Your money: Learn to be savvy about finances

If you are a risk-taking entrepreneur, Liz Koh suggests putting some money away so you are not risking everything. Photo / Getty Images

If you listen to common beliefs, women are the big spenders and men are the earners who come home to find their wife has racked up a load of shoes and handbags on the credit card.

I don't know anyone who is like that and money coach Liz Koh says it can be quite the opposite.

"Men can go a bit berserk with spending," Koh says.

"There are men who feel like they can just go out and spend money without consulting their partner or sticking to a budget. It's not just a woman thing."

But Koh, who runs financial advice firm Moneymax in Wellington, admits there is a lot of evidence linking psychological issues and spending habits.

Self esteem and depression can lead to shop-a-holic syndrome. It's in those extreme cases where women seem to be dominantly affected.

But for the average person there's fitting into a money type.

Just like individual personalities a person's money personality is likely to fall into a spectrum.

Wealth and risk

In Koh's view there are two key factors affecting how you see money - your desire to create wealth and willingness to take risks.

"If you combine these together you get infinite possibilities." By being either low or high in these areas a person can fit into four different categories. But Koh says most people are a blend.

"What people need to remember is that there is no right or wrong way to think about money - just different ways. That can be hard to understand if you are in a relationship and have very different ideas about money."

She says what people need to understand is the consequences of their money personality.

That could mean if you are a thrill-seeker who spends all their money today you will end up in poverty in retirement.

But if you are on the frugal side you might never fully enjoy your money and die before you spend it.

If you are all about being an achiever you might have a lot of stress living pay day to pay day as you try to keep up the appearance of being wealthier than what you are.

Entrepreneurs may create a lot of wealth but may also lose it all at once, putting huge stress on partners and families.

"The important thing is to understand what drives you and whether your relationship with money makes you happy."

Changing your personality

It is possible to change your money personality.

There is often a trigger point for those who decide make a change - like getting to your 50s and realising retirement is not that far away, she says.

Or wanting to achieve a specific goal like saving for a house. Or maybe money is causing relationship problems.

Where money decisions are not good is where they are not consciously made, she says.

"Just doing things impulsively or by default and not thinking about the consequences. Not planning ahead."

Retirement Commissioner Diane Maxwell is urging women to be better at planning for their longer-term financial security but Koh says in her experience females are actually much more concerned about planning ahead. "They are often the ones that take the initiative and talk about the future." Men appear more likely to be risk-takers and have a "she'll be right" attitude.

So how do you figure out what sort of money personality you have?

Koh says a simple questionnaire can be the starting point.

There is one on the sorted website or her own Moneymaxcoach website.

It's then a matter of working out how to counter your personality should you wish to.

For instance, if you are a risk-taking entrepreneur, Koh suggests putting some money away so you are not risking everything.

If you are a status-symbol achiever it might pay to think about whether it is worth going through all the stress to have the illusion of a wealthy lifestyle.

If you are a hoarder maybe it's time you worked out how much money you need to feel secure and then loosen the purse strings to spend some of the excess.

Getting help to make the changes can be useful. Just like someone with psychological issues would see a counsellor, if you have money issues you may need to see a money coach, Koh says.

What are the money personalities?
Thrill seeker: Spend all their money and could end up with nothing in retirement.
Hoarder: Might never fully enjoy their money and die before spending it.
Achiever: Can have a lot of stress trying to keep up the appearance of being wealthier than they are.
Entrepreneur: Can create a lot of wealth but can also lose it all at once.

Why are there different types?
Two key factors affect how you see money -- your desire to create wealth and willingness to take risks.

Can people change?
It is possible to change your money personality but you have to want to. A trigger point can lead people to make a change, such as reaching 50 and realising retirement is not far away.