Identifying The 4 Main Money Philosophies: Which One Is Yours?

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There are some people who just seem to be great with money. They always have plenty stocked away, have several streams of income and seem in command of their finances. Then there are those who struggle with finances. They’ve lived a paycheck-to-paycheck life for as long as you can remember, always need to borrow money from friends and family, and are constantly paying down some debt. Maybe you know someone like this – maybe you are someone like this. Why do some people just do well with money while others flounder?

It goes without saying that there are certain things beyond one’s control. Some people are born into  wealth and stability. Others might inherit debt or poor money practices. But then, removing all external factors, there is one major thing that will define the place money holds in your life: your own financial philosophy.

Perhaps you didn’t know that was even a thing. Experts have identified four main money philosophies. Can you spot which one best describes you?

Money Avoidance

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The simplest way to describe money-avoidant individuals is that they think money is “bad.” In a world that can lean materialistic, being money-avoidant almost seems like a good thing. But it has its pitfalls. Money-avoidant people often do not want to have credit cards and avoid spending money – including on necessary purchases.

Research reported on Science Direct originally published in the Journal of Economic Psychology shows that money avoidance often stems from financial scarcity. In other words, growing up with little money could lead someone to be money avoidant. Ironically, it can also cause financial scarcity aka money-avoidant adults tend to have low incomes. Research also shows that money-avoidant individuals tend to be young and single. Translation: building a family and getting older tends to show money-avoidant individuals that money can be a good thing.

Money Worship

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Money worshippers believe that money is what would make them the happiest. Their core belief is that most of their problems would just go away if they had more money. And they believe that spending money brings joy. Money worshippers tend to carry high credit card debt.

Research has actually shown that having lots of money is not the key to happiness. A study reported on PNAS shows that people experience diminishing returns of happiness past the point of making $75,000 per year.

Money Status

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Money status individuals suffer from the keeping up with the Jones’ illness. They see how much money they have and how nice of things they own as a representation of their self-worth and personal value. This group also tends to carry high credit card debt and is prone to making risky investments in the hopes of rapidly acquiring wealth.

Unfortunately, this philosophy tends to bring more misery than joy. Research published in The National Library of Medicine shows that materialism and compulsive shopping is associated with higher rates of depression.

Money Vigilance

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The money-vigilant individual constantly worries about money. Unlike the money-avoidant, they very much believe that money matters – and that causes them to regularly worry about it. This can result in being extremely frugal and overly discussing the cost of things. You can think of the money-vigilant individual as someone who is always preparing for a rainy day, even if there are none in sight and they have enough saved for plenty.

Being cognizant of spending is a good thing but being money vigilant can rob a person from ever really enjoying their money – even when they can afford to spend some.

Everyone exhibits one of these philosophies to some degree. For some people it’s pronounced and for others, it’s subtle. Knowing which money philosophy you hold could help you take more control over your financial future and be more conscious of your money habits.

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