Understand your money personality to unlock your hidden savings potential

• The fearful penny-pinchers are afraid of spending money because they’re anxious about the consequences of reckless spending. Their fear may be related to past experiences of the effects of a lack of money. An example would be individuals who’ve seen their parents or someone close to them lose everything.
• The money spenders have a blasé attitude towards money, perhaps because they’ve never experienced what a lack of money can do to people. They may be individuals who were born into money or adults whose parents sheltered them from financial problems.
• People who come into money are particularly prevalent in SA with its large emerging middle class. André says these individuals usually find themselves splurging from their first pay cheque because of a long-standing longing for a certain lifestyle or things they couldn’t afford growing up. This personality may also manifest in parents spending lavishly on their children.

Understanding your personal history with money and accepting your role in your current financial situation can trigger the change of mindset required to get you to a better space financially, André says.

‘You have to identify what your personality is first. This will help you understand why you spend money the way you do and how you can change certain behaviours,’ he explains.

‘Your childhood longing for a better home might have resulted in your buying a much bigger and more luxurious house than you need. Or your exclusion from your household’s financial decisions when growing up deprived you of basic budgeting skills. But when you get to the root of the problem you’re likely to see where the cash leaks are and what’s causing them.’

Changing one’s attitude towards money is a journey, André says. The first step is to commit to changing the situation – set financial goals and find mechanisms that will help you stick to them.

‘Some people are likely to stick to their saving goals if they have contractual savings products in place. Others get encouragement when they verbalise their commitments to other people, while some may need some coaching or a mentor who can walk this journey with them. The kind of mechanism that will work for you will depend on your money personality.’

These tools can help you stick to your savings commitments:

• Budgeting will help you keep track of where you may be slipping. Comparing your budgeted spend against your actual spending will help you identify small cash leaks that might be adding up to a substantial amount at the end of the month. Budgeting can also remove the emotion from making financial decisions.
• A sounding board gives you a way to test your thinking and plans, which will help you avoid your blind spots. Get some advice from someone you trust, like a spouse, family member or friend. Get into the habit of bouncing your thinking off someone before making a crucial financial decision.
• Professional advice has the added advantage of objectivity. A financial adviser may also point out important needs or risks you may not be aware of. An adviser should work with you to set a plan and not try to convince you to buy products whose purpose you don’t understand.
• A commitment device may be a financial product, digital goal commitments or social savings and saving societies.

Saving is one of the easiest ways to try to take control over your money, André says. By digging deeper into the roots of your relationship with money, you can determine what’s important to you instead of letting money and what it can do for you dictate your future.

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