“I’d always had an interest in personality,” says career coach Ray Linder. Yet despite that interest, he says he never made the connection between personality and personal finance until counseling some friends one day.
“They were a couple and the husband was just unmovable,” Linder remembers. “The idea of putting money into long-term investments was horrifying to him, because he was so ultraconservative.” Linder says he was driving home after the failed session when a light bulb went off. “His approach to finances and his general personality were so closely aligned that I knew there was a connection that needed to be explored.”
After extensive research, Linder wrote What Will I Do With My Money?, a book examining personality types and how they impact our behavior, especially the decisions we make (or don’t) with our finances. Based on established psychology theory, he reduced the 16 known personality types into four larger categories: protectors, planners, pleasers and players.
EBONY.com spoke recently with Linder to discuss his book, the pros and cons of each category, and what each of us can do to maximize the positive attributes of our personalities and avoid the negative.
“The natural approach of a protector is to be careful, cautious and conservative,” says Linder. “They want stability and security and generally don’t like debt.” He describes protectors as the “frugal” type who lean heavily on experience and tend to return to what’s familiar. Because protectors are typically very organized, Linder says if they fall into situations where there’s uncertainty, they often have a hard time making decisions.
His advice: If you think you’re a saver, it would benefit you to embrace financial products that fit your personality. Look into bonds, savings accounts and blue chip stocks. “But beware that your desire for security means that you could miss out on the payoffs that come with risk,” he warns. “Work with your personality by setting aside ‘risk’ money, funds you can play with without any anxiety.”
“Planners—or as I think of them, professors—are the thinkers of the bunch,” he says. According to Linder, planners like theory and abstraction, so they spend their financial energies mostly thinking about the future and strategizing. “You’ll find lot of portfolio managers in this group, because these are people who are naturals at taking in data and creating forecasts. The planner delights in beating the market and wants to be confident in making decisions,” he says.
Linder advises, as such, to avoid overanalyzing. “A big challenge for this group is failure to launch because there’s always one more thing to consider. Again, you have to work with your personality, adjusting for this. As a planner, build into your projections and models a deadline by which you should start—easy to do if there’s a point by which your returns diminish.”
By virtue of their personality, pleasers are the least interested in money, according to Linder. “They’re highly relational by nature, and care more about people. Pleasers tend to want to build a life that reflects who they are and their relationship to others,” he says—even when it comes to their money. Because pleasers are caring, they often use their money as a way of caring for themselves and others.
Linder says a good example of this is the parent who will maintain high expenses for a large home just in case their kids ever have to return, or an overly generous friend. He says the best advice for a pleaser is to remember that being logical with their money (saving, investing and budgeting) will ultimately lead to better relationships. “It may seem like you’re sacrificing connection in the short-term, but making sound decisions will position you better in the long-term,” he says.
Then there are the “players”: those who seem to use money as they please, letting the chips fall where they may. “Most might call players impulsive, but they’re really just very oriented in the present,” says Linder. In fact, because they tend to have great skill in reading situations and responding accordingly, Linder found that players don’t actually need the planning qualities many of us depend on to get along. “They’re more comfortable with risk because they don’t see it as that. They have a belief and optimism that they can make any situation work and often can,” he says.
Still, even players need to practice some restraint. Linder suggests making financial plans that embrace tactile tools and strategies. “They benefit from using cash instead of a card,” he says. If you’re a player, don’t budget and plan too far into the future. Instead, plan in weekly increments to avoid getting disconnected from your goals.
Finally, Linder says that no one money type is bad or good, right or wrong. “I encourage people to be comfortable with who they are, because there’s something to be learned from each approach,” he says. “You’ll be most comfortable and make the best decisions when you’re playing on your instincts. But try to temper that with checks and balances. It’s when we overdo aspects of our personality that we get in the most trouble.”
Donovan X. Ramsey is not a personal finance expert. He’s a multimedia journalist who writes about all things social, political, cultural and whimsical. After college, Donovan set out to discover everything he didn’t know about the world of personal finance. Learn along with him weekly on EBONY.com as he explores more everyday money matters. Follow Donovan on Twitter @iDXR or at DonovanXRamsey.com.