The UK government recently launched a financial wellbeing scheme which aims to improve Britons’ saving habits and reduce dependency on credit cards. The government’s Money and Pensions Service revealed that over 11 million people in the UK have less than £100 in savings, and set out a ten-year plan to combat this, which includes increased financial education and debt advice. While this is a great initiative, to make this a success, all parties involved must understand that this is not a one size fits all approach. To improve people’s financial wellbeing effectively, we must address the deep-rooted issues, encourage people to be aware of their personality types and understand where their personal pitfalls lie, says John Hackston, Head of Thought Leadership at The Myers-Briggs Company, a leading business psychology organisation.
Research from The Myers-Briggs Company shows that understanding your personality can give you a better chance of success when it comes to planning your personal finances. While there is no one personality type that is inherently better or worse when it comes to managing money, there are certain strengths and weaknesses for each personality type.
For example, John Hackston notes that individuals who prefer Extraversion, those who gain their energy from interactions with the outside world, are more likely to be spontaneous and spend more on social activities. “We’d therefore recommend that people with an Extraversion preference should consider putting aside time to budget, with special attention paid to their social spending,” he commented.
“People who prefer Introversion, on the other hand, get their energy from their inner world of thoughts and feelings, and can have a tendency to over-analyse things and wait too long to make spending decisions. They may sometimes need encouragement to take the plunge, ideally from a trusted source, such as a financial planner.”
“Meanwhile, those with a Perceiving preference, who prefer not to make a decision until they need to, tend not to jump into decisions, meaning that they might miss out on valuable opportunities. To combat the difficulties in making firm commitments, start with small, measured steps. If the aim is to put more money into your savings, try committing to putting a small amount into your account each month and work from there.”
“Conversely, people with Judging preferences, those with an inclination for living a planned and organised life, are likely to be more task-oriented, which can lead them to make a decision before they have gathered all of the information that they need. In this case, getting a second opinion before making important financial decisions will make all the difference and ensures that the plan is thoroughly thought-through.”
Hackston concluded: “Most people are approaching their finances with very little feedback or advice from others. Understanding our own personality type and preferences, and the areas which could use more focus and attention, can help us to establish the best money management strategy for ourselves."
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