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Money Nov 9, 2012

Do it now: Find out your money personality

By Bindisha Sarang

The dictionary defines "personality" as the organised pattern of behavioural characteristics of an individual.

And, when it comes to our money, each person has a set pattern under the influence of which he handles his money matters. And, just like personality, our money personality is formed by two major aspects -our genetic inheritance and environmental influences. At least various research papers have said so, for years now.

Once you know your money personality, you can take constructive steps to alter the money personality, as you wish. Image courtesy: 401(k) 2012/Flickr

If you are someone who is looking to give your money life a makeover (for whatever reason), the first step is to know how your mind thinks and handles money. Once you know your money personality, you can take constructive steps to alter the money personality, as you wish.

Here is a set of questions that you can answer to arrive at your money personality. Choose the most appropriate response that you would have taken under the given scenario.

1) You go to the mall to buy a purse. You are on a slightly tight budget. While buying the purse, you realise that a certain pair of shoes is on a 20% discount. You...
A) simply pick the purse and walk out of the mall.
B) buy a purse which is a little less expensive than what you had chosen earlier, and you buy the shoes too
C) You pick the purse; also buy the shoes, after all credit cards are there for a reason.

2) The markets are falling and your financial planner suggests it's a good time to pick a few stocks
A) Picking stocks? You want to get out of even the SIPs you've been investing in
B) You tell your planner you want to continue with the SIPs but are not too comfortable with stock picking since the markets are falling
C) You don't care how the markets perform, you have better things to look into. Like the Ipad mini.

3) You go on a vacation abroad somewhere in Europe, you realise that a bottle of water costs 2 euros. You
A) Quickly convert the euros into rupees and find that it's way too expensive for a bottle of water. You remain thirsty until you find free water in a park or somewhere.
B) Buy a bottle of water anyways.
C) Water? You are on a vacation, you deserve champagne.

4) You are treating a friend you are meeting after many years. You
A) Pick the cheapest dish in the menu, and hint to your friend to do the same.
B) You pick what you can afford to pay for and focus on having a good time with the friend.
C) You don't even look at the place where the prices are mentioned in the menu.

5) If inflation is 5% and your FD gives a rate of interest of 10%. Your real rate of return is
A) 4.76%
B) 5%
C) 10%

6) Your credit card balance is
A) Always taken care every month. You also ensure that you redeem all the reward points regularly.
B) You pay your total amount due, but if you do miss it you pay the minimum amount due. But, you never roll credit for more than a couple of months
C) You believe in rolling credit, at times rolling credit from one card to the other.

7) When it comes to your money
A) All your investments are in debt instruments.
B) You have a mix or equities and debt as a part of your portfolio.
C) You prefer instant gratification hence; you invest in gadgets, holidays and having a good time with people. If you have any money it's in hard-core equity instruments only

8) You just got a terrific performance appraisal, and now you have a good increment. You...
A) Increase your auto-debit on the SIP you have with the entire increment amount.
B) Throw a small party for family and friends buy some nice clothes and part prepay your home loan with the remaining increment amount.
C) Shop till you drop, start planning what all you will buy with the incremental money coming your way in future months. You up grade your life style as per your incremental amount.

9) You get a high when
A) You look at your bank balance, retirement fund and your total net worth.
B) You shop. But, if you splurge you do feel guilty for spending.
C) You only feel better when you shop for stuff and more stuff. You think money lying in the bank should be used to live a good life.

10) You give to charity because you
A) Get tax benefits and if there wasn't any tax benefit you wouldn't give.
B) Give to charity since you get a tax benefit. But, even if there wasn't any tax benefit you would still give to charity.
C) You either don't give to charity at all. Or you give a lot to charity. It has nothing to do with any tax benefits.

Result:
Mostly Option A: While you call yourself a smart investor, your friends might nick name you Mr Stingy or Mr Too-careful with money. You seem to take money very seriously. While it's good to be prudent with money, your life seems to be revolving around how you can save every penny. You think your money is on the right track, but you are just not a calculated risk taker. Which means, you may miss many smart investing opportunities. Worse, you are unable to enjoy life since money is the only thing that's on your mind.

Suggestion: Get a life.

Mostly option B: You are a saver. You like to take a few chances and take a few calculated risks. Looks like you prefer to take the balanced approached to life as well as money. Your money is some what moving in the right direction, but professional advice will give your money the boost that it needs.

Suggestion:While a balanced approach is good and you know a thing or two about money, we suggest you don't rely on family and friends while choosing your investments, rather get in touch with a financial planner.

Mostly option C: You are the big spender: Retailers love you, after all you are someone who spends a lot on nice clothes, nicer cars, flat screen TV, vacations and such. Your friends love you too, after all you throw parties and give to charity. You love life and enjoying living a good life. Sadly, all that show also means, you are either already in a debt trap or heading into one. Debt is a four letter word, which you will have to deal with. You don't mind taking risk with your money and hence you almost live on the edge.

Suggestion: If there is one rule you need to follow is don't spend the money you don't have. And asap get in touch with a debt counselor, we know already, that you don't have one.

by Bindisha Sarang

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