Money personality and its impact on life

What is money personality and what psychological types are there? Find out how it impacts your money-related decisions and emotions. Is it easy to change?

Anna Daria Nowicka

What is money personality?

According to Piotr Łabuz, psychologist and expert in financial coaching: “Money personality is the overall set of resources which determine our financial decisions and actions”. We all have some elements of various money personality types. Usually one of them is the dominant one and has the greatest impact on our actions and emotions related to money.

Your money personality has its origins in six areas:

  • the brain and neurobiology
  • temperament and personality
  • self-esteem
  • values and motivating factors
  • beliefs
  • habits

Your money personality type is correlated with your overall personality traits and your temperament, and as such, it is extremely difficult to change. Although your temperament and part of each of the Big Five Personality Traits is biologically conditioned, we can significantly influence other areas – especially our beliefs and habits, values, motivating factors and self-esteem. For years, I have been addressing these aspects with my coachees in coaching sessions.

Your approach to finance is especially closely linked to conscientiousness (which is one of your personality traits). Highly conscientious individuals usually find it easier to save money and manage funds rationally. Less conscientious people can of course acquire all of those skills, but it usually takes more effort on their part.

To some degree, we can also influence the way our brain works. It is clear that if you do not get enough sleep in the long term, you do not eat well, you have insufficient vitamin and micronutrient intake or you abuse psychoactive substances, your brain’s function will be impacted. You will take worse decisions – also in the financial sphere. It will be more difficult for you to work on yourself, to change your beliefs so that they are better for your mental wellbeing or to strengthen your good habits and eliminate things that you do that are harmful, such as compulsive shopping or excessively risky money management.

You brain will also function deficiently when exposed to anxiety or other strong emotions, which is why you should take financial decisions with a cool head. You should put aside all emotions, both the negative (e.g. fear) and the overly positive ones (e.g. excitement or excessive optimism). This is vital especially in the case of momentous decisions, such as taking out a big loan or the premature panic selling of stocks when prices are slumping.

When working on yourself, also as regards better financial management, it is worth understanding how your brain works and how this translates into emotions and decisions. It is especially important to understand how the amygdala and the reward center work.

To find out what your money personality type is, you can observe yourself and analyse your reactions, activities and experience or you can use specific questionnaires (e.g. the Money Attitude Scale or the questionnaire by Olivia Mellan).