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When a Financial Advisor meets with you and asks you numerous questions, they are not just being nosey, it’s to help build a background picture and to distinguish your attitude and more importantly your capacity for risk. A good Financial Advisor will not just look at your money; they will also look at you. There are 3 main things to consider when deciding if you are going to invest your money or just put it into a deposit account. One being how long you can afford to invest the money for, if it is long term, you can afford to take higher risk. The second is making sure that you don’t invest all your money in one sector/share. Thirdly, you need to consider your emotional relationship with your hard-earned money.

Your own personal psychological relationship with money influences decisions over how to spend, save or invest it. But are you making the right choices? As our personal finances are usually a very private part of our lives, it can be hard to recognise potentially damaging patterns of behaviour.

There are numerous personality tests that you can take online but typically there are six different personality types when it comes to your relationship with money. Which one do you think describes you best?

• Wise: You understand that money is a necessity to help you and your family. You value money but it is not your every thought. You have created ways to generate money without affecting your well-being. It is clear that you have disciplined yourself to not spend impulsively and that you are definitely not reckless with your money. You understand that growing your wealth is better than hoarding it.

• Obsessed: You believe that gathering money is your only purpose in life and there is nothing you will not sacrifice in your quest. The majority of your conversations are related to money. This unhealthy obsession may drive you to dangerous positions not only for yourself but for everyone around you. Family, health and morals mean nothing to you.

• Irresponsible: This is similar to a gambler that tells the tale of all wins but will never mention or even see their losses. You are addicted to the highs that money can give you, which can lead you to spend money you have not even earned yet, resulting in a constant state of debt. It is possible that you are a financial burden to someone else.

• Daydreamer: You constantly dream of being wealthier but you never drive yourself to make your dreams a reality. You believe that if you are a good person, money will come. You are the type of person to lend money to others even if you cannot afford to.

• Dependent: You rely on others for money because you are currently in a situation that prevents you from earning. You may not realise that if you prudently manage the income you receive from others, you can become financially independent.

• Sponger: Even though you have the ability to earn and save money, you don’t bother. You are comfortable living off the handouts provided by other people’s generosity and have become a burden to your friends and family. You may even have developed feelings of bitterness towards your benefactors as you are waiting on their generosity to provide you with certain things.

Depending on your personality type you may make certain investment decisions that are led by your character or nature but that are not necessarily the most appropriate for your circumstances. Most clients tend to use their personality and how comfortable they are with risk to make their decision. Getting independent advice can often help as a good Financial Advisor will be able to give you an impartial opinion, help you to consider the length of time you have to invest and also ensure you don’t put all your eggs in one basket.

Jacinta Clerkin QFA FLIA is a Qualified Financial Advisor, Fellow of the Life Insurance Association and Retirement Planning Advisor. You can contact her through John F. Loughrey Financial Services by telephone on 074-9124002 or by email on jacinta@jfl.ie