Finance is NOT about the numbers-Uncovering your SPENDING PERSONALITY


In the last post, I gave you the formula for financial success and I made it clear that having and keeping money starts with having the right mindset. During the course of the next few posts I will dissect the “secret formula” to reveal the factors that really control your financial life. Through this process, you will come to see that wealth accumulation has more to do with your psychology and environment than how much money you have in hand. The purpose of this exercise is to bring into proper perspective, what actions need to be taken to get you on track for financial success.

One of the two main components of the SECRET FORMULA is spending: (Save>spend)*(1+r) t.

Spending is a function of:

  • Mindset
  • Spending personality
  • Income
  • Knowledge and Application of core concepts ( needs vs wants, prioritising)
  • Having a budget
  • Follow through with the budget

You can refer to the previous post to see the discussion on mindset. Today the focus is one your spending personality. We ALL love to spend. For many it’s therapy. I admit, like most people, I LOVE shopping and I don’t mean grocery shopping. I mean shopping, shopping, you know, on things you don’t really need but are just fun to have. How many of you are smiling right now because you know EXACTLY what I mean.

There is a natural aversion to thinking about one’s personal finance because many feel to start building wealth means giving up having a life. However, building wealth and having a great life does not have to mutually exclusive. It does not mean that to accumulate wealth, you have to save every cent and never give into a whim. We have to find as the Buddha said, the middle path. We must have balance. He who dies with the most money doesn’t necessarily win. Building a nest egg shouldn’t be a tedious task; it should at minimum be a comfortable process. This process can be made easier when you know what type of spender you are. What is your default tendency when you have cash or when your credit card limits has increased? This is a crucial piece of information for you to have. When you uncover your spending personality,  you can then take action as needed.

There are many websites where you can go to and take an online quiz and assess your money and spending personality. You can find a good money personality quiz at   Generally, you will fall into one of the following five personality types:  investor/amasser, debtors/ avoider, saver/hoarder, money monk and spender.  The MONEYHARMONY site gives the following definitions of each.


If you tend to be a money amasser, you are happiest when you have large amounts of money at your disposal to spend, to save, and/or to invest. If you are not actually spending, saving, or investing, you may feel empty or not fully alive. You tend to equate money with self-worth and power, so a lack of money may lead to feelings of failure and even depression. If you hire an investment advisor or financial planner, your major concern will be finding investments with high rates of return, since you hope to make as much money as you can, as quickly as possible. You probably enjoy making your own financial decisions, so it may be quite difficult for you to give up much control to money professionals. If, on the other hand, you tend to be a worrier, too, and if you are tired of being overly obsessed with your money, you may actually welcome the opportunity to assign some of the details of your money life to a trustworthy financial advisor.


If you tend to be a money avoider, you probably have a hard time balancing your check book, paying your bills promptly, and doing your taxes until the very last minute. You may avoid making a budget or keeping any kind of financial record. You won’t know how much money you have, how much you owe, or how much you spend. You may avoid investing money, even if you do have some, because it seems like too much trouble to attend to such details. What fuels this avoidance? You may feel incompetent or overwhelmed when faced with the tasks of your money life. If you are an extreme money avoider, you may even feel a kind of money anxiety or paralysis when faced with money tasks that resemble the feelings associated with math anxiety. Some money avoiders share with money monks the belief that money is dirty. Others have a kind of aristocratic disdain toward the boring, seemingly unimportant details of their money life. But most avoiders are more prone to feeling that they are inadequate or incompetent in dealing with the complexities and the details of their money life, rather than feeling that they are above such dirty work.


If you tend to be a hoarder, you like to save money. You also like to prioritize your financial goals. You probably have a budget and may enjoy the processes of making up a budget and reviewing it periodically. You most likely have a hard time spending money on yourself and your loved ones for luxury items or even practical gifts. These purchases would seem frivolous to you. You might very well view spending money on entertainment and on vacations – and even on clothing – as largely unnecessary expenses. If you think about investing your money, you tend to be concerned not with liquidity but with future security, especially during retirement. “Saving for a rainy day” appeals to your orderly nature. If you are an extreme hoarder, you may want to keep your money so close to you that you avoid putting it even in conservative investments such as money markets, bonds, or mutual funds. Some hoarders have been known to keep their money hidden under mattresses and in other secret places rather than put it in a bank. However, these cases are relatively rare. Depending on how extreme your hoarder tendencies are, you might exhibit some, most, or all of these traits.

Money Monk

If you are a money monk, you think that money is dirty, that it is bad, and that if you have too much of it, it will corrupt you. In general, you believe that “money is the root of all evil.” It stands to reason that you identify with people of modest means rather than with those who amass wealth. If you happen to come into a windfall somehow (through inheritance, for example), you would tend to be uneasy and even very anxious at the thought of the influx of so much money. You’d worry that you might “sell out,” becoming greedier and more selfish, and losing sight of positive human, political, and/or spiritual ideals and values. You would probably avoid investing your money, for fear that it might grow and make you even wealthier. If you were willing to invest some of it, you would most likely be comfortable only with socially responsible investments that reflected your deeper values and convictions and that contributed to causes you would like to support.


If you are a spender, you enjoy using your money to buy yourself goods and services for your immediate pleasure. You probably get satisfaction from spending money on gifts for others. The odds are that you have a hard time saving money and prioritizing the things you’d like in your life. As a result, it may be difficult for you to put aside enough money for future-oriented purchases and long- term financial goals. You may spend most or all of the money you earn, and you may even be in debt. Now, it is important to realize that some people who are in debt are not spenders; they may simply not make enough money to meet their basic needs. If your own income is insufficient to meet your expenses, you are facing a real money crisis. You will have to come up with strategies to generate more income.


When you determine your spending personality you have to figure out whether or not it’s serving you. If you’re satisfied, then there is nothing to do except continue along. If however you realise that your personality type does not suit your financial goals, then you need to change it.  To figure out how to change it, you will have to find out where it originated. When did you start exhibiting signs of this personality type? Your spending personality is usually determined by environment that you grew up in. Your family’s cultural background, your parents’ educational level, the school you went to, the area you lived in and the friends you had all contributed in some form to your ideas about money and spending. All of these factors affect how you interact with money today. Tracing the source of the behavior will allow you to develop a plan of action sooner. It is important to take the time to determine why you spend the way that you do and then take concerted efforts to change it, otherwise be prepared to continue along the trajectory that you are currently on.

The reason you need to find out your spending personality and make changes if need be, is because your spending personality determines the amount and frequency of your savings. The amount and frequency of your savings determine your ability to accumulate wealth. The less you spend, the more you have to save. The more you save, the more you grow. Researchers have recently shown that there is an area in the brain called the insula which affects how we spend money. The insula is the source of social emotions, like desire, disgust, satisfaction and responsibility.  Now, whether spending brings you pleasure or pain will depend on your perception and values on money. This will determine whether your brain sees spending as a pleasure or a pain. Whatever association you have garnered over the years will affect your insula response which further accentuates the spending pattern. If you associate spending with pain, then the less likely you are to keep doing it because you would stimulate the insula which will produce emotional pain. If, however, you associate pleasure from spending, then neurologically you will get a lot of pleasure from this behavior. Understanding your spending personality and determining the emotional response that it elicits, allows you to make appropriate changes as needed to achieve financial success.

It is important to recognise that your spending decisions are not always rational, your subconscious (learned behavior about money) triggers various emotional responses to spending and depending on your behavioral biases you can be a disciplined spender or an impulsive one. When you’re aware of these mechanisms you’re able to take control and direct your spending based on your goals and objectives rather than leave it to undisciplined unconscious behavior.

Take the challenge and find out what type of spender you are.  Feel free to share with me what you found out and let me know what, if any changes you have to make.

Dr. M


Published by Dr. M Finance Blog

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