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Your Money Mind: Are You Prince Charming or Cinderella?


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Your Money Mind: Are You Prince Charming or Cinderella?
Aijaz Rahi/AP
While many people think of financial planning as a dull but necessary activity, Kathleen Grace, managing director of United Capital Financial Advisers in Boca Raton, Fla., and author of "Prince Not So Charming: A Romantic Tale of Financial Independence," says fiction can be a fun way to guide people and their financial decisions.

"We're all emotional creatures, just like the characters in classic fairy tales," says Grace. "If you understand how you make decisions then it's easier to step back and see whether you're making choices based on your emotional mindset or based on a smart financial plan."

Grace says she uses her company's "Money Mind" quiz at HonestConversations.com as a jumping-off point with new clients to explore their emotional approach to money. The quiz identifies which of three emotional characteristics -- commitment, fear, happiness -- tend to drive your financial decisions.

"I've learned that what someone tells you is the most important thing to them isn't always really the most important thing," says Grace, "So this quiz and some other specific questions and conversations are a great way to get people talking."

The Truth Behind the Fairy Tale

The people who are best at handling their money have a balance of all three money characteristics, Grace says. However, most people are usually driven by one factor more than others.

Grace cites Cinderella as an example of someone whose mind is skewed to commitment. "Cinderella is the type of character who wants her marriage to work above all else and will make financial decisions on that basis," she says. "For instance, if Prince Charming wants an exotic palm tree that's too expensive for their budget, she's likely to just pay for it herself with a credit card because it's more important to her to keep her husband happy than to be realistic about their finances."

Prince Charming, on the other hand, offers an example of someone whose money mindset is focused on happiness. "Most people think of women as shoppers and spenders, but a lot of men are spenders too. They may spend money less frequently, but their purchases tend to be bigger."

Grace says her own mindset is a mix of fear and happiness. On the fear side, she's terrified of debt, which stops her from overspending; but on the happiness side, she sees a new car that's pretty and fast and wants it no matter what the cost. Finding the balance of these two parts of her money mindset allows her to step back and look at the worst-case scenario to decide whether she can afford a particular car.

Pros/Cons of Money Characteristics

Each of the three personality traits Grace identifies has both positive and negative implications for your financial decisions.

Commitment. If your primary trait is commitment, Grace says you're a giver who wants everyone else to be happy. This can be negative if you aren't taking care of your own finances and are putting everyone else first; on the other hand this trait indicates that you're generous, attentive to others and family-oriented. "If you can mix in a little fear with this trait to keep your budget on track, then you'll have a nice balance in your life," says Grace.

Fear. People who are fearful often live below their means, says Grace, which is a very positive trait. However, they're also slow to make decisions, which could be detrimental to their financial well-being. "If they won't reallocate their portfolio or are too risk-averse to invest, it could be a problem," she says.

Happiness. "People who have a happiness mindset are decisive and can make decisions quickly," says Grace. "They tend to enjoy life and live in the moment, which is fine if you have plenty of money. However, if you're living paycheck to paycheck, that's not so great."

In Prince Charming's case, his happiness mindset is probably not too detrimental to his overall well-being since, presumably, as a prince he has unlimited royal funds. Most people, however, share more traits with the commoners in fairy tales and must face reality with a balance of money traits.

Michele Lerner is a Motley Fool contributing writer.


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