In the world of financial planning it is important to have a strong understanding of financial principles and strategies, but it is arguably even more important to have a solid understanding of yourself. Only then can you assess how your own personal traits will interact with the principles and strategies you intend to employ.
It’s part of why there really is no one size fits all model when it comes to HOW to go about implementing your financial plans. Though the underlying principles may often remain the same (earn more, save more, spend less), the approach that works for Person A may be exactly the wrong method for Person B.
So in order to identify what will work best for your financial goals, you need to first understand your own personality traits and biases. Doing so will allow you to tailor your strategies in a manner that utilizes your strengths while mitigating any areas of weakness.
A couple years ago I spent a ton of time reading introspective books and reflecting on my personality. I invested some pretty significant time into evaluating who I was, what made me happy, what made me content, and overall what I wanted from life. In the end it was definitely time well spent. It helped me identify areas where I was investing time with little or even negative returns, and highlighted that I was working for an organization that was structured in a way that frustrated me on every level. It also helped me to recognize how I could use my personal strengths to better achieve our goals of Financial Freedom, and made the decision to leave that job behind me an obvious one.
Some fabulous authors I read along the way were Gretchen Rubin, author of “The Happiness Project”, “Better than Before, and “The Four Tendencies”; Brene Brown, a researcher on human connection at the University of Houston and author of a number of incredibly insightful books all of which were worth the time invested in reading; and Daniel Goleman, author of Emotional Intelligence.
All books that prompt you to evaluate your life and personal tendencies both with an external and internal lens. While the insights obtained from those books were incredibly helpful in a number of areas in my life, they also directly applied to my approach towards Financial Freedom.
In particular I took an interest in a framework created by Gretchen Rubin titled “The Four Tendancies”. In her research into happiness Rubin developed this framework as a way of categorizing people in terms of how the react to inner and outer expectations.
Rubin’s framework is designed to help people identify their individual category to assist in employing daily strategies to improve happiness and productivity, but notably I found it to be an incredibly useful tool to identify appropriate financial planning, and here’s why.
The framework consists of 4 different categories, being the “Upholder”, the “Obliger”, the “Rebel”, and the “Questioner”.
The Upholder is someone who can easily meet both inner and outer expectations. This type of person can generally appear very self-motivated and requires no outside influence to meet their goals. As you can imagine, if you are an upholder, you don’t need to spend a lot of time worrying about building in external measures of accountability in your financial strategies because you are the measure of accountability.
The Obliger is where the vast majority of the population falls into. The Obliger is excellent at meeting outer expectations, but truly struggles with inner expectations. In order to succeed the Obliger must be creative at developing ways to create outer accountability for internal expectations. Given that so many people fall into this category, it’s easy to see why the vast majority of the population struggles with maintaining their finances or meeting financial goals. Finance has historically been a topic that isn’t openly discussed, generations passed considered it rude to openly talk about money. Keeping it hidden and not being externally accountable to anyone about it is probably the worst thing an Obliger can do when developing their financial strategies.
As an obliger, setting goals and telling others about them will help provide a layer of external expectation, one that you will then feel obligated to meet. So if your an Obliger, be loud and proud about your plans to reach Financial Freedom.
The Rebel is in for a tough ride when it comes to finance. The title is pretty self explanatory, the rebel bucks both inner and outer expectations and doesn’t like to feel painted into a corner. As an upholder, I fall in the completely opposite plane as a rebel and so I really struggle to relate to this train of thought, which also means I struggle to come up with suggestions as to how you can overcome this tendency from a financial perspective. Budgeting, savings, everything finance relates seems to go exactly against the grain of what a rebel’s tendancy is all about. My best suggestion is to ensure that the goals you are setting are things you genuinely want to achieve, and you don’t feel as though you are being forced. Otherwise, you are destined for failure.
As an aside, if you are the spouse of a rebel and trying to get them on board with a financial plan, understanding their tendency and how they will react to your expectations will be a crucial consideration in your strategies. Allowing freedom of spending to a set amount is likely the best approach when it comes to a rebel, it will allow them the sense of freedom of choice within a reasonable amount that works with the overall plan. (Yes, that basically means an allowance, but don’t call it that, your Rebel spouse won’t appreciate it!)
The Questioner is an interesting category. The questioner resists outer expectations, but easily meets their own inner expectations. UNLESS they can evaluate and come to understand the outer expectation by questioning the purpose and value. As a questioner you are likely to be very successful at implementing your own financial plan, but if you are the spouse of a questioner and trying to get them on board with what you have in mind, come prepared with an arsenal of information about why this will bring you both value. Also, give them time to absorb and digest the information before they are ready to jump on the bandwagon.
Bottom line is, understanding your tendencies and how you will respond to both inner and outer expectations should be a huge consideration in developing your financial plan. Doing so could be the defining difference between success and failure. Equally as important is understanding which tendency category your spouse falls under. You need a plan that works for both of you, what will work for an Obliger will likely not work for a Rebel, and is sure to generate conflict.
If you want to find out what tendency you fall under, try taking Rubin’s free quiz here. It only takes a few minutes and can help you get started improving your understanding of yourself, so that you can truly understand what financial strategies will work best for you.