What’s your money type? The impact of money memories


Executive summary

People think money is rational, primarily a numbers oriented topic. But it’s hugely emotional. It is hardwired into our sense of survival.

Growing up, was money a source of status in your home? Or was it a source of anxiety? Did your parents talk about it openly? What did they teach you about it?

Your earliest memories around money fundamentally shape how you approach money today… for better or worse. We carry these early lessons and messages with us as adults, following them without even thinking about it.

People often fall into one of four main "money-types" . Unearthing your type can help you figure out what types of traps you are most prone to, and also help you discuss money more easily with your partner. Our suggestion - don't plan for who you want to be, but who you really are. In this post, we breakdown how to identify what money type you are and what to do about it.

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Table of contents

Written by
Ami Shah

Ami Shah is the CEO of Steward, unlocking the 1%'s wealth strategies for mid-career professionals to take care of their families and live the life they choose.

Steward helps mid-career working professionals or executives in their 30s -40s work through asset allocation and financial decisions exactly like this one. None of this article is financial advice, but if you are looking for modeling tools or human advisors to help you through this decision, we can help. Get started here!

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What money type are you?  

The Ostrich: Money-Avoidant

Like an ostrich burying its head in the sand, you don't want to think about money.

Like an ostrich burying its head in the sand, you don't want to think about money

You know you're an ostrich when:

- You're not sure how much money is currently in your bank account
- You let someone else in your life (your partner… your parents… fate) handle your finances
- Thinking about money stresses you out

Ostrich’s beliefs about money:

Being an ostrich is the money equivalent of ignorance is bliss.  Maybe you don’t think you deserve the money that you have. Maybe you think money corrupts. Or maybe you’re just not a numbers person. Regardless, for you, money is a source of anxiety, so you choose to avoid thinking about it.

What to do if you’re an ostrich:

Reframe money positively: Write down the causes, organizations, friends, and family that your money could help. Positive thoughts around money’s power to help others, will energize you to better understand your own finances.

Sunlight is the best disinfectant:
Every business has a balance sheet and a budget. Give yourself that same transparency. Figure out what you own (your assets) and what you owe (your debts), and how much you're spending and saving.

Use tech to help get organized:
Feeling a pit in your stomach even thinking about trying to get started? Use YNAB or Truebill (less ad-filled versions of Mint)  These tools can help you get all the pieces of your financial picture together, and research shows that users bring down spending 17% after using them.

Work with a financial advisor, so you can set-it-and-forget-it. Look for someone who is (a) a fiduciary (someone who is obligated to put your interests before their own) and (b) fee-only (only earns fees from you vs. earning commissions from pushing you into particular products) (c) fits your niche. At Steward, many of our community members are Ostriches. We hate that so many folks are in a "no-man's land" between going it completely alone and hitting the asset minimum ($1M - $10M in cash + liquid personal investments) that many ultra-high net worth white glove advisors set as their floor before even entertaining taking on a family as a client.

Create a ritual to set the habit:
Set a quarterly or annual meeting with your spouse to review your financial situation. Put it on the calendar. Now.

The Lion: Money-Worship

Like a lion sporting its mane, you tie social status to wealth.      

Like a lion sporting its mane, you tie social status to wealth.

You know you're a lion when:

- You're always the first among your friends to buy the latest/greatest tech
- You've treated yourself by purchasing a fancy watch… or car… or house
- You feel you’re only as successful as the amount of money you’ve earned

You may have grown-up in a family that tied self-worth to net-worth. You’re probably an achievement-oriented person with a tendency towards “conspicuous consumption,” viewing expensive purchases as a well-earned reward for hard work and maybe even a way to achieve happiness.

What to do if you’re a lion:

Long-term goals-based planning: Figure out how much you need to set aside to achieve your longer term goals. Set near-term (i.e., monthly) saving targets to get there. Then hold yourself to them, or enlist your partner or a financial planner to hold you accountable.  

Diversify your scoreboard: As an achievement oriented hard worker, you know that what gets measured, gets managed. Start scoring yourself on things beyond money — your relationships, your physical health, and your psychological well-being. Read How Will You Measure Your Life

Build transparency: Set up a dollar limit over which you'll share purchases with your spouse (e.g., $100). Make time to discuss your spending with your spouse or a financial advisor.

Set up personal speed-bumps: Set a “cooling off” period (e.g. 3 days) before any large purchases (over $1,000) to make sure it's something you truly want

The Beaver: Money-Hoarding

Like a vigilant beaver, you save to prepare for future scarcity, sometimes to the point of self-deprivation.

Like a vigilant beaver, you save to prepare for future scarcity, sometimes to the point of self-deprivation.

You know you're a beaver when:

- Friends joke that you're frugal...or if they're blunt friends, cheap.  Your motto for buying new stuff is “If it ain't broke, don't fix it”.
- You often worry about money and believe it's important to save for a rainy day… except that your version of a “rainy day” probably looks like Noah's Ark to most people
- Many of your assets are sitting in a checking account or cash.  

You may have grown-up in an environment where money was not stable.  You may have seen parents go through some financial hardship as a child. Children of recessions are often beavers.  As a result, you seek stability and safety by making sure you always have enough cash on hand.  While this sounds prudent, the danger is that you may lose out on the opportunity to let money work for you. Your risk-aversion can keep you stuck in jobs you don’t love or earning less than you could with a little more measured risk-taking.

What to do if you’re a beaver:

Take comfort with a plan: Your worries about money can prevent you from letting your money work for you. Set up a conservative financial plan, so you can see what your real needs are for a rainy day fund. At Steward, many of our community members are Beavers! We help them run the numbers with specific recommendations of how much to keep in cash vs. invest based on (a) how many months' of expenses would help them sleep at night (b) to ensure their upcoming life events are covered in a worst case scenario.

Put the monkey on someone else's back: Discussing money with someone else to help you benchmark your savings, spending, and other personal financial metrics.

Be an Einstein: Albert Einstein  said “compound interest is the eighth wonder of the world” - and he was right! Do the math to see the difference in your financial outcome from investing in the market vs. holding your savings as cash. You worked so hard to earn it, make sure you're not only protecting, but also growing your money.

The Hare: Money-Gaming

Like an alert hare, you're always on the lookout for new and quick ways to get ahead.

Like an alert hare, you're always on the lookout for new and quick ways to get ahead.

You know you're a hare when:

- You day-trade as a hobby.
- You are still kicking yourself for not buying that stock your buddy recommended a couple years back
- You've ridden the crypto rollercoaster

For hares, wealth is a game and they enjoy playing almost as much as winning. Hares may have had some success picking winners early-on in their lives, and as a result have become accustomed to feeling a gambler’s high from making a quick financial gain. That kind of dopamine release can be addictive, and leads hares down a constant pursuit of more money through more bets, without a clear end in sight.

What to do about if you’re a hare:

Speculate… in a sandbox: Carve out a small amount of your wealth (e.g., 10% of liquid assets) to play with. Think of that as your “entertainment” budget! In that sandbox, feel free to make those risky bets that you’ve been itching to but make sure your speculation doesn’t get beyond that limit.

Test your prophecies: Write down your predictions, and check back every year or so to see how they bore out.

Escape buyer’s remorse:  Stay away from financial products that can turn against you quickly (e.g., never buy stock on margin) and from anything that seems “too good to be true” (e.g., a hot stock tip). Temptation too strong for that? Calculate the maximum you’d stand to lose to ensure you could stomach the loss if luck doesn’t go your way.

More Resources

You can officially test yourself on what type you are here

Interested in building a personalized financial to-do list based that's based on your unique money preferences and behaviors? Steward helps families in their 30s and 40s make the most of their money. Check if we're a good fit here.

Written by

Ami Shah

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