Many of us struggle to adopt a money management or investing style that minimizes the stress that we experience. This is particularly true for baby boomers after the 2008-2009 market declines. We don’t want to discover after we have invested that our investing style and money strategy are creating undue anxiety.
Discover Your Finance Personality
Keirsey is an educational psychologist who has determined that we can be assigned to one of four different personality types: guardian, artisan, idealist, and rational. To learn your type, you can take the KTS test online. It’s free but you have to register.
Men’s Health magazine has a shorter version of the KTS test in its April issue. It is not yet available online but it likely will be in a week or two. It’s worth a look.
Manage Your Money to Reduce Stress
Here is a summary of what the various experts consulted by Men’s Health had to say about the different finance personalities:
The Guardian Money Manager
Guardians study a lot about finances, buy a lot of insurance, and invest conservatively.
If you are the guardian-type, the advice is two-fold: (1) vent your stress-related feelings to family and friends; and (2) consult a personal finance professional to obtain a new investing plan. Apparently, those of us with a “guardian” personality are more likely to appreciate and follow-through on a professionally-prepared plan.
The Artisan Money Manager
Artisans are free-spenders and of all types, the most prone to incur debt. When times are bad, artisans tend to react by engaging in unhealthy habits of all kinds.
Here the advice is first to use the artisan’s negotiation skills to obtain the best money deals. Second, because artisans are known to lack discipline, they are also advised to auto-deposit money into savings and investment accounts so that they are not tempted to spend it. At the same time, artisans should give themselves a little “mad money” so that they won’t freak out from the spending restrictions.
The Idealist Money Manager
Idealists think more about taking care of others then forget about themselves. That self-apathy can lead to overspending and failure to plan for retirement.
Apparently, idealists are not so concerned about market volatility as they are losing their job. So the advice is to allow yourself to temporarily withdraw from your normal environment to contemplate what has happened. Then, lean on family and friends for support.
The Rational Money Manager
Those of us with a “rational” personality type are supposed to be cool under fire and better able to tolerate tough financial times because we value “ideas over bling.”
According to the analysis, rational types are prone to choose the riskiest investments and to be “paralyzed by analysis.”
Thus, the rational money manager is advised to make prompt money management decisions but be willing to make rapid changes in strategy if things turn south.
Final Thoughts on Money Personalities
I found this exercise interesting but I am not overwhelmed by the specifics of the advice. I believe it is helpful to be self-aware of how your personality can get in the way of good decisions about your money. To that extent, the information provided by Keirsey and the Men’s Health experts is helpful and maybe can reduce stress caused by tough economic times.