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There is a growing literature in the field of financial planning around the area of financial psychology. What academics and practitioners are recognizing, more and more, is that money is not just about the exterior life, such as financial ratios and personal balance sheet, but also about an interior life, such as a money personality. Your money personality is important for you to know because it influences how you think and feel about money, which impacts your financial health and even the quality of your relationships.
Money Worlds
One of the best ways of understanding your interior life around money is to identify your money personality. My favorite money personality assessment tool is called “Money Worlds,” which was developed by Dr. Miriam Tatzel.
A money world is a certain way you view money that may or may not be shared by others. In most cases, you will marry someone with a different money world than you. And that often causes relational conflict.
For example, in my own life, after a year of marriage, my wife and I got into a fight when I came home one day and said, “Honey, let’s go for 2 weeks to Europe! It will cost about $5,500, and here is where we should go.” And her response was something like: “Excuse me? What kind of world are you living in if you want to hound me every time I spend $10 more than our grocery budget, but you are willing to spend $5,500 just like that?”
While my wife has wondered what kind of world I’m in with money, I get confused too about how her world works.
As a single person, I always spent a certain amount of time making a purchasing decision, and then made my final decisions and did not think about it again. My wife, on the other hand, spends a significant amount of time thinking about every purchase she makes, and then agonizes about her decisions for several months afterwards. I have learned after 10 years of marriage that you can return just about any purchase you make, including milk and underwear.
My wife and I definitely operate under different ways of thinking about money. Or put another way, we have different money worlds.
Are You Loose Or Tight With Money?
Professor Miriam Tatzel, a social psychologist, saw that people often have distinctly different attitudes and values related to money and began to study the differences. Eventually, she was able to condense various attitudes and values about money into two primary characteristics:
- Degree of Looseness with Money
- Degree of Materialism
Regarding “degree of looseness,” if you are loose with money, then you are willing, or even eager, to spend money. You believe that by spending more, you will get the best. By contrast, if you are tight with money, you are usually reluctant to spend, and by spending less, you will get the best.
Regarding “degree of materialism,” if you are high in materialism, you derive pleasure from material things that improve your quality of life. If I am low in materialism that means that I view material things, like beds and cars, as relatively neutral tools, and delight more in experiences that improve my quality of life.
Please note that being high in materialism is not morally wrong! It just means that you particularly enjoy life through material things.
Mapping Your Money World
When combining these two characteristics of looseness and materialism, Professor Tatzel was able to map four possible “money worlds” for people, and they are: value seeker, non-spender, big-spender, and experiencer. As I discuss these money worlds, see if any particular one resonates with you.
Value Seeker
First, if you are tight with money but high in materialism you have a “Value Seeker” money world. A Value Seeker tends to spend extensive time researching and saving in order to buy nice things. They view the price of things as positive, in that, if something is more expensive, it must be better.
Non-Spender
Second, if you are tight with money and low in materialism you have a “Non-Spender” money world. The Non-Spender avoids spending because it is painful. Price is seen as something always negative, which means: the higher the price, the worse the product or service they are buying. In general, they are naturally more happy if they are not buying things or shopping.
Big-Spender
Third, if you are loose with money and high in materialism you have a “Big-Spender” money world. The Big-Spender spends money on nice things in order to feel connected to themselves and others. Material things are the medium for how they experience and enjoy the world.
And, to re-emphasize this point, that there is nothing morally wrong about this money world. However, that being said, while it is not necessarily a morally wrong money world to have a Big-Spender money world, there are some fiscally dangerous attitudes that are often attached to this money world, such as use of consumer debt that leads towards financial loss. Studies have shown that those with a Big Spender money world tend to have the most amount of consumer debt relative to other money worlds.
Experiencer
And, finally, if you are loose with money but low in materialism you have a “Experiencer” money world. This money world has exploded with the younger generations, beginning with Millennials. The Experiencer sees money as a way to buy experiences and services that lead to their growth and development. They tend to avoid acquiring costly things that tend to anchor a person down to one location, like boats and homes, and, instead, focus on being mobile.
Your Money World Wing
So, did any particular money world resonate with you? You may be thinking that you are sometimes one money world and sometimes another. Just like the enneagram personality studies, you should imagine that you have a healthy expression of your money world and an unhealthy expression of your money world, or “money world wing.”
For me, I tend to be an Experiencer when I am healthy, in that I am loose with money and low in materialism. In my healthy money world, I relate to money in a non-fearful way. In general, I get loose with money when expenses have to do with personal development or memorable experiences, like when I wanted to go on a European vacation. But, if it is something like buying groceries or shoes, I tend to naturally get tight with money since I am low in materialism and I don’t derive a lot of pleasure from material things, in general.
However, when fear is overtaking me, and I enter into an unhealthy view that money is severely scarce and I must have more of it for protection, I transform into a Non-Spender. As a Non-Spender, I shut down all of my spending and become very unpleasant to live with.
Don’t Judge Other Money Worlds
Once you identify your natural money world and your “money world wing,” the next step is to never judge any particular person’s natural money world as good or bad.
Having different money worlds may cause conflict, but appreciating the good parts of a person’s money world is key to navigating the inevitable conflicts that will occur if one of you likes to spend money and the other person is very uncomfortable about spending money. Every money world has both good and bad aspects, so you can’t point your finger.
For example, if you have a friend who is a Big-Spender and you are a Non-Spender (which is very likely if you are a financial professional), there will likely be lots of moments where you will be tempted to judge your friend’s behavior as morally wrong, and you will have conflict with them when you tell them they should stop spending money. In order to manage this conflict, a good first step is to acknowledge that your client’s money world is a legitimate way of viewing money. Big Spenders tend to be great at hospitality. They are naturally able to create beautiful places and comfortable spaces because of their high materialism.
In the same way, Big Spenders may think there is nothing good about being a Non-Spender, painting them as a cruel Scrooge character. However, the simple living of a Non-Spender can be an inspiring example to us all, like Maria from Sound of Music, getting off her bus to her new home with one bag, one guitar and one big smile.
Conclusion
Once you recognize that other people have valid money worlds, the final step is to acknowledge and take responsibility for the ways your own money world can become unhealthy and potentially harm others. Owning this, instead of focusing on the bad parts of other people’s money worlds, creates the smoothest path toward improving both your financial health and the relationships around you.
