Gaining savings is just as important as losing weight when it comes to New Year’s resolutions. However, the determination that drives you to hit the gym might not be enough to change your money habits, according to Stephanie Holmes-Winton, owner of the Nova Scotia-based financial planning consultancy The Money Finder and author of the book “$pent.”
Holmes-Winton argues that personality plays a huge role in an individual’s financial habits.
“Too often, the professional advice given to people about debt and spending misses the mark,” she says. “The common theme is usually math and shame. But I believe our money mindset shapes how we view our finances.”
In “$pent,” Holmes-Winton outlines seven money mindsets that define how we’re inclined to spend and save money. Here are three of the most common money mindsets. You can also take Holmes-Winton’s quiz to see how you stack up as an investor, spender, and saver.
1. The Dreamer
Traits: If you believe anything is possible, have a strong entrepreneurial spirit, and think you can do anything, you’re likely a dreamer.
- As an Investor: You are a risk-taker who has no qualms about investing in yourself or your business.
- As a Spender: Your spending habits are not always terrible, but you do tend to overspend.
- As a Saver: You struggle to save and probably haven’t saved much money.
2. The Justifier
Traits: If you can reason your way out of just about anything and rationalize spending money on things you don’t need, you’re likely a justifier.
- As an Investor: If you’ve invested in your future, you probably have a managed investment portfolio because you tend to be neither overly involved nor excessively removed from your investments. Your greatest challenge is coming up with the money, not deciding what to do with it.
- As a Spender: You often encourage others around you to overspend to feel better about your poor spending habits.
- As a Saver: You have the potential to be a good saver and probably have an emergency fund.
3. The Brick Wall
Traits: If you’re stubborn, a straight-shooter, comfortable in a leadership role, and take money matters seriously, you’re likely a brick wall.
- As an Investor: You’re super smart and probably an excellent investor. However, your failure to trust anyone’s judgment but your own can get you into trouble.
- As a Spender: When times are good, you’re in control of your finances. But when your money situation hits a snag, you tend to go into denial and refuse to make necessary changes.
- As a Saver: Once you’ve done thorough research into every possible savings account, you know how to save your money. However, you’re often unwilling to listen to the sound advice of a financial adviser, which can lead to financial trouble.
Conclusion
Understanding your money mindset can help you make better financial decisions. Whether you’re a dreamer, justifier, or brick wall, recognizing your tendencies can guide you in improving your spending, saving, and investing habits. As Holmes-Winton suggests, focusing on your money mindset rather than just the numbers can lead to more meaningful and sustainable financial changes.
