Mind And Money: Your Spending And Saving Decoded Based On Personality Type

The way you treat your money tells a lot about you than you realise. Wondering how?

Imagine you're at the mall and a really cool backpack catches your eye. Yes, it's expensive, but the quality of the product looks on point.

Now pause.

Think about how you would react and you can place yourself into a personality type based on the reaction.

Scenario 1: You step right in and swipe your credit card to buy the backpack without a second thought.

This is the type of people who are impulsive spenders. Thinking about the purchase barely holds them back as they don't wait to contemplate about the consequences of this spend.

“Spending is the result of a combination of so many factors,” said Dr Anjali Chhabria, a practicing psychiatrist.

One might not even realise that they liked might have liked the design of this backpack because a friend had a similar design. They might even be influenced by social media, as they give into the fear of missing out on the product.

“This type of people end up spending somehow, if they have money in their account,” said Kiran Telang, a financial planner.

The fix according to Telang, can be as simple as setting a spending limit. Having a provision set apart to spend will help stay within the limit and spend guilt free.

Scenario 2: You start thinking if you actually "need" a backpack. You start weighing the things you might have to give up to save for the backpack. Thoughts start to spiral and walking away just seems easier.

If you find yourself over analysing every spend, then your protective and perfectionist personality trait spills over to your spending.

“They tend to deprive or delay gratification to themselves,” said Chhabria. For people belonging to this type, low self-esteem might also add to the confusion as they start to question if they deserve the spend.  

Protectors also struggle to put their money into spaces with uncertainty, which might make them apprehensive about investing as well.

“Investing is a very uncertain science because of volatility,” said Telang. Accounting for elements like inflation or tax and constantly tweaking the plan is important, according to him.

Scenario 3: Seeing the bag, you remember a friend struggling to save to be able to buy a backpack. You go ahead and buy it for the friends and get it wrapped to surprise them.

This type of spenders often attaches the purpose of giving to money. They're empathetic with their money. They might put others needs or giving toward the greater good, before their own needs.

“People being empathetic with their money depends on the stage in life they're in,” said Chhabria. This mindset could also kick in after one feels comfortable with what they already saved.

This could also come from a place of fear, guilt or pressure to do good, which is not ideal according to Chhabria.

Kiran recommends that you have a philanthropy plan in place where you follow a set system of giving that will help you budget for the same.

Scenario 4: Your first thought is whether this would be a good purchase that is worth the price. You rationally walk yourself through the decision making process. You take a call based on what makes more sense in the long term.

These spenders are focused on the long-term impact of their financial decisions. They try to identify the impact that short term emotional decisions might have and hold back till they are convinced it will help them in the future.

Protectors might be more comfortable mentally accounting for their funds. Essentially, if they label funds based on their purpose, it's easier for them to save and set aside for the fund.

“Even people who are rational will also have emotions come in when big decisions need to be made,” said Kiran.

“People like to belong to a certain group, they might follow people they trust,” echoed Chhabaria. Herd mentality and bias often get through to these tough minds as well.

All four of these types have their nuances, drawbacks and strengths. Identifying which type you belong might help you navigate through money matters better.

You can start by analysing the way you think about money, how you spend it and what it means to you. Once you place yourself into one of the four buckets, then you can make informed and intentional choices when it comes to big money decisions.