Get To Know Your Inner Money Manager

At first glance, managing money seems pretty simple. In order to use a budget, you just need to gain some knowledge about how a budget works. In order to invest well, you just need to learn about different types of investments and how to buy them.

But it isn’t that simple, is it? Sometimes, even when we know exactly the right financial move to make, we don’t. Or, two people can take the same workshop, but one ends up having a much easier time putting the lessons into practice than the other.

Very often, what’s at work here is temperament. When you understand your God-given temperament, you see as never before why you tend to do what you do—financially and otherwise.

When couples fight about money, very often the disagreement isn’t really about what it seems to be about; it’s a clash of temperaments. Understand your temperament—and if you’re married, your spouse’s—and you will gain a huge advantage in managing money well.

Know Thyself

Temperament is “the prevailing quality of mind” that characterizes someone. Whether you’re extroverted or introverted is one aspect of temperament. Whether you like to keep your options open or prefer closure is another. Whether you prefer to think through decisions logically or go by gut feel is yet another. Together, these traits make up your temperament.

There are several temperament classification systems, but most have their roots in the one devised by Hippocrates, the father of modern medicine. He defined four main temperaments: choleric, sanguine, phlegmatic and melancholy.

Each temperament comes with a set of natural strengths and weaknesses. Living at the effect of your temperament can be frustrating at best and financially destructive at worst. You can’t change your temperament, but you can learn to manage it.

Here’s a little insight into each temperament.

The choleric is the classic type A person – a hard-charging, time sensitive, get things done sort of person. If you think this article is a little long and wish I’d just bottom line it, you may be a choleric. On the positive side, once cholerics set a financial goal, nothing will get in their way. On the negative side, they may be in such a hurry to make things happen that they fail to talk about decisions with their spouse.

The sanguine is an outgoing, fun-loving people person who likes to be noticed. If you drive a flashy car, you may be a sanguine. On the positive side, sanguines tend to be very generous. On the negative side, planning is a foreign concept to them. Budget? Who has time for that? Sanguines would rather be out enjoying time with family or friends.

The phlegmatic is steady, reliable, and dependable. They tend to be very frugal, knowing how to really stretch a dollar. On the positive side, phlegmatics will consider all the pros and cons before making a financial decision. On the negative side, they may never get around to actually making the decision. Planning is a strong suit; follow through is a weakness.

The melancholy has some of the most natural money management abilities. If you enjoy using a budget, you may be a melancholy. Where melancholies can get into financial trouble is they can be perfectionists, insisting on having the best clothing or vacations, for example, which can lead to overspending in these areas.

Knowing your temperament and your spouse’s can help you leverage each other’s strengths and minimize each other’s weaknesses.

Going Further

Do you know your temperament?  If not, download the “Identify your temperament” worksheet from the resources page of my web site.

In my book, Money and Marriage: A Complete Guide for Engaged and Newly Married Couples, there’s an entire chapter devoted to temperaments – how to identify yours and your spouse’s, how to understand the financial ramifications, and how to put that knowledge to work in your relationship.

And in my most recent book, Trusted: Preparing Your Kids for a Lifetime of God-Honoring Money Management, there’s a chapter devoted to bringing some of this temperament teaching to your kids.

How have you seen your temperament at work in your money management?


2 Responses to Get To Know Your Inner Money Manager

  1. Pete Smith July 9, 2024 at 12:17 PM #

    Wade Pfau discusses something quite similar in his books and podcast as it specifically pertains to how one draws retirement income. What is one’s preferred style. Optionality vs Commitment and Probability vs Safety First. This produces a 2×2 matrix of the different combinations.
    Good stuff, Matt. Thanks.

    • Matt Bell July 9, 2024 at 2:41 PM #

      I’ve heard of Wade’s work in this area but I haven’t read it. I’ve been meaning to check it out. Knowing your temperament is helpful in so many ways.

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