Each of us has a unique relationship with money. Why? We are all built differently. Our childhood experiences, observations in how our parents handled money and the financial literacy we were taught are just a couple of factors that determine how we manage money as adults.
As a Licensed Insolvency Trustee, I meet with people from diverse financial backgrounds. There is no “cookie cutter” profile of a person who gets into financial trouble. While the set of reasons, facts, circumstances and events that lead to financial difficulties is always unique to that individual, there are similar spending personalities and behaviours among those who get into deep debt. The most common spending personalities that I meet in my line of work are the Impulsive Spender, the Social Value Spender and the Avoider.
The Impulsive Spender focuses on “wants” instead of needs and tends to make purchase decisions in the moment. This personality type seeks that spending high whether it be on large or small purchases. Consistently unplanned purchases are common with this personality type and due to their spontaneous nature, Impulsive Spenders usually carry larger amounts of debt. Even if there is no cash in the bank to buy the item, the need for instant gratification takes over and reaching for credit cards easily fulfills that need.
Social Value Spenders are those who purchase things for themselves or for others to boost their self-esteem. They tend to be the friend who always insists on picking up the bill at the restaurant or buys unexpected gifts for family or friends. Social Value Spenders want to be seen as generous or even needed. They typically like to maintain a certain social status as well. They love to “Keep up with the Joneses’” and are willing to put their financial stability at risk to fund this lifestyle.
Emotional spending is greatly tied to Impulsive and Social Value spending personality types. You can overcome this behaviour by seeking help from a qualified professional. A credit counsellor is great place to start, but you may need to speak to a registered psychologist to deal with any underlying root causes of your behaviour. With their assistance, you can establish a plan to make changes to your spending. It’s also important to inform your partner or family members, so they can help support you and hold you accountable for your spending habits.
Avoiders do not have money management on their radar and simply prefer to ignore the topic. Part of this is just not feeling comfortable with talking about their money situation. Perhaps it’s derived from growing up in a household where talking about money was taboo or from a stressful financial memory. The danger with Avoiders is that they generally have no idea of how much is in their bank account and tend to neglect their financial wellness. Often times, Avoiders let bills and unopened mail pile up because they are uncomfortable in how they might feel when opening them. The Avoider spending personality is usually a symptom of a larger issue such as mental illness like an anxiety disorder or lack of a proper financial role model.
The good news is that Avoiders can change their mindset on managing their money by incorporating it into their everyday lives. Take 10 minutes in the morning while you have your coffee to look at your bank account online. Become familiar with the transactions and understand what service fees you’re being charges. Do this on a daily basis and you will start to feel that your financial wellness is part of everyday life, like brushing your teeth. Avoiders will be further empowered by taking financial education courses, jotting down financial goals, both short and long term and working off a monthly budget.
You can change your behaviour and relationship with money. These personalities are not permanent and neither is your debt. If your financial wellness is being consumed by debt, it’s time to speak to a Licensed Insolvency Trustee. Bring in your unopened bills and your income and expenses. We will help you sort through them and work towards the best solution for your financial situation.