I have written a couple articles such as this one and this one on the psychology of money. There is the MBA finance chick side of me who looks at sheer numbers, then there is the realist who says wealth building isn’t all about the numbers it is even more about personality and psychology.
SO what are the money personality types as I see them:
Slow and Steady Wins the Race – These folks are the ones that follow all of the rules. They max out their 401Ks, IRAs, have 529s for their children, an emergency fund, pay their credit card bills in full.
Get Rich Quick – These folks really want to be rich but don’t have the discipline for long term wealth building. So instead they typically try to build wealth with the “investment of the moment”. Sometimes this strategy works, but most of the time it doesn’t.
I Could Be Hit By a Bus Tomorrow – These people are the folks that aren’t so focused on wealth building period. Its just not on their radar. They can range from simple to extravagant folks, the common thread being they are way more interested in living life than thinking about money. Fortunately, most of them never get hit by a bus. Unfortunately, this means they never planned financially for not getting hit by a bus.
Nervous Nellie – Nervous Nellie is a hybrid of Slow and Steady Wins the Race and Get Rich Quick. Nervous Nellie is the type of individual who knows what the rules are: invest in Retirement Accounts, 529s, etc. But gets really nervous when the market is unstable. This is the investor the buys high and sells low because they think that the world is ending when the DJIA loses 5%.
Broke as a Joke – This person is broke they don’t think about money because they are barely covering expenses.
I would love to hear your thoughts on this subject and see if any of you have identified other money personality types. In a subsequent entry I will talk about how these folks should invest differently!
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