10 Personality Traits That Help You Master Your Finances

personalities, finances

How you handle money comes down to certain personality traits. Are you anxious or compulsive, or grounded and practical in your approach to saving and spending?

Kathleen Gurney, founder and CEO of Financial Psychology Corporation and author of Your Money Personality: What It Is and How You Can Profit from It, has spent years researching people’s financial traits.

“The way we behave with our money is often unconsciously motivated,” she said.Some of the traits are really assets, and we want to reinforce those traits. If they’re not used properly, they become liabilities.”

These 10 personality traits can help you master your finances. Read on to see which you have and which you need to develop.

Read: Americans’ Biggest Money Fears Today (Infographic)

1. Control

Those who take responsibility for their finances tend to be more confident in their decisions. And those who actively manage their money have significantly higher levels of wealth, according to a study published in the Journal of Economic Psychology.

To take control of your finances, Gurney recommended that people start with one task, such as tracking spending or setting up automatic bill payments. Then use that sense of accomplishment to tackle another task. The more control you take, the more your money management skills will grow.

Read: 25 Financial Planners Share Their Best Advice for Saving Money

2. Contentment

It’s not uncommon for people to feel anxious about their money. But being calm and content plays a role in financial success.

A study of financial personalities by Allianz Life Insurance Company found that more people felt financially overwhelmed when asked about their retirement savings than any other characteristic, which included resilient, savvy and distracted. The study concluded that the overwhelmed personalities were in “survival mode.”

Taking concrete steps to plan for the future will ease one’s anxiety, Gurney said. Reading books by financial experts and seeking out advice will also help to boost a person’s knowledge and confidence.

3. Thoughtfulness

People who are reflective and can think things through tend to consider financial decisions as part of a bigger picture, Gurney said. Rather than getting hung up on one bad move, they figure out how to move forward to reach their goals.

“You can’t judge a (golf) game by one hole,” Gurney said. “Instead, you have to look at how well you played all nine or 18 holes.”

Conversely, being impulsive can lead to bad money decisions like overspending. If this sounds familiar, develop willpower. Don’t spend when you’re feeling emotional. Try to see money as a way to build security for tomorrow rather than a means to bring about pleasure today. Commit to your financial goals and consider your future.

4. Rationality

Being grounded and rational can help keep emotions out of financial decisions.

On the contrary, when people get emotional, they tend to react rather than reflect. And that can lead to poor outcomes.

When it comes to investing in particular, people need to be level-headed. When the stock market takes you on a gut-wrenching ride, keep your cool and remember that you’re in the market for the long haul.

5. Calculated Risk-Taker

Taking on too much risk can jeopardize your financial situation. Taking on too little risk can lead to missed opportunities. Finding a happy medium by taking calculated risks is an ideal approach to your financial security.

A calculated risk-taker will research and calculate the probability of loss versus gain when making financial decisions, Gurney said.

Related: 9 Ways to Take the Fear Out of Investing

6. Trust

People who don’t trust themselves to make the right decision tend not to trust others either, Gurney said. This can have a negative effect on people’s finances because they won’t trust anyone to help them with money issues and they’ll be skeptical of others’ advice.

When you trust in yourself, you tend to be a better judge of others. Know that you can make the right decision when it comes to choosing an advisor to help you with your finances, Gurney said.

Related: 10 Things You Need to Know Before Choosing a Financial Planner

7. Empowerment

People who feel empowered have the self-esteem to take calculated risks, Gurney said. If you don’t feel a sense of empowerment, you might talk yourself out of taking risks when appropriate because you’re afraid they won’t pay off.

“You’re a victim if you don’t feel empowered,” Gurney said.

8. Self-Determination

Motivation and self-determination enable people to take charge of their finances. They focus on what they can control rather than what they can’t, Gurney said. They believe they have the ability to succeed, even when they’ve made mistakes.

9. Optimism

People who are optimistic don’t rely on money to make them happy, Gurney said. “It’s not the amount of money we have but how we use money that brings contentment,” she said.

On the other hand, those who count on money and material possessions to bring them happiness typically do not manage their money well and take on more debt, according to that study in the Journal of Economic Psychology. 

10. Willpower

People with willpower can resist the urge to spend unnecessarily, even when others around them are spending lavishly.

Those who lack willpower should consider shopping with a list to avoid temptation. Gurney said they should have contributions to their retirement account taken right out of their paycheck so they don’t have a chance to spend it.