3 Ways Psychology Affects Your Money

3 things I want you to identify in your money mindset:

1. Spender vs. Saver

Most people find it pretty easy to determine if they’re a spender or a saver. Spenders can see so many creative possibilities when it comes to money.

On the other hand, a saver’s first instinct is to not spend their money. They feel much better about having money tucked away. Savers are patient and willing to wait to make a purchase.

What’s dangerous for spenders and savers both is going to the extremes. As a spender, if you spend everything you make, you’re going to be broke. And savers, if you save everything you make, you’re going to miss out on a lot of fun experiences that bring joy to your life. This is pretty obvious when we think about it—but the point is that we need to think about it.


2. Safety vs. Status

Are you financially motivated by safety or by status? For this one, you may have to do some real soul-searching. Be honest with yourself as you think through what motivates you when you spend or save. This piece is key to making the psychology of money work for you.

People who value safety want the security that money can bring. They want to know they can withstand job loss, a medical emergency or even just a dip in income. If you’re a safety person, you need to watch out for living in fear. Fear can keep you from giving generously, investing in retirement, or even spending money on a new pair of shoes when the ones you wear every day have a hole in them and clearly need to be replaced.

If money is about status for someone, it’s how they measure success. The amount of money they have affects the type of home they live in, the activities they’re involved in and their ability to go on that dream vacation.

3. Your Family and Childhood

The way you heard your parents talk about money—or not talk about it—definitely influenced your attitude about it from an early age. This alone won’t define your money mindset, but it’s good to be aware of.