Financial personality test

It is just past the halfway mark and so far 2011 has been a pretty busy year for me. I’ve expanded and refined my fee-for-advice services, given my website a facelift, launched two new newsletters – one for clients and one for advisors – and currently I’m working on the very first Debt & Cash-Flow Management Certificate Course with The Knowledge Bureau.

I also wrote and published my second book: $pent. The focus of the book is how our financial personalities or “Money Mindsets” as I call them, determine our decisions when it comes to borrowing, spending, saving and investing. My assertion is if we know and understand what makes us tick when it comes to our finances, we stand a far better chance of managing the money we have to build the life we want.

Enough about me though. What can I do to help you with all of this stuff I’ve been working on?

Share it with you, of course.

When it comes to how people use their money, there is more than just math and common sense at play. Our personalities, feelings, temperaments and upbringing have a huge impact on how we use money whether we realize this or not. Even feeling certain you are not emotional about money has an emotional component. During my decade in the industry I have listened to thousands of people talk about their money.

In particular, because of my fascination with debt and cash-flow, I have witnessed a lot of emotional discussions. I don’t mean weeping on the desk over debt. I mean I watch people literally have a conversation with themselves about their money. It often starts with what they think I want to hear, and then it moves to a more honest version of what they feeling about their finances and finally ends at a place where they get clear about what they really want from their money.

Here’s a great example.

I wrote some recent blog posts about this particular couple and their original goal to buy a cottage.

When I first met them, they told me how great both of their incomes were and how excited they were about their financial future. A few minutes in (without me asking many questions) they begin to talk about wanting a cottage. Then, they explained why they wanted it. They said it is so they can get away because work is hectic but in reality what they really ended up saying is…We are working so hard and we don’t feel like we have anything to show for it.

When we exposed the reasoning behind this goal, what they thought they’d get from a cottage –rest, relaxation and time off – in the end, it was really going to amount to even more stress and little time to enjoy it. When it came down to it what they wanted was time and to feel better about their debt and spending situation and adding more debt to their over $300,000 pile was going to equate to less time and more stress.

This client’s cash-flow and debt plan allowed one of them to cut down the number of days they worked every week, and one to reduce the excess workload. The problem of time was taken care of and thanks to their plan, their debt repayment kept on track. I gave them exactly what they wanted but it didn’t come the way they expected. The tail was wagging the dog but because I could see their Money Mindset early on, it was easy for me to come to the best conclusion for what they were really asking for and be able to explain it in a way that they could absorb and run with.

There are seven different Money Mindsets. You’ve got one and so does every one of your clients. There is The Bunker, The Brick Wall, The Undercover Agent, The Polly Anna, The Dreamer, The Justifier and The Masquerader. None of the Mindsets are bad, none are good. They just are. You can be any one of these and be independently wealthy or completely broke but the Mindset dominates the way you think and react to money. Knowing this about your client could really help you understand how to work with their spending and investments.

Here’s an example. Let’s use The Brick Wall; this is a more common mindset among males. Brick Walls are smart, usually educated, they like to research their purchases before making decisions and they especially like to research their advisors and investments. They are cautious when making large decisions but very confident with every decision they make. They can come off a little controlling or intimidating but they don’t always mean to be that way: although sometimes that’s the point.

You cannot tell a Brick Wall what to do. You’ve got to let them take the lead, ask the questions and tell you where they want to go. You’ve got to pay close attention to what they tell you they want because they expect to hear their own reasons as they relate to any of your advice. If you can’t back up what you say or recommend the way they want you to they will move on to the next.

While the Brick Wall will generally feel they are not emotional in any way about money, they get quite anxious if they don’t feel in control. If you try to take control you will shut them down and you can’t help them or have a productive relationship with them that way. Brick Walls may seem like they are difficult clients but if you understand them they are actually great clients because they lay out their expectations and they don’t mess about.

I truly believe that for all of us our money ends up where our mind is. If we can understand our clients Money Mindset than we can not only work more effectively and efficiently with them we can reduce the stress around money for them as well. Imagine your clients association you with stress free financial discussions.

The Money Mindset quiz is free, it is a gift and I hope you’ll take it yourself. Each Mindset has a little description when you finish the quiz so no matter what everyone can learn a little about themselves.

Which Money Mindset do you think you are? I’m a Dreamer. While some people think I’m “good with my money” and all logical and stuff; in reality I work hard to keep my feet on the ground. I was raised to believe I could do anything and I do believe that. However, what knowing my Money Mindset has helped me to do is to learn which decisions I need to bounce off others, even if I just need to hear it come out of my own mouth. Otherwise, I would grab at every opportunity and when the truly amazing, life altering options my journey has taken me on presented themselves my arms would be too full take grab the right opportunities. I can be a horrible spender and if I didn’t take my own advice and model what I ask others to do I’d be in a whole different financial space.

So take the quiz, have your clients take the quiz and stop bypassing one of the most influential factors on why we do what we do with our money.