PHILADELPHIA (WPVI) — How people think about money may be just as important as how much they earn.
Financial Advisor Dan Hernandez with Milestone Wealth Management said understanding “money personalities” can help individuals avoid common financial pitfalls.
Hernandez said much like knowing whether you are an introvert or an extrovert, identifying your money personality can offer insight into your financial behavior.
He said the answer could be the key to avoiding pitfalls of each personality type and unlocking financial strategies for success.
There are four primary money personalities: the Saver, the Spender, the Avoider, and the Balancer.
The Saver is disciplined and focused on the future, often excelling at building retirement and emergency funds.
However, this type may struggle to enjoy spending in the present.
The Spender represents the opposite tendency, freely parting with cash and often struggling to stay on track with long-term goals.
“So the saver needs to know there’s money there for the future,” said Hernandez. “The spender gets emotional comfort from spending.”
Savers are encouraged to focus on letting go a little bit and having at least a little fun.
Spenders are advised to try two exercises: avoid spending any money for seven days, then use only cash for the following seven days.
“You know, our personalities aren’t going to change,” Hernandez said. “But if I have it under control, I can manage it better.”
The third personality type, the Avoider, tends to ignore financial matters altogether, avoiding account checks and delaying decisions.
Hernandez called this the most concerning type because it can lead to missed opportunities, mounting debt, and unnecessary stress.
“Eventually, they’re going to have to look at their savings. They’re going have to deal with it. They’re gonna have to make the payments,” he said.
For Avoiders, Hernandez advised, “Create a budget,” and added, “what I always tell my clients is pay yourself first… Put that $300 dollars a month over here, whatever over here is a saving and investment account. Then you can kind of spend without guilt.”
Hernandez said a budget can help people “set it and forget it,” but only “if you adhere to it.”
The final type, the Balancer, is generally comfortable managing saving, spending, and financial planning but may over analyze decisions.
The key according to experts is that understanding these tendencies can help people take control of their financial lives, no matter which category they fall into.
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