Two types of people
As a blog about money, I’m referring to two types of money personalities. This applies to men or women; it doesn’t matter. I won’t try to apply college-level psychology to dive deep into why the personalities are what they are; rather, it will be obvious from the discussion. This was confirmed to me in a recent study by the data analytics firm PYMNTS Intelligence, which surveyed 2,878 U.S. consumers in January and published an exclusive report, “The Financial Management Divide: Planners vs. Reactors.” A summary on the web is here: https://www.pymnts.com/study_posts/the-two-money-mindsets-shaping-how-consumers-manage-their-finances/
Not surprisingly, a data analytics company would slice and dice the collected data and report it by generation, age, etc., and show the specific habits of these personas. Their findings confirmed what I’ve always thought about the two types of people regarding how they handle their money; those that are responsible and those that are irresponsible. Or, proactive and reactive. Those that take care, and those that don’t seem to care. This report calls the two types of people planners and reactors.
A planner is someone who always pays bills on time, keeps their car well maintained, and saves for retirement. A reactor just takes care of things as needed from one day to the next. They’re the type of person whose car will seize up on the side of the road from lack of oil, then have to rent a car on a credit card because they don’t have enough emergency savings to cover the cost right now. What interested me in the report was the data showing that some percentage of people shift between the two personas over time. How can that be? As I said, I always thought people were either responsible or irresponsible, and generally you go through life that way. But it turns out we can become a planner or a reactor at any time.
At an inflection point in someone’s life, such as moving out on our own, getting a first real job, getting married, or raising children, one can shift from the reactor to the planner persona because of the event. Or, when life hands us so many lemons - dwindling our income and savings - we’re pushed from being a planner to becoming a reactor by the new circumstances. When the economy becomes challenging, it can be difficult for some to stay employed and earn enough to keep up with expenses, so it’s not easy to stay a planner if you’re thrown a new challenge week after week. So, as the economy sours, the percentage of reactors is bound to go up. I’m betting you have observed these two types of people around you and maybe will admit that you have been one or the other of these personas at different points in your life.
It should be obvious that your financial outcome will be better if you can be a planner. Planners don’t pay late fees or credit card interest. A planner waits for a sale instead of paying full price. Planners are organized and think about the future, not just the present. If you’ve always been a reactor, there’s hope you can become a planner by dedicating yourself to the cause. Put in the work, as they say. It’s not difficult, but it requires taking the time to learn about money and admitting your mistakes. Even if you are a planner type, do you slip into reactor mode from time to time? Do you ignore basic money management tasks, put off crucial decisions, or tell yourself you don’t have time right now? Excuses are a slippery slope toward becoming a reactor.
Finally, I wondered: why would a data analytics company be interested in the planner and reactor personalities? Simply, its clients, such as marketing firms and advertisers, need to understand the psychology of potential customers. We would expect reactors to be impulse buyers, while planners are the comparison shoppers. Reactors need help getting to retirement, while planners are already on track. Reactors buy final expense life insurance, while planners have enough money set aside. Knowing the personas and size of your market segment allows advertising to be tailored more effectively. Telling a planner to be a better planner won’t increase sales, but reaching reactors when they’re in a financial bind is a good way to sell a lot of products and services.
In our gut, we know that financial success won’t happen if you’re irresponsible or don’t care. But here’s the thing - to be a planner, you don’t have to document and analyze every small expense or spend hours managing investments, because that extra effort won’t make a huge difference at the end of the day. What matters most is establishing and consistently following good financial habits, taking the necessary actions, thinking ahead, and living within your means. It is possible to find a better path by planning your lifetime journey rather than getting lost all the time.
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