Talking about money means thinking about how we feel when we think about it. Do we feel sad? Happy? Do we feel that we live for money? Does money serve to give us what we want? Does money buy what we need to satisfy our needs? Do we think about how we spend it? Do we spend on impulse? Do we spend in a planned way? Do we save for goals? Do we save for the future? Do we have a purpose for what we earn? These are some questions that need to be answered when we think about our money.
In Financial Education, there are ways to find out our financial profile. We can intuitively know how we feel when we think about money, but it is through specific tests that we can obtain more accurate answers about our financial behaviour.
There are four financial profiles identified in financial education:
Controlled
Economical
Spendthrift
Unbalanced
In summary, we will present each of them:
The Controlled, or in common parlance, the penny pinchers, save as much as possible today in order to have comfort and security in the future. They are people who delay gratification and have great budgetary discipline. They never spend more than they have.
When taken to extremes, this financial control leads to a lower quality of life.
The Economical, also known as Balanced, are strict when it comes to controlling spending. They draw up budgets and shopping lists and constantly do accounts, statistics and projections. They understand investments, interest rates and inflation, even when they do not work in this area, and are sought out by friends and relatives for advice.
When they take their obsession with financial matters to extremes, they can become tiresome.
Spenders, or those who live from paycheque to paycheque, spend all their disposable income and often find that their salary barely lasts until the end of the month. They have a wide network of friends and are always open to new experiences. These people are highly dependent on job stability and dislike controls, budgets and accounts. If they think about saving, it is only to achieve a short-term goal.
The Uncontrolled, or those commonly referred to as ‘big spenders,’ do not know how much money comes in or goes out of their accounts. They have a vague notion of saving, but do not know where to start to get their finances in order. Although they cut back on spending, it never seems to be enough. They are usually people who live in financial chaos, have difficulty keeping records, and every month it seems that their money lasts less and less. These people are financially undisciplined, prone to conflicts and unnecessary interest payments due to disorientation. The main characteristic of these profiles is that they earn a lot of money and therefore do not think about how they spend it, but feel that they spend it.
Identifying each person's financial profile is the first step towards the success of a personal financial education programme and, consequently, towards a financially healthy life. At AESS, we have the tools to help those who want to understand their finances, identifying their profile and using our own methodologies to help change, adjust or improve the identified profile.
It is also important to understand the relationship between different financial profiles in a couple. This is because most domestic problems, and even some violence, stem from personal and joint finances. Understanding the correlation between each profile is important for reducing or eliminating these frictions. Some marriages end in divorce over money issues, while others are prolonged for the same reason. Below is a table illustrating the personal relationships between financial profiles:
That is the theory. In practice, it is always possible to find a financial balance.
To learn more about this topic and financial education programmes, tools, and methodologies for becoming a Financially Healthy Citizen, contact AESS and ask your questions.
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