Today, I have a guest post from my fellow UK-based personal financial blogger, Anastasia at Living on a Budget on a subject of great interest to me. Among her many other qualifications, Anastasia is qualified as an MBTI practitioner, and so I asked her to write about the impact of a person's Myers-Briggs type on their attitudes to money. (I'm an INFJ, and what Anastasia says below pretty much rings true to me....)
Many people do not handle money effectively. But why? Laziness? Ignorance? Apathy? Fear? Can so many people really be so inept at handling money? Or is there something else? Do other factors, such as personality type and gender, also play a role?
The question is an intriguing one…
Myers-Briggs Type Indicator (MBTI) was developed by Isabel Myers and Katherine Briggs to try and understand the differences and similarities in human personalities. The test is based on the work of Carl Jung, a Swiss psychologist who believed that personality traits are innate. Each year, more than one million people take the MBTI, which analyzes people by these four ranges of personality traits.
Thinking-Feeling: This range focuses on how people make decisions. Thinking (T) people prefer to decide on the basis of logic, analysis and reason. They tend to follow their head rather than their heart, whereas Feeling (F) people usually decide first on the basis of personal preferences, second, on the basis of logic.
Judging-Perceiving: This range suggests the type of lifestyle and work habits people prefer. Perceiving (P) types are more spontaneous and seek out additional information and options. Judging (J) types tend to be planners, preferring more order and structure.
Sensing-Intuition: This describes how people take in information. Sensing (S) people prefer concrete facts, organization and structure. Intuitive (N) people tend more to hunches. They want to know the theory first before deciding what facts are important.
Extrovert-Introvert: This category focuses on how people get their energy. Extroverts (E) are more energized by interaction with others, Introverts (I) by the inner world of reflection, thought and contemplation.
One survey found that based on the Myers-Briggs Type Indicator (MBTl) two preference dichotomies are especially relevant to personal financial management: the Judging / Perceiving, and Thinking / Feeling preference combination.
The Judging types of both genders are more interested in and more savvy about managing their finances. They actually enjoy managing their finances more, and are better diversified in their investments, than the Perceiving types.
The Feeling group is less likely to own a property, have a brokerage account or measure their progress.
How else could your preferences affect the way you deal with money? Let’s have a look at each preference and its implication:
E - Extroverts would rather deal with money in a social situation. Prefer face to face banking rather than on line, for example. Pictures of the stock market traders that I've seen on TV seem like prime examples of Extroverts (and an Introvert's worst nightmare).
I - Introverts need down time away from people in order to recharge. This doesn't mean that we don't like people, so I'd bet Introverts deal with most of their money stuff online. Online budgeting communities like Wesabe and blogging are both good examples of how Introverts can interact with other people, and still get their down time.
N - Intuitive people probably play the stock market, where their inclination to find patterns for the future can get a workout.
S - Sensing types are probably more into automatic deposits into a retirement funds, ISA, or other high yield but predictable returns. (I'm also guessing more Sensing types end up with a sizeable retirement nest egg.)
T - Thinking types probably make the best math based financial decisions. When they do have to pay off debt, they work on the one with the highest interest rate first, and then work their way down. Or they would be at least inclined to apply some sort of debt repayment method rather than “just somehow” pay debts off.
F - Feeling types, however, probably buy stocks on how much those stocks are ethical, environmental etc. (depending on values most important to those people)
J - Judging types have a plan. They have a budget, and have mapped out how much to save, spend, and invest for their goals. I think Judging types would do the math to see how much money they would save (or lose) by taking out cash on a very low / 0% interest card, and putting that money in a savings account (shtoozing), making only minimum payments until full interest rate kicks in.
P - Perceiving types probably would prefer very flexible investments with immediate access and no strict deadlines.
It is important to know and understand your MBTI type as it can help you to make decisions based on your personal strengths rather than on what other are telling you!
I am a thirty-something Englishwoman, and am an enthusiastic amateur in the world of personal finance, as well as in food, fashion, and literature, particularly Victorian fiction and classic detective stories, as well as self-help and recipe books.