The Two Money Personalities

February 9th, 2007 • Related • Filed Under • by admin

When I first began learning about personal finance, one of the most interesting things that I found was that the entire field was subjective. There were very few universal truths when it came to money that everyone could agree on. With most other areas of study, everything is pretty cut and dry. In medicine, you give a specific prescription for a given virus, and overall there’s general agreement that it’s the right thing to do. There might be few dissenters here and there, but overall there’s a consensus. This is simply not true when it comes to our money.

There are many different ideas about there about how people should handle money, and it is become very clear that there are two unique and distinct ways of thinking when it comes to money. Just like a person can have a type A personality or a type B personality, a person can have either a type A financial personality or a type B financial personality. One is not necessarily than the other. Each has its strengths, and each has its weaknesses.

Let’s first look at the type B financial personality. Much like people who are type B personalities in the traditional definition, people who are type B financially are relaxed, methodical in their ways. The type B people tend to focus on financial security and maintaining what they already have. These people try to eliminate as much risk in their possible, and they do this by getting appropriate insurance, avoiding risky investments, and saving money for emergencies. Type B financial persons tend to not open their own businesses and make gutsy financial moves, because it all adds risk to their lives. They tend to borrow very little if any money, and only buy what they can afford.

The type A personality is quite a contrast. These people focus financial growth and increasing their earnings rather than protecting what they already have. These people are much less concerned with risk than their type B counterparts. These people tend to leverage their assets much more in hopes of greater gains. They view borrowing money as neither good nor bad, but just another method of increasing one’s net worth. They will often open their own businesses and jump into somewhat risky investments which have a much greater potential for growth.

Neither personality is necessarily better than the other. They are different, each having their own strengths and weaknesses. People of differing personalities often consider the other side to be flat out wrong, creating great debates which have occurred and will continue to occur. We are all guilty of this and neither side is any more right than the other, but we are all entitled to our own opinions.