Ted Klontz knew he should save for retirement. He claimed he wanted to save, and he even hired a financial advisor to help him create a plan. But when the time came to direct funds into his retirement account, he didnât do it.
Frustrated with himself, Klontzâresearcher, author and co-founder of the Financial Psychology Institute®âasked a friend for advice. The friend asked what retirement would mean for Klontz, and he instantly responded: It means you quit.
âIn my family history, people who retired never did anything related to their entire work careerâthat part of their life just stopped. I loved what I was doing and couldnât imagine ever quitting,â Klontz says.
After saying it out loud, Klontz, who has a doctorate in psychology, realized what had been holding him back. His internalized beliefs about retirement didnât reflect his true vision for his future, but they shaped his actions in the present. By making that realization, he was able to imagine his dream retirement. In that dream, he would do work that inspired him, complete it on his schedule and live where he wanted to live.
Once this vision was clear to Klontz, he began catching up on his retirement savings. He put a plan together for selling his business so he could create the retirement he imagined for himself and his family.
âEvolving my belief about retirement shifted everything for me,â he says. âSometimes those massive changes happen just by getting another piece of information, either from inside you or from somebody from the outside.â
Try this money personality quiz
A desire to understand how money shapes peopleâs beliefs and actions has informed the last 25 years of Klontzâs career. He has come to realize the importance of decoding peopleâs money beliefsâthe subconscious ideas, typically learned in childhood, that drive their actions. Along with a team of researchers, he has developed a rigorous assessment to help people determine which money belief they are most impacted by.
Whatâs your money personality? Uncover how your own beliefs are shaping your financial behaviors by taking this money personality quiz, inspired by Klontzâs research.
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Letâs explore why itâs important to understand your money beliefs and dive into the most common financial personalities:
Whatâs the value of knowing your money personality?
As a leader in the emerging discipline of financial psychology, Klontzâalong with others in his fieldâhas made the case that in order to improve your financial outlook, you need to understand your underlying financial beliefs.
Once you understand what your financial personality is, you can begin to change your behaviors, whether thatâs your everyday spending habits or your long-term savings plan, Klontz says.
âThe best financial plan, or the best investment advice in the world, isnât a substitute for understanding oneâs own relationship with money,â says Deborah Price, CEO and founder of The Money Coaching Institute and author of âMoney Magic: Unleashing Your True Potential for Prosperity and Fulfillment.â
Understanding your relationship with money means digging deep into your money patterns and behaviors as well as what you learned growing up, where most behaviors are formed, Price says. The problem is that many people have blind spots and cannot easily understand these dynamics without guidance and support, she adds.
Maybe you say you are focused on building up your emergency savings, but you still overspend on clothes or travel instead of diverting that cash to your emergency fund. Or perhaps you want to prioritize saving for long-term financial goals, but youâre leaving extra cash in your checking account instead of transferring it over to your online savings account.
Learning to understand your financial behaviors can help you to spot ways in which you may unconsciously undermine your best efforts to improve your financial life, such as by saving or investing, Price says.
As you learn what your financial personality is and reflect on what type of spender you are, you can begin to understand why you spend a certain way, even though you say you want to do otherwise.
You can also transform your beliefs into steps that will help you manage your finances.
