If you’ve ever taken a personality test, you know that learning more about your personality can help you understand your habits for the better and live a more balanced life.
Similarly, knowing your money personality can help you tackle your financial future with confidence — whether you prefer to save, spend or invest.
Curious to know what your money personality is and how your natural tendencies can help inform your financial decisions? NBC News business and data correspondent Brian Cheung joined the 3rd Hour of TODAY on Oct. 27 to break it down.
Below, learn more about Cheung’s tips for using your money personality to make sure you’re getting the most out of your money.
What Is a Money Personality and What Does It Mean?
When you describe someone’s personality, you typically list a number of character traits that make up who they are. Similarly, a money personality describes how you interact with money by listing financial habits.
“There are different profiles for how you spend money that might determine what your spending and saving goals might be,” Cheung said on the 3rd Hour of TODAY. “Identifying your personality type first might be a good way to make sure if there are other ways you can steer your goals.”
Some of us are savers, while others prefer to spend. Some people think about money all the time, while others prefer to avoid conversations about money.
Regardless of where you fall, the ability to recognize your unique money personality can be a first step to learning where you might need to adjust your habits to strengthen your financial health.
What Are the Different Money Personalities?
Experts have identified four main types of money personalities, according to this lesson with Khan Academy:
Savers
“Savers, as the name implies, is someone that’s going to be saving more than spending,” Cheung said. “When it comes to those types of personalities, they’re focused on longterm goals. What are you saving for? Are you saving for a car? Are you saving for a house? They’re also trying to invest that money.”
On the flip side, savers shouldn’t forget to live a little.
“The caveat with the saver is sometimes you’re not enjoying life. You’re too worried about squirreling money away. … Maybe, hey, go out to dinner every now and then,” Cheung said.
Spenders
“(Spenders) are the ones, in some cases, who might be spending more or having a little bit too much fun,” according to Cheung. “But in the now, they’re having a good time.”
That said, spenders should keep their future in mind and try to find rewards that don’t involve money.
As Cheung said: “They need to remember that if you have a longterm goal, if you’re spending too much now, you’re not going to have enough in your savings accounts to ultimately have fun when you’re retired.”
Avoider
If you’re an avoider, you don’t like to think about money, Cheung said.
“Sometimes you’re an avoider type, right? If you’re trying to move, for example, you don’t want to be thinking about having to buy a new kitchen table and all those things — so you might be avoiding it right now, but you really want to try to become a balancer.”
Balancers
A balancer is someone who is thinking about saving for the future, while also balancing out immediate needs in the interim, according to Cheung. “They’re open to investing. But again, for the balancer, sometimes you just have to relax and enjoy spending sometimes.”
At the same time, balancers are prone to “decision paralysis,” Cheung said, in that they can be conflicted about financial choices that make the most sense now and in the longterm.
How Do I Determine My Money Personality, and What Do I Do With This Information?
Knowing whether you’re a spender or a saver is pretty straightforward, but deciphering the balancer and avoider personalities can be a bit tricky. If you’re frequently looking at your financial statements, it’s a pretty good indicator that you’re a balancer, according to Cheung.
The overall message here, though, is this: When looking at your bank account, is more money coming in than going out?
“It’s as simple as that,” Cheung added. “Cash flow is the best way to know if you’re saving your money.”
After that, he recommends using the 50-30-20 rule: Plan to use 50% of your post-tax incoming on needs, like housing and groceries; use 30% on wants like, dining out and shopping; and put 20% away in savings or the market.
“If you’re not putting more than 20% (in savings), you’re probably someone who is spending a little bit too much. If you’re putting over 20%, then you’re probably a saver,” Cheung said.
What Does Knowing Your Personality vs. Your Partner’s Mean? How Is That Helpful?
You and your partner are a team, so understanding both of your money personalities is another way to work together and join financial forces. For instance, if one of you is a spender and the other is a saver, your money personalities can work in tandem. As Cheung said, “sometimes opposites attract.”
On the other hand, if you’re both spenders and are living beyond your means, you’ll know you need to make a compromise.
“Ultimately, can you have a civil conversation about your goals?” Cheung advised.
Talk with your partner about your short, medium and longterm savings goals to better understand what you want to achieve together. This will help guide how you decide to save and spend over time.
Is There a Personality That’s ‘Better’ Than Another?
The ideal money personality type should be a combination of the saver and the balancer.
“But again, there’s no shame,” Cheung said. “And I think at different points of our lives we can be certain personality types over others.”
