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Nov 7 2011 12:00AM


People have different styles when it comes to handling their money. What are two things that affect our personal beliefs and opinions about financial planning?


“I have a broad view of money management approach, which relates to the values, personality, ability and the aspirations of an individual,” said FPA member Eva Levine, CFP®. “Accordingly, the two basic factors that impact many money management styles, in my view, are whether a person has a long-term/short term-thinking approach, and whether he/she has realistic/unrealistic personal goals. Based on these two factors, you can separate out four types of money management styles.

  1. The first style applies to people who are long-term thinkers with realistic goals. They are able to define their goals and marshal their resources to achieve those goals. I call this group the achievers. The achievers are usually the people who are successful financially.
  2. The second style applies to people who are long-term thinkers, but who have unrealistic goals. They are the dreamers who would forever chase after something that is beyond their means and abilities. They may tend to spend money on unrealistic promises.
  3. The third style applies to people who are short-term thinkers with realistic goals. They tend to be able to achieve their short-term goals and are very happy with that. I call them the status quo dependables, because they are happy with what they have already achieved and feel that there is no need to change anything. The dependable can do very well until something happens that upsets the apple cart because it is totally unexpected and they are not prepared for it.
  4. The fourth style applies to people who are short-term thinkers with unrealistic goals. They are the quintessential 'keeping up with the Joneses' type whose goals are defined by other people (friends, neighbors, etc.), which may not be achievable within their means and abilities. I call them the financial drifters as they seek instant gratification without any consideration for its long-term implications.

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