Your Money Persona

We are all unique individuals with distinct personalities,
likes and dislikes as well as different ways of talking, thinking, solving
problems and interacting. We have exclusive modes of expressing ourselves
through dress, grooming and our own catchphrases.

And, we each have our own way of thinking about money.

Some of us are frugal, some are disciplined savers, some are
spendthrifts, gamblers, high-risk or risk-averse. But it all boils down to how
we view money. It can be a status symbol, a burden or just something that pays
the bills. But make no mistake: Our money philosophy is 100% a part of who we

According to a behavioral finance expert at JP Morgan, it’s
a myth to think we can separate our emotions from things like money or
financial health.1 Money triggers our “emotional baggage” and can affect
our decisions. Dr. Brad Klontz, a clinical psychologist and financial planner,
calls these individual reactions our “money scripts” and says they are the key
to driving both positive and negative financial behaviors.2 It’s
also a good reason to work with qualified professionals to help address any effects
your money persona may have on your money management skills.

And then there are some fairly universal emotional responses
to money. For example, would you buy a pack of gum if the only cash in your
wallet was a $100 bill? Most people would not. That’s because we put larger
denomination bills into a different category than, say, a $10 bill. The price
of a pack of gum remains the same — it is our perception of large versus small
bills that drives our behavior.3

It’s a good idea to fully understand your money personality
before you share your life with a partner. Before engaging in a situation that
involves financial transactions, such as living together or getting married,
partners should have a comprehensive conversation in which they share their
best and worst money behaviors. This includes spending patterns, credit scores,
debt balances and payment habits. Do you follow a budget or “wing it” paycheck
to paycheck? Are there financial mistakes or bankruptcy in your past? As you
consider sharing your lives going forward, you and your partner should identify
both separate and shared financial objectives, as well as how you plan to
achieve them.4

It’s also important to recognize the current cultural norms
of one-half of the population: Women. After all, women tend to earn less and
take time out of the workforce to care for family members, which doesn’t help
their financial situation. Note that a recent study found that within the first
five to 10 years of retirement, 38% of women become either widowed or divorced.
After 11 years, that number increases to nearly half. Research also found that
this situation is not much better for young adults: Millennial women appear to
be on the same trajectory as female baby boomers. Generally, lower salaries
coupled with lower contribution rates have resulted in lower retirement account

There are a couple of ways to help tackle the issue of women
being at a disadvantage during retirement. One is to make retirement income
planning for the female partner a separate financial goal for couples. Don’t
view planning for retirement solely as a couple; plan for a certain level of
income for each spouse after the other one dies.

Second, new research shows that we can make gradual changes
to become more emotionally intelligent to help increase our earnings capability
and improve our leadership skills. Studies show that people with high levels of
emotional intelligence (EQ) earn an average of $29,000 more a year than those
with lower EQ. Some of the ways to boost your EQ is to become more self-aware
about why you react to certain situations (that make you angry, happy or sad);
use this empathy to better understand why others react similarly; practice self-control
when confronted with these situations; be a leader in difficult times to use
your empathy and self-control to help others — particularly in the work
environment — confront situations with patience, calm, understanding and
carefully thought-out ideas. This type of EQ tends to get recognized by
employers and results in promotions and higher pay.6

Content prepared by Kara Stefan

1 Caroline Schagrin. The Points Guy. Jan. 29, 2020. “The
emotional psychology around money with behavioral finance expert Michael
Liersch on ‘Talking Points.’” Accessed Feb. 24, 2020

2 Myriam DiGiovanni. CUInsight. July 17, 2018. “What’s
your money script?” Accessed March 9, 2020.

3 Ivana Pino. CNBC. Feb. 14, 2020. “You should always
keep a $100 bill in your wallet, a psychologist says. Here’s why experts agree.” Accessed Feb. 24, 2020.

4 Judith Ward. T. Rowe Price. Feb. 12, 2020. “6
Financial Vows Couples Should Take to Heart.” Accessed Feb. 24, 2020.

5 Judith Ward. T. Rowe Price. Jan. 21, 2020. “Closing
the Women’s Savings Gap.” Accessed Feb. 24, 2020.

6 Marcel Schwantes. Inc. Feb. 24, 2020. “Research Says
You Can Earn Way More Money by Boosting Your Emotional Intelligence. Here Are 4
Ways to Do It.” Accessed Feb. 24, 2020.

We are an independent firm helping individuals create retirement
strategies using a variety of insurance products to custom suit their needs and
objectives. This material is intended to provide general information to help
you understand basic retirement income strategies and should not be construed
as financial advice.

The information contained in this material is believed to be reliable,
but accuracy and completeness cannot be guaranteed; it is not intended to be
used as the sole basis for financial decisions. If you are unable to access any
of the news articles and sources through the links provided in this text,
please contact us to request a copy of the desired reference.


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