Four Stages of Money Consciousness

What would you do if you were given $10,000 right now?  … Go ahead, I’ll give you a minute to think about it….

Would you invest in that venture capital project you’ve been keeping your eye on? Spend it on a tropical vacation or cruise? Donate it to your favorite charity?

Based on the varying nature of responses that I would certainly get when I ask this question, I think it’s safe to say most of us have a very distinct relationship with our money and how we spend it. While one might assume this relationship is characterized by exactly how much money he/she has at a given time, a more important aspect to focus on is ones money personality.

You may have heard the term ‘money personality’ before. While bloggers have centered the majority of the money personality discussion on identifying money personalities (see Lisa Smith at Investopedia), we’d like to explore the stages of the Money Consciousness:

1)   Unconscious-Incompetent: This is the most dangerous stage of Money Consciousness. The Unconscious-Incompetent is not sufficient at managing his/her own personal finances. More importantly, the Unconscious-Incompetent is unaware of their inability to manage their own finances. Most often, those who have experienced a reduction in their regular income will fall into this category, as they are unable and/or unwilling to compensate for the decline in regular income. The Unconscious-Incompetent will often burn through savings, skip bill payments, and run up high credit card bills to maintain a level of spending not reflective of their income.  Those who fall into this category must seek the advice of a financial professional immediately.

2)   Conscious-Incompetent:  Don’t let the word ‘incompetent’ blind you. The Conscious-Incompetent may not possess the necessary tools to manage his/her own finances, but they possess something much more important: awareness. The Conscious-Incompetent is aware that he/she cannot manage their finances on their own. As such, they seek help from financial advisors, they purchase budgeting software, and they keep themselves well read on everything financial so that they can put themselves in the best position to succeed, they learn about market and the loan industry, which is useful for them. Funny enough, the Conscious-Incompetent is actually pretty darn competent.

3)   Unconscious-Competent: Simply put, the Unconscious-Competent is a natural when it comes to personal finance. The unconscious-competent is often the unsure, analytic type. He/She seeks advice from a financial advisor, even when they do not necessarily need it, and tends to be quite conservative when investing.  The Unconscious-Competent has efficient, effective spending tactics…they just don’t know it.

4)   Conscious-Competent: They may not have the magic wand or the funny looking hat, but the Conscious-Competent is a Financial Wizard. The entire premise of finance comes naturally to the Conscious-Competent. He/She is well read and well informed in the area of finance. The Conscious-Competent is active in seeking out innovative investment strategies and, as such, has aligned him/herself with a strong, trusted financial advisor to help fully understand the intricacies of the finance world.


Where do you fit in on the Money Consciousness Scale? Let us know in our comments section below.



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