If you understand how you think and feel about money, you may be able to make more of it.
Financial decisions aren't just about dollars and cents. For most people, they're often rife with emotions and preconceived notions. By analyzing your attitudes about spending and saving, you may be able to make better financial decisions, according to Baltimore, Md.-based certified public accountant Tope Ganiyah Fajingbesi. She groups these attitudes into five financial personality types and assigned each one a color to make the concepts easier to understand. Here is a brief synopsis:
- Green: Typical entrepreneur; believes money should be invested, wants to grow businesses
- Blue: Good employee or financial manager; keeps budgets, doesn’t take financial risks
- Yellow: Embodies the work-hard, play-hard mentality; emotional spender, buys luxury items to reward him or herself
- Gray: Generally content, doesn’t aspire for great wealth; the best investor because of patience
- Red: Doesn’t handle money in a realistic way; in debt and without a plan to pay it off
Most individuals are a blend of two of “money colors,” says Fajingbesi. By determining yours, you can increase your awareness of your strengths and weaknesses, she says in her recently self-published book What Color Is Your Money? According to Fajingbesi, being financially self-aware can benefit your business in the following three ways:
1. Picking a co-founder or business partner: Bring people on your team who compensate for your financial weaknesses, says Fajingbesi. If you are a blue person, it may be easy for you to keep the budget for your business, but not as easy for you to invest large amounts of money. As an entrepreneur, too much caution can hold back business growth, she says. If you are aware of your conservative nature, then you might want to bring on a business partner who will push you to make investments in your business.
2. Matching your pitch with the personality of the investor you approach: If you want to build train tracks in Africa, you will be best suited to a gray investor because that individual may not get his or her money back for the next 15 to 20 years, Fajingbesi says. Similarly, match your own investments with the sort of projects which will suit your financial temperament. If you yourself are a gray person, you can consider putting your money to work in community and economic development projects because the returns on your investment will be small and slow, but also can be aligned with your personal beliefs, says Fajingbesi.
3. Avoiding dire financial mistakes: Knowing yourself can also help you protect yourself from making expected missteps. For example, a green personality is going to want to invest any money he or she can scrape together in lieu of saving any. If you know that you are a naturally impulsive green person, you might develop a routine of running your investment ideas by a trusted blue colleague before you part with your money, Fajingbesi says.