What personality type are you when it comes to finances?

Why It Matters:

  • Unproductive and irrational behaviors can be harmful to your finances and health.
  • Being aware of unwanted behaviors is the first step to correcting them.
  • These five personalities are key to understanding the psychology of personal finance.

Kastle Waserman tkc.profilePicture Written by: Kastle Waserman | Transamerica
May 07, 2019

5 Min readClock Icon

With today’s busy lifestyles, trying to manage personal finances and maintaining our health can be a challenge. It’s hard to know if the routines we have fallen into are actually good or bad for our overall success.

Behavioral finance is the study of why people make the choices they do with their money. Often it’s based on irrational subconscious actions instead of logical strategic thinking. We looked at it in-depth in a recent article. Now we want to introduce you to some personas with these unproductive behaviors so you can see what they look like:

Mr. Overconfident

This guy bought one good stock and thinks he knows everything about the market. He’s constantly telling his friends how much money he made from his winning stock and how they should listen to him because “he sure can pick ‘em.” Every time he has a good feeling about something, he buys. However, when an investment tanks, he shrugs it off as “bad luck” and is off to the next “winner.”

He doesn’t do much better at taking care of his physical health. He’s often seen taking smoking breaks and eating fast food for lunch. He’s been overheard saying, between cigarette puffs, “I don’t have any disease in my family. I’m like the man of steel! Bet you wish you were me, suckers!”

How can he overcome this behavior?

Mr. Overconfident might want to learn from his mistakes. If a stock drops, he may want to go back and do some research on the company and any news around it to find out if it was a risky investment. Then, he should do the same research on future investments to buy based on financial statements and annual reports rather than on gut feelings.

As for as his health, hopefully Mr. Overconfident won’t wait until a diagnosis of high blood pressure, high cholesterol, or lung cancer to start leading a healthier lifestyle. Small steps such as bringing a healthy lunch to work can put him on a better path.

The Framer

She’s got an uncanny ability to zoom in and obsess on things. She looks at her stock investments and focuses on that one that is lagging behind. She rings up her broker daily, “It’s not moving, we need to sell!” She just can’t bring herself to see the big picture. Her portfolio, because it’s diversified, is actually performing well. Instead, she chooses to see the one investment that isn’t.

She does the same thing with her opinion of her body. She looks in the mirror and just sees what she considers “large thighs.” She goes on fad diets to lose weight, but burns out and binges on sweets. Then she’ll go to the gym to do 20 thigh exercises but ignores the rest of her body.

How can she overcome this behavior?

The Framer needs to look through a wider frame. Instead of worrying about one small aspect, she needs to see the big picture. The performance of her whole portfolio is what’s really important. It’s diversified for a reason — so the good investments balance out the bad ones and reaching the long-term goal is the focus.

For her health, instead of short-term fixes, she’d be better off on a sustainable plan of healthy eating. Instead of just spot exercises, she may want to work with a trainer to develop a program of overall fitness that includes cardiovascular and strength training for her whole body.

The Sheep

He can’t seem to help himself. He sees what everyone else is doing and follows the herd. Every time there is a buzz on a stock, he buys. When there is panic in the news over a stock market dip, he wants to sell off all of his investments.

He does the same thing with his health. Always trying to lose that stubborn 10 pounds, he tries every fad diet. When it doesn’t work, he’s back to enjoying all the office sweets and catered lunches his coworkers indulge in because “everyone else is doing it.”

How can he overcome this behavior?

The Sheep would be better off weighing his options rather than just assuming others know best. Doing his homework on the stock investments he chooses will put him more in control of his financial future.

To make better health choices, instead of fad diets, he needs to figure out a healthy lifestyle that works for him. Maybe it’s lowering overall calorie intake or taking the small step of just cutting out junk food. Instead of eating all the office treats that come around, he could keep some healthy snacks in his desk and reach for a handful of nuts instead of a cookie.

The Mental Accountant

She’s a mathematics wiz, but when it comes to her finances, she has separate accounts for everything. She has an account for her vacation fund, groceries, shopping, retirement, and credit card debt. And even though she’s paying crazy money in interest on her credit cards, when she gets a bonus at work or a tax refund, she puts it in the vacation fund for a bigger, better vacation or in the shopping fund to buy herself a treat rather than paying down her credit cards.

She does the same with her diet. She tries to eat healthy on certain days like “Meatless Mondays” and “Fish Fridays,” but the rest of the time she allows herself too many “cheat days” when she binges on whatever she wants.

How can she overcome this behavior?

Our Mental Accountant might be better served creating a budget and prioritizing debt payment. Every dollar that comes in should get the same treatment in the budget — no matter if it’s a dollar earned or an unexpected windfall.

To stay healthy, a steady, balanced diet can help her maintain her overall health as well as a regular routine of daily exercise.

Mr. Anchor Man

He’ll dazzle you with a fancy bottle of wine that cost a small fortune. His car is a sleek, cherry-red sportster that has triple-digit maintenance costs. Nothing but the best will do, and he’s willing to pay the price to get that high quality (and status symbol). Mr. Anchor Man holds onto the belief that if something is expensive, it must be good. He thinks that pricey stock fund or new IPO must be a good investment if it costs hundreds, so he buys without checking that it may be overvalued or the subject of media hype.

He does the same thing with his health, taking on extreme sports to show off how fit he is: Ironman Triathlons, black diamond ski slopes, bungee jumping. He figures the more his body can endure, the healthier he must be.

How can he overcome this behavior?

Instead of going for the most expensive item all the time, Mr. Anchor Man might benefit from a little comparison shopping, trying less expensive brands and seeing which ones are truly lower quality or if they are the same. He might just find he can save a lot of money that could be put into his retirement account if he takes his taste for the high life down a notch.

As for his health, going for extreme sports all the time may look impressive but also may subject him to injury that could lead to unexpected medical costs, as well as aches and pains that may last a lifetime. Taking on a steady and safe fitness routine will maintain his overall health both now and down the road.

Do you see yourself in these personas?

It’s easy to catch yourself in these behaviors when you are aware of them. If you find yourself acting like Mr. Overconfident or a Sheep, take a moment, breathe, and think about how you can redirect that behavior.

Then don’t forget to reward yourself! Treat yourself to a nice walk in a beautiful setting or go to a movie you’ve been wanting to see. Try to avoid rewarding yourself with shopping or eating since those can lead to other habitual behaviors damaging to your finances and health.


Things to Consider:

  • If you see yourself acting out a harmful behavior, take a small step toward correcting it.
  • Reward yourself whenever you catch yourself in the act and try to do better.
  • Both your finances and health could benefit from shedding irrational behaviors.

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