To help you master your money, take a look in the mirror

Published on Saturday 9 October 2004 00:27

MANY people want to think that handling money well is just a matter of mastering the numbers. But another key aspect is one that most people want to avoid: self-reflection. In order to handle money well, you must know your money personality and take control of the detrimental aspects. In my new book, What Not To Spend, I discuss some of the basic money personalities I’ve dealt with over the years. Do any of the descriptions below sound like your partner, a relative, or yourself?

• The Big Spender: Shopping and buying are meaningful, self-defining activities for this person. Their conversation is littered with phrases like "I just had to have them" or "The sale prices were irresistible". Big Spenders would, and more than likely do, go shopping every single day and always find something to buy. Some shop impulsively. Many run up massive credit or store card debt. Others spend every bit of money in their current accounts and are perpetually in overdraft.

There are usually two core issues driving Big Spenders. First, the question "Do I really need this?" never enters their minds during the buzz of shopping. Second, they are frequently using spending as a quick solution to some emotional inadequacy or void they feel but do not really want to think about or try to solve.

• The False Optimist: "Oh, it will work itself out" is a frequent phrase used by the False Optimist. They rarely say "I’ll figure a way to work this out" because they believe fate will always intervene: a rich relative will die and leave them lots of money; a better paying job will come along out of the blue; they’ll meet Mister or Miss Right who has a big savings account that will make all of their financial problems disappear.

False Optimists usually resist taking responsibility for their actions or for finding a solution. They view dealing with harsh financial realities as being pessimistic, dismissed with a wave of the hand. They want to remain resolutely optimistic, and frequently delusional, as the credit card bills pile up and it becomes difficult to pay the mortgage. They only way to help the False Optimist is to force them to take off their rose-tinted glasses and even then they’ll avert their eyes.

• The Ostrich: This person doesn’t look at his or her monthly bank statements, overdraft notices or credit card bills, which go straight in the drawer, out of sight and mind. They typically don’t have a budget. They only want to be vaguely aware of handling their money.

When asked about their finances, the tone of their response may suggest that being financially aware is a kind of a moral flaw that they are proudly avoiding.

Unlike the False Optimist, the Ostrich will know the situation is not good, but wishes to avoid dealing with it until they are forced to. And as soon as things get better, their tendency will be to put their head right back in the sand until the next crisis.

• The Hustler: "I can beat the system" is the unspoken mantra of the Hustler. They know (or think they know) how to play the zero per cent credit card borrowing game and believe there are nothing but beneficial financial consequences. They take pride in cleverly using money borrowed from banks and credit card companies to make money for themselves, without working. Theirs is an elaborate financial tango that they are dancing with a partner - a financial institution - that is much bigger than they are.

Unfortunately, it usually requires a financial tumble before the Hustler sees the long-term fruitlessness of this approach.

See yourself in any of these descriptions? Perhaps your money personality is a combination type. This means your struggle with your pounds will be more complicated and difficult. By being aware of your financial personality and its foibles as well as monitoring yourself on an ongoing basis, you can increase your ability to handle your money well and avoid trouble. The key is that you have to want to do this for yourself and for your money.

• Alvin Hall will be talking about his new book, What Not to Spend, at the University of Dundee at 7pm on Monday (tickets from Ottakar’s, 01382 223999), and signing copies at 12:30pm on Tuesday at Waterstones, 128 Princes Street, Edinburgh (0131 226 2666) and talking about the book at 6:30pm the same day at Waterstones, 153 Sauchiehall Street, Glasgow (0141 332 9105).