The way that you manage your wealth could have a significant effect on your overall happiness and wellbeing. If you’re in control of your finances, you could improve your quality of life and save for the future, hopefully achieving important goals.
By understanding the personality traits and behaviour patterns that govern your relationship with your wealth, you may be able to manage your finances more effectively.
A psychological framework known as “personality colours” could help you achieve this.
Read on to learn more.
Your “personality colour” can give you an insight into your financial behaviours
In his book Surrounded by Idiots, psychologist Thomas Erikson identified four distinct personality types that most people fit in to. His hope was that understanding your own, and other people’s behaviour would help you work together more effectively and improve relationships.
Erikson called these categories “personality colours”. The following table demonstrates the general characteristics associated with each colour:
These categories are not rigid, and many people exhibit a combination of traits from different colours. However, you may fit into one colour more than the others. You can take an online quiz to determine your personality colour.
So how might understanding your colour personality help you manage your finances?
Red personalities may be more driven when managing their finances but could also lack discipline
If you fit into the red category, you’re likely to be very goal-oriented, which is a positive when it comes to financial planning. For example, you may find it easier to prepare for retirement if you have a clear picture of what you want your lifestyle to look like.
You might also be more confident than others about managing your wealth, so you’re less likely to experience stress. Additionally, increased confidence could mean that you’re more inclined to negotiate with providers about bills, check your bank accounts regularly, or make ambitious plans.
All this could mean that you have more control over your wealth and you’re better able to work towards your goals.
However, red personalities may also be impulsive and more open to risk-taking, which could mean that you’re prone to poor spending habits.
For instance, a study from the University of Lincoln found that confident personality types tend to budget less and use credit more often than their reserved peers.
So, if you fit into this personality type, you may benefit from setting clear budgets to manage your spending. This could mean you’re able to save more for the future and achieve the goals that are so important to you.
Blue personalities could be over-cautious and may struggle to focus on goals
Blue personalities are usually very cautious, which can be a positive but may also create hurdles in financial planning.
For instance, if you’re overly concerned about not being able to fund your lifestyle, despite reaching your savings goal, you might continually delay your retirement. Yet, if you wait too long, you might be more likely to experience health issues because you’re older. This could make it harder to achieve certain goals such as travelling, spending more time with your family, or indulging in your favourite hobbies.
This is an example of how being too cautious could affect your ability to achieve your goals in life.
If you’re a blue personality, your caution may benefit you in some situations as it prevents you from making poor financial decisions. However, it’s important that you don’t lose sight of your long-term goals because you’re over-analysing your finances.
Yellow personalities could shy away from “negative” conversations about their wealth
Yellow personalities tend to be optimistic and idealistic about the world. While this positivity can be a desirable trait in relationships, it could also mean that you shy away from certain conversations about your wealth because you see them as negative.
For instance, discussing what happens after you pass away or considering the possibility that you might become seriously ill isn’t particularly optimistic. Also, as an idealist, you might believe that difficult situations are unlikely to affect you.
Unfortunately, this could leave you and your family vulnerable because you haven’t considered important protection such as life insurance or income protection. Your family could experience issues when you pass away too because you don’t have a clear estate plan in place.
That’s why, if you’re a yellow personality, you may need to resist your natural tendency to only consider the positives, so you can prepare yourself and your loved ones for the worst.
Green personalities may find financial planning comes naturally to them
If you fit into the green personality category, you may find financial management feels quite natural to you. This is because you’re likely to value stability, meaning you see the benefits of budgeting to achieve security now and in the future.
Additionally, if you’re very routine-driven, you may find it quite easy to establish positive habits such as saving and investing for the future.
Green personalities are also very cooperative, meaning you may work well with a professional financial adviser. This valuable support could make it easier for you to work towards your financial goals.
Get in touch
Whatever your personality colour, we can work with you to understand your relationship to your wealth and establish positive financial behaviours.
Email hello@fcadvice.co.uk or call 0333 241 9900 to learn how we could help you work towards your goals.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
The Financial Conduct Authority does not regulate estate planning.
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The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
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