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Understanding money personalities | Navigating family and business financial decisions

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By Steven Boyce Business Owners

Every day, you make thousands of unconscious decisions. Over the years, our research has delved into the intricate world of these choices, revealing eight distinct ‘money personalities’ that influence behaviour and drive decision-making. These personalities are the Family Guardian, Freedom Seeker, Apprehensive, Builder, Social Spender, Maximiser, Maverick and Controller.

As expected, these varied money personalities can lead to conflict within family groups, between spouses, and across generations. Recognising everyone’s decision-making traits can shed light on the drivers behind your behaviour and enable you to hone in on what truly motivates you to ensure that your family’s plan is personalised to work effectively for everyone. Our unique position at the heart of family decision-making allows us to witness the opportunities and challenges that these different perspectives present.

Recent research has extended our understanding of how these money personalities often show up for business owners. In interviews with fifty of Western Australia’s most accomplished business owners, we uncovered common characteristics related to their money personalities. We’ve distilled some of these findings into three strategies that many of the more functional ‘business owner’ families implement to foster better relationships and alignment around their financial affairs:

Control and decision-making

As a business owner, the ultimate decision-making authority rests with you. Your experience in running your business will likely have imbued you with a sense of power and confidence in your judgment. In contrast, successful and harmonious family financial relationships are usually fostered by shared decision-making and collaboration between spouses. This includes active listening, setting joint goals, creating boundaries for financial decisions, and catering for the differing levels of financial acumen and money personalities. While one person may typically take the lead in managing family finances, a combination of these factors can reduce stress around your finances, ensure more productive conversations around money that enhance alignment, and promote a sense of security and peace of mind.

Extracting wealth from your business

Venturing into business ownership requires a unique personality and mindset. As a successful business owner, it’s likely that you’re growth-orientated and perceive and tolerate risk differently from the general population and your spouse. Due to a natural optimism and desire for this growth, business owners sometimes underestimate the risks inherent in their endeavours, constantly ploughing all their profits back into growing their business. In today’s rapidly changing world, innovation and disruption are prevalent in virtually every industry. At an appropriate time, it is important for business owners to consider establishing processes that balance the need for capital to grow their business, with a dividend policy aimed at reducing the risk to their personal finances. This approach will allow you to reduce debt and acquire high-quality assets, which, in turn, helps build a passive income stream and lessens the reliance on selling the business to finance life after work. Ultimately, this will provide a greater sense of security for the family, and reduce the reliance on your business to fund your long-term goals.

Speculative investments

Our interviews with business owners revealed that many of them maintained close friendships with other business owners with whom they often discussed their investments. This camaraderie between like-minded ‘risk seekers’, often resulted in a greater inclination to invest in higher-risk opportunities, such as property development, private businesses, or speculative shares. If you are attracted to this style of investment, it’s important to strike the right balance. This includes putting some science behind how much needs to be in an investment portfolio that has diversified, dependable assets to safeguard the long-term interests of the family, and how much can comfortably be invested in higher-risk assets that will lead to more uncertain outcomes.

Understanding what drives you and your family is the key to making informed financial decisions. For a more in-depth exploration of the eight different investor personalities, don’t hesitate to reach out to your adviser.

The information provided on this site is of a general nature only and may not be relevant to your particular circumstances. The circumstances of each investor are different and you should seek advice from a financial planner who can consider if these strategies and products are right for you.

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