to fruit.
I tend to be a saver when it comes to clothing. But just think about it. It'll give you a nice framework for how you tend to be.
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