Many of us have money coming into our lives, even as students, housewives, employees and business owners. But what are we doing with that money? If we were to keep a record of all the money that has come intou our hands in the past 24 months, would we be shocked? Surprised? Especially if a million or more has actually ‘passed through your hands’?!
Generally speaking, from the money you make, you are either saving the money for investment or spending the money on consumables. Also note, when you save, you should not be saving for saving sake. You should be saving with a clear intent to invest and purchase growing or/and income-generating assets.
On the other hand, you are either multiplying the money that comes to you or you are diminishing the money that comes to you. That is, you may be taking actions that increase [multiplies] the value of the money with you or you may be taking actions that reduce [diminishes] the value of the money with you. It is interesting to note that money doing nothing with no real purpose or money spent on declining assets, can be diminishing the value of money.
The Money Behaviour Quotient – The MBQ is a resource tool to help you assess your money behaviour and lifestyle because your lifestyle is either hindering you or helping you to build wealth. The MBQ was created when we observed a consistent pattern of behaviour with our clients when it came to how they behaved with their money and the final results with their money over time.
We realized that having the information was not always enough, as there were certain mindsets and emotional actions that people often acted upon that would be contrary to the ‘financial goal’ they said they desired. It became clear that if people were to achieve their dream of financial freedom, we needed them to see beyond the obvious, to see how their mindsets and emotions could potentially affect their end results.
The MBQ has four [4] key money behaviours which are applicable to people who make money. The Spendthrift, the Hoarder, the Mismanager, the Investor. The goal is to exhibit the behaviour of the Investor but many of us do not know HOW TO behave as an investor. You may find that you think you fall into two categories but there will usually be a dominant behaviour.
The first money behaviour profile and least popular is the Spendthrift. Someone who spends money or possessions prodigiously and who is extravagant and recklessly wasteful, often to a point where the spending climbs well beyond their income. This is a situation where a person is spending the money coming into their life in a manner that diminishes the value of the money. They are literally ‘burning through their cash’. This person can have a tendency to be a debtor and run themselves to bankruptcy because they cannot delay gratification and want to keep up appearances. This personal struggles to delay gratification and lacks self-discipline.
The second money behaviour profile is that of the Hoarder. Many people will find saving money as a ‘good thing’. But it is usually not ‘good enough’ if nothing is done beyond preserving the value of the funds, especially when you are not retired. To hoard, means to accumulate for preservation for future use. But saving money alone and doing nothing else, especially with no real purpose for saving, could be diminishing the value of the money in view of inflation.
The hoarder often keeps ‘postponing’ taking action on doing more with their money. This is typical because of a lack of knowledge on money, savings, debt management and investment. When the hoarder ‘attempts’ to invest with little or no knowledge, they often fall prey to scams or invest wrongly, and this serves to reinforce their fears. This person may have a scarcity mentality, with a fear of never having enough or/and the fear of losing it all. Ultimately, the hoarder continuously repeats the same actions and does little to multiply their funds.
The most common money behaviour profile we interact with is that of the Mismanager. But what is mismanagement? It is the process or practice of managing ineptly, incompetently or dishonestly. It means to mishandle, blunder, misconduct, overlook, fumble or to miscalculate funds. This is something Nigeria is well known for but most Nigerians will not admit they might just be as ‘bad’.
This is a situation where a person is making money from one or multiple income sources but not paying enough attention to realize that they are spending the money just as fast as they are making it, or/and not making the most of the funds to create wealth. It is probably the hardest to identify and accept because we are seemingly doing “well”, that we struggle to accept that something might be amiss. Making money is often not the problem but having an accountable cashflow management system.
The fourth and final money behaviour profile is that of the Investor. An investor is any person who commits funds in a strategic way, into business opportunities with the potential to offer profitable returns or appreciation in value. The Investor has a balanced and practical understanding of money, saving, spending and investing parts of their income, with a goal to increase their cash flow and net worth.
They can delay gratification, be forward-thinking, and not be pressured to keep up appearances but focused on creating the type of life they desire. The Investor knows how to ‘play the game of money’ & ‘speak numbers’. What the other three profiles lack, the investor has and more. The investor has a financial plan, act on it and compound the money invested wisely. They literally know how to make 5 talents become 10 talents.
The MBQ is a representation of all four profiles as seen below.
Interested in taking an assessment to determine your money behaviour profile? Send us an email., so you can get an indication of how your lifestyle may be helping or hindering you from building wealth.