Friday, September 01, 2006

Financial Personality Traits

The personality traits are

1 – The Research-everything

• There is nothing wrong with research and you should do your homework before making major financial or investment decisions.

• However at some point, research must come to an end and action should take over thereafter.

• If no action takes place, then this can lead to analysis paralysis, where the individual remains in a perpetual state of preparedness, always seeking a little more information, or clarification before moving forward.

2 - Credit Card Shopper

• This type generally has all the credit cards you can think of.

• Because there is essentially no cash transacted with any of their purchases, they psychologically feel no money has been put to use and continue spending like there is no tomorrow.

• They therefore easily fall into the biggest consumer debt trap that there is, credit card debt.

• The answer for this lot is to remove all forms of credit cards and, if they must have a card, then it should be a debit card. This is a card that is preloaded with a fixed amount of cash and you can only spend what’s on the card and not a penny more.

3 – Spendaholics

• This type must buy something, anything. This is what gives them a rush.

• This person should never be allowed into a shop without a pre- agreed plan on what it is they will do in the shop.

• This type of person should only enter a store after they have made a list of exactly what essential goods they are going to buy and to stick to that list.

• This person should never have access top a credit card, as they will not have the discipline to use it correctly.

• Only cash accompanied by a specific list drawn up prior to entering the store should be used.

4 – Cheapest Possible Price

• This one has a different type of disorder in that they will not be anything unless it’s the absolute cheapest price that there is.

• This disorder is often masqueraded as one of “getting the best deal” out there.

• This stems from many things, among one of which is fear of spending any money.

• The problem here is that many times the absolute cheapest item is just that… In many cases the products do not last at all and one ends up paying a lot more in the long run for these “cheap” products.

This kind of person exactly is not aware of the cost of the article in the market and feels that the sales person is selling the article at a very high cost.

5 – Decision making Through Hearsay

• This type has no fixed opinion of their own, so they go by what others say and do.

• They conduct no research to verify any information received and take everything they hear at face value.

• As a result of this, they keep changing their minds depending on what the latest information is that has come their way.

6 – Impatient

• This type is looking for instant results on everything. The shortest route to instant gratification is what appeals to them.

• This personality type wants things done yesterday and will often abandon very sound plans before they yield any results.

• The final outcome here is that this person is forever in start-up mode because they are always trying out a new plan, since the previous one “didn’t work.”

7 – Hands off Anything Financial

• Very willing to dump financial responsibility or decision making onto others.

• They tend to duck any financial decision making that has been left to them to execute.

• They want the rewards of a good financial plan, but not the work associated with it.

• They are surprisingly shocked to find that things have not taken care of themselves.

8 – Dreamers

• This type would love to lead the good life and can often describe it to you in vivid detail.

• They however make little or no effort to get their heads out of the clouds and into reality.

• The problem here, as you can imagine, is that dreams by themselves do not pay any bills; only action from dreams can do this.

Now before you set yourself off in a major panic, just remember that we all have a little of these traits in us, so you’re not a lost cause for having spotted such signs in your behaviour. The important thing to ensure is that none of these destructive personality types dominates your financial decision making process.