Business Bookshelf

ost people can characterize the way they handle money in familiar terms—big spender; penny-wise, pound-foolish; tightfisted. Jordan E. Goodman, however, views money management from a more complex angle.

After more than 25 years of radio and television financial commentary, lecturing and writing, Goodman realized he was giving the same financial advice to the same people again and again. This book is the fruit of his study of why clients kept repeating their financial mistakes. He found money behavior falls into six definable patterns, or “Money Types,” and everyone has a predominant financial personality. A successful adviser must make clients aware of their individual money type to help them adopt behavior that allows them to enjoy their money.

Goodman says people’s attitudes about money are colored by psychological factors. They “operate from experiences and messages given to them in [the] past.” To find out more, he interviewed hundreds of volunteers about their financial problems and practices and prepared profiles of how people “care about, use, spend, invest, lose and earn money.” For instance, one financial personality takes excessive risks; another denies money’s importance; a third prefers to maintain the status quo. All exhibit clusters of characteristics in their feelings, fears and fantasies about money, the way they deal with money, the financial situations they get into and their ultimate financial goals.

Goodman devotes a chapter to each of the following six money types, tailoring practical financial advice to best fit the type’s “personal emotional experience of money”:

Strivers , who need to let others know how much they have. Great entrepreneurs, strivers may overspend—living beyond their means—and end up in debt. For them the heart of financial planning lies in cutting down on expenses and putting money aside.

Ostriches , who are intimidated or embarrassed by money and believe they cannot manage money basics. They need to learn how to help themselves and take charge of their finances.

Debt Desperadoes, who “prefer the thrill of buying to the security of having.” Such shopaholics, who max out their credit cards and borrow to pay for essentials, have to work their way out of debt and learn to trust in their money management.

Coasters , who are financially stable but too complacent and therefore likely to bypass money-making opportunities. Goodman’s money mastery technique: Make changes that provide better returns.

High Rollers, who relish gambling on high-stake deals (which often works to their advantage). Their weakness lies in taking risks without a safety net. They need to learn money management without “squelching risk-taking impulses.”

Squirrels , who cheat themselves by hoarding their money out of fear of imminent destitution and loss of control over their lives. Goodman recommends they learn to enjoy money by investing it safely.

Each chapter begins with a money-type profile of strengths and weaknesses, followed by several case studies illustrating problems specific to that financial personality. Goodman analyzes the details of each case, pointing out how the individual’s actions have become habitual patterns in the Emotional Path section of the chapter. The Financial Path section explains how the type can make changes that build, rather than destroy, the financial future. Chapters conclude with Points to Remember and lists of resources (books, newsletters, organizations and Web sites) for that particular money type. The Appendix, “Taking Action: Where to Find Further Help,” comprises 21 pages of additional resources that cover a broad, general spectrum.

The book includes a hefty arsenal of worksheets (monthly budgeting; assets, liabilities and cash flow; retirement expenses; annual retirement savings; and capital accumulation, for example), questionnaires and other aids to help readers define their financial goals. That guidance, along with the case studies, should benefit J ournal of Accountancy readers whose clients or employees need advice explained to them in lay terms.

The author says he hopes readers will use the book to push the margins of their money types so they can make better informed decisions, learn how to operate from their strengths and to cease limiting their options and increase their level of comfort with money.

Emotions are the key. “To get serious about money,” Goodman says, “always be aware of how your emotions set…into action…your behavior.”

Barbara J. Shildneck , a former editor of the JofA , is now a contributing editor to the magazine.