How Personalities Affect Spending

Personalities affect the way people spend and save money.
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Financial psychology focuses not on what people buy but rather on the beliefs, emotions and behaviors that explain “why.” Personalities do affect spending, and models called “money personality types” can help explain why. Understanding the effect personalities can have on spending increases awareness and may help people make spending decisions that help rather than hurt their overall financial health.


People differ in their attitudes about and relationships with money. A healthy attitude requires self-confidence, the ability to prioritize, save and, when necessary, say “no.” Unfortunately, this does not describe a great many spenders who, according to Dr. Brad Klontz of “Psychology Today,” display self-destructive and self-limiting financial behaviors characteristic of money disorders. Klontz relates the development of money worshiping and money avoidance back to “financial flashpoints” -- painful or traumatic life events associated only with money. But others take a broader approach, incorporating all life events that affect and shape personalities.

Personality Traits and States

A combination of personality traits and states rather than a single trait or state most often influences spending. A trait is a permanent, stable personality characteristic and, in reference to spending, includes such things as confidence, persistence, patience and observance. A state is an emotional reaction such as anger, depression or frustration, the way a person typically reacts in a given situation. Personality states also can be the root cause of emotional spending, which alone or in combination with personality traits, can have devastating financial effects.

Money Worshipers

Money worshipers range from money hoarders to compulsive shoppers. Financial flashpoints such as childhood poverty or wealth, the internalization of unspoken messages from parents or even significant investment losses later in life can all create personality traits that affect spending. Insecure or fearful personalities may become money hoarders as they struggle to create a world in which they feel safe and secure. Money hoarding often increases during periods of stress or anxiety. People with low self-esteem may use compulsive spending as a way to validate and make themselves feel important or as a way to escape from the worries and anxieties of everyday life.

Money Avoiders

Money avoidance often manifests itself in denial or financial rejection. Indecisive persons may be so afraid of making wrong financial decisions that they either minimize or refuse to face financial realities and in the end make poor financial decisions or no decisions at all. While this may not directly affect daily spending, refusing to balance a checkbook or pay a monthly credit card bill can make a bad financial situation worse. Financial rejection is spending, but often in a different way. Although it can relate to overspending, people who for whatever reason can’t save any amount of money without feeling guilty often donate money to charities or borrow money to family members and friends without considering the effect this may have on their current or future financial situation.

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