How understanding your “money language” can encourage good habits

You may have heard of “love languages” before – the unique ways we show love to the special people in our lives.

But what about “money languages”?

Research from Starling Bank (reported by Sky News) has found that there are seven such languages that define a person’s relationship with money. Understanding yours might improve your financial planning by revealing the psychology behind how you spend and save.

Keep reading to find out which money language you speak and what you could learn about managing your wealth.

7 types of money language define how we spend and save

Money languages reflect how individuals communicate about their finances with their parents, relatives, friends, and partners.

In fact, understanding your money language is particularly useful for couples. Starling Bank reports that only 26% of UK couples speak the same money language, while Sky News finds that 76% of couples argue about their finances regardless of their approach to money management.

Knowing how you and your partner communicate with money can help you tailor a plan that accommodates your individual languages to achieve more with your combined wealth.

Keep reading to discover your money language (or languages).

1. Scarcity mindset

You’re an excellent saver and do so regularly. However, the idea of spending makes you feel uncomfortable.

This might mean that you struggle to treat yourself or justify spontaneous costs.

While you invest well for your future, you might struggle to relax and enjoy your money in the here and now.

2. Lifestyle enrichment

On the opposite side of the spectrum, “lifestyle enrichment” refers to those who enjoy putting their money to use and spending it to boost their lifestyle.

This might mean that you’re good at creating and achieving short-term goals, like saving for a holiday or buying a new car. However, you might struggle to maintain regular contributions towards your long-term objectives.

3. Money know-how

You have an excellent understanding of personal finance and likely have a plan in place that makes your money work for itself.

You are also likely to already have a working relationship with a financial planner.

4. Financial avoidance

You dislike talking about money as you might find the subject intrusive. You may also tend to spend your money emotionally rather than rationally.

People with this mindset likely avoid financial planning and often miss key opportunities to increase the efficiency and growth of their wealth.

5. Protecting privacy

You are secretive about your finances and rarely share information about your wealth with others.

This is often driven by a desire to be independent or the fear that someone could take advantage of you.

While this language makes you less susceptible to scams and fraud, it might also mean you’re less likely to open up about your financial circumstances with your partner, spouse, or a trusted professional.

6. Acts of finance

“Acts of finance”, much like the love language “acts of service”, refers to those who show affection by spending money on other people.

This might mean you’re more inclined to give to charity or use estate planning strategies like lifetime gifting to pass on wealth early to your loved ones.

7. Extravagant affirmation

A step further from “acts of finance”, “extravagant affirmation” refers to those who spend money on other people to an extreme degree.

This means that you use your wealth to improve the lives of those closest to you, but you may do so outside of your means and, ultimately, to the detriment of your own wellbeing.

Use your money language to make your financial plan work with you rather than against you

Your personal money language might be one of the above, or a combination of several.

Once you decide which best reflects you and your relationship with money, you can use this understanding to improve your financial plan.

For example, if your money language is “lifestyle enrichment”, you might currently focus more on living in the moment rather than fulfilling your future financial goals. While this is beneficial to your present wellbeing, the lack of a retirement plan might leave your pension underfunded and impact your ideal lifestyle after work.

Instead, you can shift the narrative of saving to think of it as future spending money rather than as inaccessible wealth for the present.

You can also use strategies like “paying yourself first” to help you stop spending your income before you save it.

Your Kellands financial planner can provide you with a more practical understanding of your financial psychology

While these seven money languages are a good starting point for understanding your financial psychology, it’s important to remember that they are not comprehensive.

If you’d like to gain a more concrete understanding of your saving and spending behaviour, a Kellands financial planner can provide you with:

• Bespoke financial reporting and analysis of your finances to identify problem areas and suggest strategies to mitigate them.
• Behavioural coaching to help you navigate periods of uncertainty with confidence and prevent impulsivity with spending or knee-jerk reactions when investing.
• Regular check-ins to ensure that old habits die quickly and your plan continues on the right track.

If you’d like to learn how our award-winning team can help you improve your financial plan, email us at hale@kelland.co.uk or call 0161 929 8838 today.

Please note

This article is for general information only and does not constitute advice. The information is aimed at individuals only.

All information is correct at the time of writing and is subject to change in the future.

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