The way we think, the way we express and the way we behave are all interconnected.
As people, we’re complex… but brilliantly unique!
The human psyche is intertwined in such a way that our attitudes, beliefs, motivations, fears and frustrations, all affect the way we behave. Each human being follows a unique and characteristical pattern of cognitive, emotional and behavioral tendencies that evolve from the fundamental, biological and environmental factors. These come together to create an individual’s ‘Personality.’
Our personalities, therefore, are a combination of distinctive traits born out of fantastic consistency and stability in our attitudes and behaviors; persisting over a long time and across situations.
Through years of extensive observations and research, behavioral scientists and economists have established that human psyche has a direct and profound influence on its ability to make financial decisions and therefore on the overall well-being.
Our dominant personality traits such as, habitually applied cognition, emotions, and behaviors all come to play in defining how we deal with Money; in personal as well as professional lives. Our experiences, direct and vicarious learning throughout life, as well as various biological factors, further reinforce these influences. These are the building blocks of, what we call, the Money Personality.
Money personality is, therefore, a highly sophisticated derivative of a lot of factors. Some of the major ones can are – our tendency to accumulate money, the appetite for taking a risk, ability to deal with complexity, attitude towards social acceptance and our inclination towards pursuing financial goals.
Money personality, when understood well, can go a long way in explaining as well as predicting ‘Who we ‘Really’ are, as financial beings and therefore what do we need to do to become financially successful.’ It can also help in avoiding certain unfavorable tendencies that are often painful prevent us from achieving desired results.
The power of Money personality
The below five core-attributes of Money personality help in understanding it better and in appreciating its profound influence on all aspects of our lives:
1. It analyzes existing behaviors while predicting future outcomes.
It’s fascinating to see how Money personality regulates our attitudes and behaviors in everyday activities such as spending, saving and investing.
These behaviors observed over long-range throw many exciting patterns & trends. Reading these patterns explains the pros and cons of our specific actions and habits. They evoke the need to look within and make adjustments or improvements if needed.
This can be extraordinarily powerful in correcting troublesome addictions, building good habits and thereby achieving our true financial potentials.
2. It allows questioning oneself.
Money personality is also an immense reservoir of knowledge.
It allows for responding judiciously to all financial decisions in a sound, pragmatic way.
For example, as head or the only breadwinner for the family, one needs to be responsible and entirely in control of finances. Plan well, spend wisely and provide for all known needs as well as prepare for unforeseen emergencies.
However, if personality wise, if this is a person who ‘lives in the moment’ and doesn’t believe in planning. Spends recklessly beyond his means. We all can imagine how chaotic his/her financial life would be. Add to this the insecurity and stress which the family members would have to go through, due to the family’s weak and shaky financial health. We can see how awareness of the person’s Money personality and actions based on it can lead not just the individual but the entire family a happier, improved financial life.
Knowing Money personality reaffirms behavioral patterns, defines them accurately and helps us to honestly introspect our ‘Real’ financial selves, favorable & unfavorable habits, and actions needed for better financial outcomes.
3. It’s more subconscious than conscious.
When it comes to financial decision making, we fall prey to certain cognitive biases that very often distort the perception of real financial needs. Hence the decisions we make can be vague and often far from what’s needed.
These cognitive biases work sub-consciously and limit one’s capacity to optimize and be rational in ones thought processes. They play an active role in our conscious cognitions and make us highly susceptible to make mistakes. Many of these mistakes can prove very costly, especially when they are about high-impact items such as investments in financial markets. Therefore, understanding these biases and avoiding them timely, is essential.
4. It’s beyond what we can see and feel.
We as humans, are ‘Emotional Beings.’
We may usually think rationality but sometimes, the emotions over-power us. And this explains why sometimes, being in a happy mood tends to make us spend unusually more, under the guise of cherishing the moment.
At other times, the emotions may swing entirely in the opposite direction. Making us feel that ‘Spending more’ will make us happy., in sad, stressful time. This is where the term, ‘Retail therapy’ seems to have originated.
Sentiments like pride, shame, insecurity, egotism and various hedonistic tendencies also play a huge role while our money decisions. Assessing money personality is seemingly the only way one can ‘Know’ what these positive and negative tendencies are and take steps to correct them promptly.
5. It is therapeutic and deeply nourishing.
Self-esteem and self-respect always get positively reinforced with decisions, resulting in excellent, prosperous outcomes.
When it comes to money, knowing our ‘Real’ selves helps in understanding the context, biases, ‘true’ needs, and desired responses. This allows us to make a brilliant decision.
Right, productive decisions generate more trust & self-respect within a person. They encouraged him/her to take more smart choices using Money personality. Hence, it helps to build sustainable and self-fulfilling internal and external environment that nourishes the inner-person and outer world around us. Motivates us to become financially successful and happy.