There is a growing literature in the field of financial planning around the area of financial psychology. What academics and practitioners are recognizing, more and more, is that money is not just about the exterior life, such as financial ratios and personal balance sheet, but also about an interior life, such as a money personality. Your money personality is important for you to know because it influences how you think and feel about money, which impacts your financial health and even the quality of your relationships.Money Worlds
One of the best ways of understanding your interior life around money is to identify your money personality. My favorite money personality assessment tool is called “Money Worlds,” which was developed by Dr. Miriam Tatzel.
A money world is a certain way you view money that may or may not be shared by others. In most cases, you will marry someone with a different money world than you. And that often causes relational conflict.
For example, in my own life, after a year of marriage, my wife and I got into a fight when I came home one day and said, “Honey, let’s go for 2 weeks to Europe! It will cost about $5,500, and here is where we should go.” And her response was something like: “Excuse me? What kind of world are you living in if you want to hound me every time I spend $10 more than our grocery budget, but you are willing to spend $5,500 just like that?”
While my wife has wondered what kind of world I’m in with money, I get confused too about how her world works.
As a single person, I always spent a certain amount of time making a purchasing decision, and then made my final decisions and did not think about it again. My wife, on the other hand, spends a significant amount of time thinking about every purchase she makes, and then agonizes about her decisions for several months afterwards. I have learned after 10 years of marriage that you can return just about any purchase you make, including milk and underwear.
My wife and I definitely operate under different ways of thinking about money. Or put another way, we have different money worlds.
Are You Loose Or Tight With Money?
Professor Miriam Tatzel, a social psychologist, saw that people often have distinctly different attitudes and values related to money and began to study the differences. Eventually, she was able to condense various attitudes and values about money into two primary characteristics:
Degree of Looseness with Money
Degree of Materialism
Regarding “degree of looseness,” if you are loose with money, then you are willing, or even eager, to spend money. You believe that by spending more, you will get the best. By contrast, if you are tight with money, you are usually reluctant to spend, and by spending less, you will get the best.
Regarding “degree of materialism,” if you are high in materialism, you derive pleasure from material things that improve your quality of life. If I am low in materialism that means that I view material things, like