Want to retire wealthy? Start with your ‘money personality’

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For those seeking ways to build wealth (or just to get rich quick), there’s no shortage of advice out there.

Personal finance sites abound online, and self-styled radio talk show experts dispense wisdom with varying degrees of accuracy.

But one study found that your fundamental attitudes about money can be a predictor of your ability to accumulate wealth.

The study, published in the Journal of Financial Planning, looked at the correlation between certain behaviors and four “money scripts” — or, put another way, four money personalities.

And, spoiler alert: Only one of the four money scripts is particularly conducive to getting wealthy.

But Tom Murphy, a certified financial planner and CEO of Murphy and Sylvest, said the good news is, like anything, once you recognize that you look at money a certain way, you can take steps to change.

“Recognizing why you are doing what you’re doing is strongly correlated with changing it,” he said. “Lots of times, once people understand their money personality, how they deal with money, they can actually go in and change their behavior.”

Murphy said that money beliefs shaped by childhood trauma are, of course, much harder to overcome.

Nevertheless, parents who are conscious about the way they talk about money to their children — even in tough times — can help teach fundamental lessons about saving.

“Here’s how you teach the right lesson: When the child wants something, you tell them that’s fine, but they have to use their own money, and in two weeks, when it’s broken … then they don’t have it anymore,” Murphy said. “Give the child the opportunity to make a bad decision.”

He gave similar advice about investing: If you manage small amounts of money as a kid, you have a better sense for how it works when you’re an adult.

“They either like it or they don’t — that’s a hugely valuable lesson to learn,” Murphy said. “And lots of people don’t learn that until their 20s or 30s.”

So which money personality do you have? Here’s how the four break down:

  1. Money avoidance: Money avoiders believe money is morally corrupting — that rich people are greedy and therefore they, themselves, don’t try to amass wealth when they get it.
  2. Money worship: Money worshippers believe that money will solve all their problems, and that their happiness and power is tied exclusively to having enough money.
  3. Money status: Those who follow the money-as-status script believe that their self-worth is equal only to their money. They tend to believe that it’s important to buy new things as a marker of status, rather than because they really need them.
  4. Money vigilance: People who are money-vigilant emphasize frugality and saving — and they’re also a little bit secretive about how much money they have.

You can probably guess which one tends to produce the most wealth over time: No. 4, or money vigilance.

But Murphy said lots of people hold a mix of these beliefs — and can exhibit combinations of unhealthy behaviors, like compulsive gambling or giving too much of your money away to charity. Even hoarding money and being unwilling to spend any can be emotionally detrimental.

Still, Murphy said that, above all, it’s important to pay attention.

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