Putting the Personal in Personal Finance

Ask 100 people about how they perceive and manage their finances, and you’re guaranteed to get 100 different answers. This does not make sense on an objective level because money, unlike many things, is almost completely black and white. In every financial decision, there is one choice which is objectively better than the others, a choice supported by a wealth of research and evidence. Take for example a favorite example of the FIRE community: index fund investing. We know for a fact that a buy and hold investment strategy in index funds consistently outperforms any other stock market investment strategy over long periods. Yet, even people armed with this information and understanding struggle to maintain this strategy through market fluctuations, particularly crashes. The reason for this lies with human nature. However, I think we can get a little deeper into the weeds of human behavior and decision making when it comes to personal finance. I’m particularly interested in the role our personalities play in how we handle our finances and how those traits can be identified and characterized. Thanks to research into the realm of psychology and personality, anyone with an internet connection has access to powerful tools which allow them to assess the ins and outs of their own brains. The tool of choice for this article is the Meyers-Briggs Type Indicator test which sorts personalities into 16 archetypes. Anything which seeks to boil down something as complex as personality into something easily digestible needs to be taken with a grain of salt, but I believe that the general traits laid out by this personality test can provide a starting point in understanding how we behave and make decisions, especially with money. I believe that certain elements of personality can explain the dissonance between the cool objectivity of money and the completely irrational way most people deal with it. It is armed with this theory that I assigned my Dad the topic for this week’s article: take the Meyers-Briggs and analyze how traits attributed to your type reflect the decisions you make with money. You can find his reflection here and read on for mine.

An INTJ in good company

I walk a fine line between the INTJ and INFJ personality archetypes. My near-constant analysis of the world around me, intrinsic attraction to efficiency, and my passion for learning perfectly reflect the INTJ, or “Architect” type. On the flip side, my altruism, sense of idealism, and acute sensitivity to the thoughts and feelings of those around me are traits assigned to the INFJ, “Advocate”, type. However, when it comes to the way I think about finance, it’s the INTJ in me that truly shines. Though one of the rarest personality types in the general population, INTJs are disproportionately represented among the giants of personal finance, especially within the FIRE movement. This makes a lot of sense because traits fundamental to our personality also lend themselves to excellence in money management. Ultimately, five “INTJ” traits stand out to me as particularly foundational in the way people like me interact with money.

Core Optimizer

I am at my core an optimizer. Nothing irks me more than inefficiency of any kind. This aspect of my personality has thrived since childhood and has had significant influence in the way I live and interact with the world. I’m an engineer, after all. It makes sense that the incredibly inefficient way most people handle their money would have been obvious to me since I was very young, and that it bothered me even before I had money of my own to optimize. Now that I do, I’m thankful to have access to people who are much smarter than I am whose tools I can use to streamline my own financial life. The reason the principles of financial independence integrated so seamlessly into my mind is that it more closely mimics my natural though process more than any other money management strategy.

Disregard the status quo

Unlike the archetypal INTJ, I do care about what other people think. But I don’t care enough to make silly decisions with money to project an image of wealth. It’s not in my values. I’ve never understood the whole “keeping up with the Jones’” idea mostly because obvious expressions of wealth didn’t seem particularly desirable or attainable for me. I went to a very fancy boarding school (on full scholarship) for high school, and many of my classmates simply had wealth that was incomprehensible to me, so I found other ways to fit in that didn’t have anything to do with how much money my parents had. Today, I spend a lot of time thinking about my money, but very little time thinking about other people’s money because it’s none of my business and I also don’t care. I love the idea of “stealth wealth” because someday if someone judges me for wearing second hand clothes or biking everywhere (though I really don’t think most people pay any attention to these things) I can laugh and count the zeros in my net worth and think about how much better the life I’m living is for me and the planet.

Long term planning and goal setting

In my free time, I make plans. Monthly plans, 5-year plans, 10-year plans. It’s like taking my brain to the playground, letting it run wild and spin fantastic futures for itself. However, I realized a few years ago that many of my plans were at odds with having a 40-year career in a 9 to 5 job. I recognized money as the mechanism that would enable the kind of life I wanted to live, but I was stuck in the traditional career model that in order to have money you need to work your whole life. Enter Mr. Money Moustache, and my life was changed. This long-term planning aspect of my personality likely saved me from waking up at 30, as so many of my peers will, and realizing that I have no savings and a career I’m burned out in. This personality trait also lends itself particularly well to personal finance because the most important aspect of success in this field is the long game and the ability to make contingency plans for your contingency plans. Though I don’t have very much capital yet, I have time on my side thanks to my predisposition for making detailed, long-term plans.

Cold calculator

One of the most important strengths of the INTJ personality type in personal finance is the ability to be coolly objective about money. Too many of the bad financial decisions people make are rooted in emotion, and luckily, I do not struggle with this as much as many people do. I’m not perfect in this area, but this is a strength specific to my personality.

Information gathering

One of the most notable traits of an INTJ is their innate capacity for research, especially in areas which they find interesting or relevant. This gathering and synthesis of large amounts of information has been extremely helpful in taking me from zero to almost competent in the realm of personal finance very quickly without an outside force sorting this information and feeding it to me. An essential part of this information gathering drive is an intense curiosity. I am very aware of the fact that I don’t know what I don’t know and I am passionate about using the resources at my disposal to become more knowledgeable about a variety of topics. In the information era, this constant information gathering is actually not as common as people might think, so I think this has been a significant benefit in changing the way I think about money and finance.

So that’s a deep dive into my personality and the way it connects to my philosophy about money management. I think it’s always a positive idea to use the tools you have at your disposal to unlock the reasons behind your behavior. Happy personality testing 😊

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