What’s Your Financial Behavior Capability?

Knowledge is your gatekeeper. Invest in education. The more you understand, the less stress.

One Google search using the words “money education” reveals over four billion results! The topic is well covered in books, articles, social media, research, and tools. If there are so many resources available to us, why are so many of us plagued with an inability to produce more Money Energy potential?

Offering Solutions Without Defining the Problem

I don’t think a day goes by when I haven’t read, watched, or listened to media channels advocating for more financial literacy. We all would like to see more measurable results when it comes to our ability to efficiently budget, save more, invest wiser, and generate more wealth. I agree that we need to do a better job with money education, but in terms of solving a problem, I’m not convinced we can help improve financial well-being without understanding our natural financial behavior capability. 

A necessary starting point when deciding to take control of your finances is to understand the inherent behaviors influencing how you behave with money. We all have a Natural Financial Behavior Capability (FBC) that reflects hard-wired behavior, which, by the way, is 95% set by the time you are seven years old. I think that absolutely everyone can benefit from knowing more about their own relationship with money. That’s why DNA Behavior offers its Natural Behavioral Discovery free to anyone interested in learning.

As a step towards knowing your level of Money Energy, the DNA Natural Behavior Discovery reveals and measures your ingrained FBC: your propensity to save or spend, create wealth, manage risk, and your financial EQ. Armed with this personal insight, you can rethink and reshape your financial well-being and put yourself in charge of your money. In essence, you need to become familiar with your behavioral style before you can address how to improve your financial habits.

A second step toward improved financial literacy is to maintain awareness of the ever-changing world around you and the impact on your own long-term financial stability. You never know when changing economic conditions may force you to rethink your approach and relationship with money.

Life’s surprises aren’t always good ones.

Doug Roberts was someone who has done a pretty good job of accumulating wealth and maintained an overwhelming level of confidence that his money would last more than a lifetime. Sadly, sometimes a singular unexpected event can significantly reduce your Money Energy potential if you ignore the signals. 

So, here’s a little bit about Doug. He is 55 years old and married with an adult son. Doug earns a living as a sales executive with a base salary and commission. He has done well for himself, and it could be said that he and his family enjoy many of the finer things in life.

Doug’s household maintains a relatively small mortgage, is protected by life insurance, is covered by a premium medical insurance through his employer, contributes the max to his retirement accounts, and has membership to several exclusive organizations for networking purposes. The future looks bright for him until… unexpectedly he receives a call from his Human Resources liaison and is informed that the firm is restructuring for economic reasons. He is also told that his role has been eliminated—effective immediately! The possibility of this occurrence should not have escaped his mind. There was news of large-scale layoffs within his industry, but his overconfidence blinded him to the fact that he could face a similar fate.

The Risk of Ignoring Longevity Risk

Doug was to receive an average payout package and, once he learned of this, he went to his financial advisor for guidance. His advisor knew Doug maintained a very healthy lifestyle that would likely lead to longevity, so he crunched the new numbers for him. Even if many of his risky investments performed well, his lifestyle-sustaining income would not be able to maintain him beyond 69.5 years.
At this point, Doug's advisor reminded him of his DNA Behavior Discovery profile that showed him to have an Engager profile. He was comfortable connecting with people, using natural enthusiasm to promote and connect well in his profession as a salesperson. However, this behavior style also means that he is prone to herding behavior. So, he may be more reactionary to his fears and make decisions more quickly, instinctively, and emotionally.

This is where becoming more educated about your personal identity can help you maintain your Money Energy batteries in times of adversity. Because Doug’s advisor had him complete a DNA Natural Behavior Discovery, we are able to apply a more scientific approach to diagnose the best possible actions for Doug. From a natural Financial Behavior Capability perspective, his scores were as follows:

  • 4% Saving and Budgeting – meaning he was low in this area and a lot of discipline would be required to sustain a change in spending habits

  • 30% Wealth Creation Motivation - meaning he was more content, and lifestyle-oriented which would require a new focus to change the way he works, lives, and operates given the new circumstances

  • 50% Risk-taking – meaning he has a moderate propensity to take some risks when needed and gaining more investment education would help him get comfortable with decision-making

  • 14% FBC - meaning overall, based on the first three elements above, his natural level of Money Energy is low thereby requiring a lot of conscious thinking to boost his overall Money Energy “battery” for living a quality life for longer

  • 31% Financial EQ – meaning that his tendency to make emotional decisions at the wrong time could be high, and therefore needs to remember the “check yourself before you wreck yourself” principle

These metrics are incredibly useful when formulating a financial plan. But there is a third educational dimension to be considered beyond understanding your behavioral style and FBC. If you want to witness exponential gains in Money Energy, it requires more opportunities. More opportunities can also be derived from expanding your skills and experience. 

Continuous Improvement

Education is an ongoing and dynamic process that extends beyond formal schooling. Lifelong learning, adapting to evolving knowledge, addressing changing needs and challenges, personal and professional growth, and self-development are all integral aspects of education throughout one's life.

  • Seek out opportunities for self-development.

  • Stay informed of new discoveries.

  • Research industry movements.

  • Monitor how societal, economic, and technical changes influence your profession.

  • Look for ways to improve your problem-solving skills.

  • Explore various subjects, disciplines, and perspectives that may lead to new career growth.

Taken together, investing in education is investing in yourself. Know your personal identity, learn where you can improve your financial behavioral capacity, and continue to expand your skills—and you will feed your Money Energy for many years to come.

Related: Managing the Rollercoaster Ride of Investor Sentiment