Jasmine Birtles
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How best to save depending on your personality
Moneymagpie Team
8th Nov 2021
By now we’ve probably all done an online personality test to find out whether we’re outgoing, shy, creative or something else. But what if we applied these personality types to our money habits? Well, that’s exactly what Clare Framrose, Head of Savings at Atom Bank has done. From the worrier to the risk taker, you’re sure to find a saving style that suits you.
- The Worrier
- The Avoider
- The Compulsive Spender
- The Compulsive Saver
- The Risk-Taker
- The Saver-Splurger
The Worrier
If you classify yourself as the “worrier”, then chances are you might be a bit apprehensive when it comes to money. A “worrier” may feel that they cannot maintain a steady financial status, which is why they may benefit from other people’s views when it comes to money. If this is you, then it may be worth booking yourself an appointment with a financial advisor. This would allow you to air your worries around money management and find out how to best look after it. Further to this, an instant saver account may be a good option for savings, it allows you to save but you have easy access to the money in case of an emergency.
The Avoider
Much like your responsibilities you tend to ignore your finances until they catch up with you and cause you an issue. Whilst ignorance may be bliss, you cannot solve an issue by ignoring it, it will just become worse. The way forward for the avoider may be to set yourself a challenge, whether that’s stopping buying takeaways, eating out or drinking, you could save this money and put it away in case of emergency. There are also challenges like the 1p saving challenge where you start by saving 1p, then 2p and so on and by the end of the year you could have saved over £600. By setting fun challenges, you’re more likely to stay interested in your money habits and start to notice where your money has been slipping off to instead of it being in your rainy-day fund.
The Compulsive Spender
Does your money seem to disappearing every month? A little treat here and there, a meal out, an extra drink at the pub and suddenly you’re massively out of pocket. You likely have a compulsive spender type personality, sure the instant gratification of a shopping spree is nice but when your car breaks down and you’ve spent your pay check already what are you going to do? It may be that a fixed savings account is the way forward for you. By putting away a percentage of your wage away a month you have an emergency fund there for that broken boiler, new washing machine or any other emergency that comes your way. Fixed savings accounts are different to instant savings accounts as the money isn’t as readily available meaning you’ll have to put more thought into financial decisions.
Mario Weick, psychologist at Durham University, delves deeper into how looking to the future can help compulsive spenders reign in their spending splurges. He says:
“The benefits of saving money materialise over time, so focusing on a future goal can make it easier to save money. If you focus on the here and now, you may encourage further spending. The key to strengthening your savings is to make the process easy, sociable and fun.”
The Compulsive Saver
In complete contrast to the compulsive spender, your personality means you rule your wallet with an iron fist. Every last penny is accounted for with no room for fun. Whilst this may seem sensible, you might want to reassess your habits. You need to find a balance between spending and saving sensibly because no amount of saving is going to lead to happiness and may even cause issues surrounding spending your money. Take some time to reassess your finances and work out how much you can set aside for “fun”. That could be anything from treating yourself to a new top to a nice meal out. Like most things in life, money needs to be treated with moderation.
Mario says: “Neither extreme spending nor extreme frugality is a pathway to happiness. Uncontrolled spending can cause guilt and debt but, on the other hand, being overly frugal can be burdensome and cause excessive worries about how you spend your money. A healthy balance between restraint and allowing oneself some pleasure and spontaneity is probably an optimal strategy to boost happiness – it’s the golden formula.”
The Risk Taker
So, you’re known for taking a few risks without thinking about the consequences, you like the thrill that comes from not knowing what’s coming next. This personality type isn’t always the best when it comes to approaching money. However, being aware of your habits will be beneficial as you can be more thoughtful of how much money you need to set aside to maintain your financial stability. A fixed saver account may be for you if you’re a financial risk-taker, as you can’t just access the money, you’ll know that you have a rainy-day fund waiting for you.
Dr Jo Gee unearths why some people take more financial risks. She says: “Their behaviour is motivated by the production of dopamine from neurons in the brain’s reward circuit, which creates a sense of pleasure and thrill at the concept of risk and reward. Short term gain should never win out against long term pain, so these personality types need to set boundaries around their financial risks, define these with a financial advisor and get therapeutic support if their sensation-seeking behaviours are becoming an issue.”
The Saver-Splurger
You’ve started the month with a budget, you know where your moneys going and you’ve planned to have enough to save and still have a bit left over for some fun. But suddenly all the moneys gone and you’ve had to dip into your savings to cover the bills. It might be that a new approach is in order, one that involves both a monthly and weekly budget. By having a monthly overview and then splitting that down into weekly outgoings you are less likely to lose track of your hard-earned money.
To find out more about how best to save your money, visit Atom bank for further information.
Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence.
Interesting information.