CAN YOUR MONEY PERSONALITY BE A PROBLEM?

CAN YOUR MONEY PERSONALITY BE A PROBLEM? Economic Times - 16th July 2012. When it comes to spending and saving, find out if your feral instincts can pose a problem for you. Also learn what you can do to improve your financial behaviour. TIGER: Aggressive Endowed with daring and passion, you bring these traits into your monetary dealings. So, be it spending or investing, you have a high risk appetite and go overboard, oblivious of your financial status or consequences. Armed with credit cards, you indulge in buying sprees, and invest in risky stocks. What should you do?  • At the beginning of the month, keep aside a certain sum for saving. • Limit your credit cards to one or two. Go shopping with a list, and stick to it. • Think long term. Consider your need for an item before you buy, and your goals and returns before you invest. SQUIRREL: Conservative In tandem with the furry creature’s traits, you squirrel away funds. Intent on saving and don’t spend out of line, but most of your money is either at home or in a savings bank account. You don’t invest in the right avenues to make your money grow. So, while you may have the money to meet some of your minor, short-term goals, you may not be able to rake in enough for longterm needs, or fend off inflation. What should you do?  • Keep six months’ expenses for emergencies and invest the remaining amount. • Start by opening a recurring deposit. If equity scares you, pick mutual funds, which hedge the risk, but let your money grow. CAT: Fickle Your inconsistency can be your undoing. You do not know which instrument is good for you and, frankly, couldn’t be bothered. You can’t stick to a plan, or stay with an investment for long. So, you invest in a Ulip without considering its utility and surrender it before its lock-in period to pick an endowment plan. You shift your savings account to another bank to notch the extra 1% interest. You lose money all the time. What should you do?  • Make a list of your financial goals and if you’re tempted to try a new investment, think if it will get you the money you need. • Calculate the money you lose in a year to skittishness. It can be a big deterrent. SLOTH BEAR: Sluggish This category is a magnet for most people. You are informed enough about financial instruments, but do little to invest. You realise your insurance premium is due, but don’t bother to check or pay on time. You know you should invest the money in your savings account, but don’t. You procrastinate and are lazy about your finances. What should you do?  • Keep separate files for all your financial transactions—bank accounts, insurance plans, mutual funds. Spare one day at the start of a month to update these. • Link your premium payments with ECS, so that they are deducted automatically. • Pay bills, etc, through Net banking