Financial Health and Your 'Time Personality'

A recent study found that 'time personality' is a greater predictor of one's financial health than is financial literacy. This may seem counter-intuitive, but researcher and psychologist Philip G. Zimbardo expands the idea that financial decisions are made based on emotion by defining this new dimension. He found that financial health correlated to a person's focus on the past, the present, or the future, what he calls time personality.

 Intuitively we may think that future-focused planners are the most financially sound, but research shows otherwise. Those focused on the future do tend to be planners. Planners think they are good with money. However, since they can tend to overspend on purchasing a sense of security, they need to look out for traps of being over-insured and investing based on unreliable information. Also, they should be aware of how they balance future savings and gain against sacrificing current enjoyment.

 For those too focused on the present, impulsivity is a pitfall. These types tend to spend beyond their means. They can also miss noticing long term changes they can make to reduce their financial burden, such as shopping around for better interest rates.

 Those stuck in the past, especially those who suffered consequences of poor financial decisions or other financial crises, were best off, financially. More avoidant of buying beyond their means, this group limited their propensity to experience debt, bankruptcy and foreclosure. The pitfall for this group, as you may have guessed, is being too conservative. These tend to limit their investing reach for profitable endeavors, or miss out on market gains on more aggressive investments. Generationally, "Millennials" suffered recession during their early working years, making them more likely to save than spend extravagantly. "Baby Boomers" also faced recession, but as a group they are more future oriented, which makes them good planners, which is great if they follow smart financial advise.

 Find the Time Personality Quiz at www.magnifymoney.com/timeperspectives/

References:
The Washington Post, Why Stressing about money mistakes past or future is hurting you, by Jonelle Marte July 20, 2014
The Stanford Daily, Philip Zimbardo releases financial health and personality study, By: Jacqueline Carr | Intern July 23, 2014
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