Which “money personality” are you? | Your Brain on Money

The idea that one-size-fits-all for money advice is just terrible. We all have different personalities. We know this intuitively, and we all have different values. Not everybody wants or needs to own a home. Not everybody wants or needs to have children.

Everyone has different attitudes and hangups about money. So how do we get to know our money personalities?

To me, you gotta dive into your psychology. You have to understand why you think the way you think around money, and how that's manifesting in your life, in order to change it.

We are diverse in so many ways. So therefore, when we think about financial advice, it should also be unique for the person, for their background, for who they are.

Everything else in our lives is customized to our preferences. Why shouldn't our financial advice be? This is "Your Brain On Money." Meet neuroscientists Dr. Joseph Kable and Dr. Moran Cerf. They're here to explain how much of our personalities are actually built into the structures of our brains.

We can see structural differences in the brain, specifically in the areas of the valuation circuitry of the brain, the areas of the brain that are important for decision-making, as well as functional differences in terms of how those areas of the brain are connected. If you go in and get an MRI, that MRI of your brain, you know, contains some information about whether you are more likely or less likely to be a risk-taker.

How much of our personality are we born with, and how much develops over time?

The kind of, really a little hand-wavey answer that scientists landed on is that about 50% of our personality is DNA. You're born, and we can look at your DNA as a baby and predict that you're gonna be an extrovert, or predict that you're gonna be neurotic. And then of the other 50%, about half, so 25% of the whole, is determined by your parents and your childhood experiences, and the other 25% by your peers.

This is Dr. Klontz. He's here to explain how our personalities manifest in the way we deal with money.

After studying tens of thousands of people, we've identified four patterns of beliefs around money that people manifest: The first is money avoidance. This is where we have a negative association with money. Now, no surprise, if you have a negative association with money that is strongly held, it is gonna have a negative impact on your financial outcomes. The second is what we call money worship. This is the opposite—this is where you're putting money on a pedestal. "More money's gonna make me happier, it's gonna solve all my problems." The third is what we call money status. This is the 'Keeping up with the Joneses effect,' where we equate our self-worth with our net worth. The fourth is what we call money vigilance. This is the money personality of the wealthy and the self-made wealthy and the ultra-wealthy. Interestingly, there is a downplaying of how much money they have. For all of these money personalities, there are elements of truth in all of them, and there's elements of dysfunction.

This is Dr. James, a financial therapist, and he's seen how these money archetypes can impact our behavior.

There's some people who, maybe they're impulsive—they're someone who wants to do something, and that impulsivity can have good options and good times, but maybe that also makes them buy things or try things or start a new business without maybe fully looking into everything.

If you're really money vigilant, you're afraid to do that and spend money. It's important to be vigilant, honoring that part in you, saving and investing, but what's the point of all that if you're still living a life of deprivation? You don't deserve that. Nobody deserves that. Trying to find balance around all of these beliefs is very, very important for not just our mental health, but for our financial health.

Or maybe someone who's a little bit more risk-tolerant. They don't like to take on risk, so maybe they're more of a saver, or maybe they're someone who is not gonna invest in the thing right away, they wanna see it proven. So,...