People who are good with money are well aware of their finances. They create budgets (e.g., for a month), are aware of their income, and track their expenses. By creating and following a budget, you don't only avoid living beyond your means, but you take full control over your finances.
People who are good with money know exactly how much they need to get by each month. They know what it takes to cover their mortgage, bills and other unavoidable expenses. They know how much they need to save for the future and invest for retirement. Everything above this number is a bonus.
It may be useful to understand the various money personalities when finding the right approach to investing, spending, saving, and the overall management of your finances. Five common money personalities are investors, savers, big spenders, debtors, and shoppers.
Some people love money for the things it allows them to do, and others like to spend it, or save every penny as a way to feel more “secure”. We form our ideas and beliefs around money in our family of origin, and early experiences.
The psychology of money is the study of our behavior with money. Success with money isn't about knowledge, IQ or how good you are at math. It's about behavior, and everyone is prone to certain behaviors over others.
Toxic money habits are more about bad financial behavior rather than your literal money. Toxic habits come in many forms, but the most common are: lying about how much money you have, shopping away your feelings via retail therapy, and relying on credit cards rather than cash in hand.
The psychology of money
The study established that there are four ways of looking at money: money as power (status spender), money as generosity (generous indulger), money as security (secure saver) and money as freedom (independence lover).
You think about how much you have made so far this month and how much more you want to make. You wonder how much your coworker might be making. We suggest that it's this fixation on money that leads to a stronger desire for money: If you can't stop thinking about money, you want it more.
Someone who is avaricious is greedy or grasping, concerned with gaining wealth.
Our psychology around money is usually connected to our early understanding of money. It stems from the families we grew up in, the media messages and culture surrounding us, our experiences of earning or losing, and the value systems we build ourselves as we get older.
Traits With the Highest Earning Potential
Based on the above four dimensions, extroverts, sensors, thinkers, and judgers tend to be the most financially successful. Diving into specific personality characteristics, certain traits are more closely correlated with higher income.
Commanders (ENTJ)
They are the personality type most likely to equate money with influence. They reach beyond needs and extend their interest in money to attaining their wants and desires.
The personality type that makes the most
Out of the 16 personality types, those with the ENTJ (someone who aligns with Extraversion, Intuition, Thinking, Judging) personality type on average earn the most money. ENTJs are natural born leaders.
People who are good with money are well aware of their finances. They create budgets (e.g., for a month), are aware of their income, and track their expenses. By creating and following a budget, you don't only avoid living beyond your means, but you take full control over your finances.
For those in the middle range of emotional well-being, happiness increases linearly with income, and for the happiest group the association actually accelerates above $100,000.
Although the mass media has convinced many Americans that wealth leads to happiness, that’s not always the case. Money can certainly help you achieve your goals, provide for your future, and make life more enjoyable, but merely having the stuff doesn’t guarantee fulfillment.
Explanation: A person who loves money and hates spending it is called "Miser". Miser means a person who hoards wealth, and spends as little money as possible. Hoarder, saver, gatherer, cheapskate etc are synonyms of the word "miser".
If you find yourself mentioning money in every word you speak, and most of your conversations lead to making or having more money, getting rich, or how much you are making, then you have a money problem.
A compulsive hoarder is a person whose hoarding instinct has gotten out of control, leaving them psychologically unable to get rid of anything. This type of hoarder often lives in a home dangerously overcrowded with objects they've acquired. Definitions of hoarder.
Money dysmorphia or money disorder is a blanket term used to describe a psychological condition in which an individual has a distorted and irrational preoccupation with money, belongings, and wealth. This preoccupation is often accompanied by feelings of inadequacy, anxiety, and inadequacy.
People can experience multiple types of OCD. Similarly, someone with OCD can have obsessions and compulsions about money. For example, you might worry that you're a bad person because you have disposable income while others don't (which might relate to moral OCD, a kind of scrupulosity).
Guilt. Pride. Finances and money elicit so many emotions. Unfortunately for many of us, those emotions can be negative, like shame or fear, and keep us up at night.
Hoarders live in the opposite extreme of Spenders. They deprive themselves of luxuries and find satisfaction is seeing the numbers grow in their savings account. Hoarders view money as a means to security and avoid risks for fear that their savings may be wiped out.
Financial Psychology Theory
The social or economic exchange theory suggests that people use money as a form of reward or punishment in relationships. This can create power imbalances or struggles and feelings of insecurity or inferiority.