One thing that has always bothered me about financial books and websites is that they tend to assume that we all aspire to the same financial goals: pay off debt, save for retirement, be able to afford a comfortable standard of living… and to some extent this is true. But what finance writers tend to leave out is that finance is a highly personal matter, and how you feel about your finances and how you ideally choose to tackle them is important to making your plan to financial security. There is no bulletproof approach for everyone and forcing ourselves to conform to one way of thinking can often be responsible for stalling our financial progress and creating more anxiety.
I’ve started to think about this even more since getting married in 2015. While my husband and I are both fairly close on the spectrum of how we handle money, there are times we disagree. I know of couples where this is even more prevalent and it led me to uncover four main Personal Financial Philosophies. These philosophies are the core money values we carry with us on a day-to-day basis and they influence everything from what we spend our money on, to if and how we invest.
I developed a quick (no more than five minute) quiz to determine which Personal Financial Philosophy you most identify with. Take the quiz and then come on back to read a quick synopsis of what you should look out for and how you can best capitalize on this information. Note: I also recommend if you are part of a couple that your partner take the quiz as well. The results may be eye opening.
THE FINANCIAL REBEL
Financial Rebels are generally not concerned about financial norms and consequences. They may regularly miss debt payment and have little interest in your long-term financial picture. There are two main reasons why someone may be a Financial Rebel. First, they may feel too overwhelmed with their financial situation to deal with it, as avoiding the problem and pretending they don’t care is often easier in the short-term. Alternatively, they may have a deep rooted money script that tells them that it is normal to disregard financial consequences. Such money scripts often develop as a product of our upbringing and once identified they can be controlled.
This is one of the harder Personal Financial Philosophies to partner with, but if a Financial Rebel is committed to taming this financially reckless attitude it can be accomplished by identifying triggers, retraining habits and setting clear goals accompanied by logic for why those goals are important.
THE FINANCIAL CONSERVATIVE
Financial Conservatives are very (perhaps overly) concerned about finances. They tend to make “safe” investments such as leaving excessive amounts of money and checking and savings account that may yield very little financial benefit. They also tend to harbor a lot of financial stress and may lose sleep over their finances on a regular basis even if they are doing everything they can to ensure a stable financial future.
This Personal Financial Philosophy has its benefits as well as its drawbacks. Being conservative means that they will likely have an emergency fund in place assuming they’ve been able to afford one. On the other side of the coin, they may need to diversify a bit more and make sure that their investments have the potential to grow in value over their lifetime. Financial Conservatives generally make good partners with all other Personal Financial Philosophies as they can balance nicely with a flexible Financial Rebel, and have some tendencies in common with Financial Pragmatists and Extremists.
THE FINANCIAL PRAGMATIST
Financial Pragmatists are interested in building wealth in a logical way, step-by-step, and want to chip away at long-term goals slowly. Often they will take on debt if they can see a long-term benefit associated with it. Their idea of a stable financial life is traditional and may include retirement accounts, buying a home, and other diversified investments. They tend to weigh cost and benefit in making financial decisions and can see the importance in saving/investing as well as living a full life in the present.
Financial Pragmatist are typically good partners to have, but may have trouble coupling with Financial Rebels and Extremist initially. They can provide some balance to Financial Rebels, but are often frustrated and struggle to understand other financial philosophies that don’t seem to make financial sense to them. Logic and planning serve a key role in keeping them motivated and aligned on a financial strategy.
THE FINANCIAL EXTREMIST
Financial Extremists have always existed, but seem to be more prevalent in the age of social media where bloggers share their stories of retiring at the age of 35 years old. They are interested in building wealth in non-traditional ways and are willing to make short-term sacrifices for long-term gains. This could include extreme budgeting or moving back in with their parents if it means they could pay off debt quickly or retire early. This is an admirable goal for those with the discipline and stamina for the undertaking.
Financial Extremists are extremely goal focused and do best with partners that are able to share their goals with them. If they keep their money separate from their partner it is possible for them to coexist with other financial philosophies, but they are ultimately best suited to be with someone that will support their vision and help them in accomplishing their goals.
Written By: Lindsay Dell Cook
Lindsay Dell Cook is an accountant, turned writer and founder of Budget Babble. She lives in Philadelphia with her uber supportive husband, and enjoys taking their adorable mutt for walks or reading a good book while buried under a pile of cats.