Holidays bring parties with friends, opportunities to spend time with family, and gifts galore. But hear me out as a Financial Planner (and not as a Scrooge): the holiday season also presents challenges that reveal nearly everyone’s “Money Personality.” After working with over 500 families over 20 years, I know that just as each of us is born with our own unique DNA, we are all born with a specific money personality.
Researchers have defined a few basic money personalities, including the saver, the investor, the shopper, the debtor, and the spender. The holiday season just gives us a laboratory through which to discover and observe our money personalities in their amped-up forms. Even the most disciplined of us find it hard to resist the sales (20% off if you buy $100 worth of goods you didn’t need anyhow!), Instagram posts (THE most luxurious sweater that you NEED for your holiday parties!), and gift-giving (let’s all spend just $50 on a Secret Santa exchange!).
Now is a good moment to refer back to a previous blog about our proprietary MONEY Budget system that gives us a context for how to spend money. You’ll recall that the “Y” in the MONEY Budget speaks to “Why are you spending the money?”
In The Geometry of Wealth, Brian Portnoy points out that the three factors of human fulfillment – disposition, circumstance, and intention – help us to understand how any of us choose to spend money. Disposition, also known as “nature” in the “nature vs. nurture” debate, accounts for about 50% of our fulfillment. (Also think of your Disposition as your Money Personality.) Circumstance, or “nurture,” only accounts for 10% of our fulfillment. That means that your current or previous surroundings don’t need to be much of a limiting factor in your fulfillment. The other 40% of your fulfillment is assigned to Intention, or rather, the choices you make around things you can control. Portnoy sums up what we all know: “Conscious decision-making and deliberate action have material consequences for the quality of one’s life experience.”
You may not be able to match every dollar to an intentional line item on a budget over the next month, but you might start a new practice this holiday season. Ask yourself, does spending this money fulfill me? Does it make me happy?
I spend a lot of my time with new clients focusing them on spending their money intentionally on things that actually matter to them. Instead of succumbing to the great black hole of restaurant, gift, clothing, and other “in the moment” expenses, I encourage them to dedicate their money to what really matters. For one couple it might be committing funds to early retirement and philanthropy. For another it may be delaying retirement to be able to afford to travel the world.
As you are out and about over the next month, I encourage you to observe your spending behavior. Do you buy more than you can afford to pay off at the end of the month? Are you already stressed about your January credit card bill, knowing that you won’t be able to pay off the balance? Are you wondering what you won’t be able to afford in January to pay for the gifts, sweaters, and Secret Santa surprises that you are buying now?
You were born with your money personality, raised in a family that may have modeled and supported good or bad spending and saving habits. All of us, however, have the potential to use our Intention to have a healthy relationship with money. As you make your way through the next few weeks, I encourage you to observe your spending motivation and patterns, and just to notice if your money choices align with your personal goals. In the New Year we will talk about how you can use your Intention to use your money to have the life you want.
Suggested Next Steps:
Make at least one really intentional spending decision in the next week.
Share this with a friend. You know who needs it.
If you need more, reread the blog referenced above or The Geometry of Wealth.
Have a joyous rest of 2019 and a prosperous 2020.