Money can break a relationship—and I’ve been there. It cost me $500 and a friendship.
I thought I was helping someone through a tough time, but as weeks turned into months and repayment promises turned into excuses, I realized I’d made a painful mistake.
That experience taught me an invaluable lesson: trust and money don’t always mix well.
Psychology sheds light on why some people are unreliable with finances.
In this article, we’ll explore 10 types of people you shouldn’t trust with money—and how to recognize them before it’s too late.
1) The impulsive spender
Impulsive spenders can be a real red flag when it comes to trusting someone with money.
These individuals tend to make purchases on a whim, without considering the financial repercussions.
They’re easily swayed by sales, discounts and the ‘must-have’ items of the moment.
One minute they’re saving for a house, the next they’ve blown a chunk of savings on a state-of-the-art home entertainment system because it was ‘on sale’.
This lack of financial discipline and foresight can lead to monetary instability and debt.
2) The eternal optimist
Now don’t get me wrong, optimism is a fantastic trait to have. It keeps us resilient, hopeful, and can even be good for our health.
But when it comes to finances, unbridled optimism can be a bit of a risk.
Let me share a personal example. I once lent money to a good friend of mine, who was always the life of the party and an eternal optimist.
He believed that every investment he made was going to be ‘the big one’.
He was always convinced that his latest business idea was going to take off and make him a millionaire.
Unfortunately, his optimism was not always matched with sound financial planning or business acumen.
He ended up losing not only his investments but also the money I had lent him.
It was a bitter pill to swallow, but it taught me an invaluable lesson: optimism should be balanced with pragmatism, especially when it comes to finances.
3) The financial procrastinator
The financial procrastinator is someone who constantly delays making important financial decisions.
They avoid handling bills, put off opening a retirement account, and never seem to create a budget.
Essentially, they are inactive when it comes to managing their finances.
This habit can be risky, as their lack of action results in missed opportunities or even financial setbacks.
Trusting someone with your money becomes difficult when they consistently postpone essential financial tasks.
Their inaction jeopardizes your financial future, making sound financial planning nearly impossible.
In the words of Warren Buffett, “Do not save what is left after spending, but spend what is left after saving.”
4) The overconfident risk-taker
Overconfidence can be as detrimental as procrastination when it comes to handling money.
Overconfident individuals believe they have more control over events than they actually do. This can lead to taking unnecessary risks with investments or financial decisions.
Consider the stock market, for instance. An overconfident investor might think they can predict market trends better than anyone else.
They might invest heavily in a high-risk, high-reward venture without considering the potential for loss.
The field of psychology has a term for this – the ‘illusion of control‘. It’s a cognitive bias where individuals overestimate their ability to control events. And when it comes to finances, this illusion can lead to disastrous results.
5) The overly cautious hoarder
Contrary to what you might think, not all caution is good when it comes to finances.
There’s a type of person who is so afraid of losing money that they end up hoarding it. They avoid investments, even low-risk ones, and keep their money in a savings account that barely keeps up with inflation.
While this might seem like a safe strategy, it can actually be quite detrimental in the long run.
Money that is not invested or put to use tends not to grow. In fact, due to inflation, it can even lose value over time.
Psychologists call this “loss aversion“—the fear of losing outweighs the joy of gaining.
While caution is wise, excessive hesitation can cause missed opportunities, hindering financial growth. Balance caution with a readiness to take calculated risks for greater rewards.
6) The constant borrower
The constant borrower relies on loans to cover everyday expenses or make non-essential purchases.
While borrowing for big investments like a home, car, or education is common, consistently borrowing money for things like shopping, dining out, or vacations is a red flag.
It reflects poor financial discipline and a tendency to live beyond one’s means. This behavior can result in mounting debt and an inability to save or plan for the future.
A person who is constantly borrowing may struggle to build financial security and can quickly find themselves in financial trouble.
Such patterns highlight a lack of financial responsibility and stability, making it risky to trust them with your money.
7) The non-communicator
I once dated someone who was financially secretive. He made purchases without discussing them with me, even for things that impacted both of us, like vacations or household expenses.
Whenever I tried to bring up our finances, he’d shut down the conversation or avoid it completely.
This lack of transparency caused frustration and confusion. Over time, I realized we weren’t aligned financially, and it created emotional distance between us.
People who hide financial matters or avoid open discussions about money can erode trust.
Clear and honest communication is crucial in any relationship, especially when managing finances together. Without it, misunderstandings and resentment can build, causing long-term damage.
8) The materialistic individual
Materialistic individuals place a high value on acquiring possessions, sometimes spending a significant portion of their money on luxury goods to enhance their image.
While wanting nice things isn’t inherently wrong, an excessive focus on material goods can signal potential financial instability.
These individuals might prioritize their desire for status symbols over essential financial goals like savings or investments, putting them at risk of living beyond their means.
As Will Rogers wisely said, “Too many people spend money they haven’t earned, to buy things they don’t want, to impress people they don’t like.”
This mindset can result in financial strain and dissatisfaction.
9) The emotionally driven
Emotions can cloud our judgement, especially when it comes to money.
People who are emotionally driven tend to make financial decisions based on how they’re feeling at the time, rather than considering the long-term implications.
For instance, they might splurge on a shopping spree to cheer up after a bad day or invest in a friend’s business out of sympathy rather than sound financial reasoning.
While it’s human nature to be emotional, allowing these emotions to control our financial decisions can result in regret down the line.
Dr. Susan David famously noted, “Emotions are data, they are not directives.”
It’s essential to separate feelings from facts and base decisions on logic and sound financial advice, rather than being swayed by temporary emotions.
This approach helps create a more stable, thoughtful financial path, free from the impulsive decisions that emotional reactions can provoke.
10) The financial novices
There’s a steep learning curve when it comes to understanding finances.
Terms like stocks, bonds, and mutual funds can sound like a foreign language to the uninitiated.
It’s easy to fall into the trap of trusting someone else with your money simply because you don’t understand it yourself.
I’ve seen this happen with a family member who handed over her retirement savings to a friend who claimed to be a financial expert.
Unfortunately, the so-called expert knew little more than she did, and her nest egg dwindled away due to poor investment choices.
Knowledge is power. If you’re unsure about something, take the time to learn about it before entrusting your money to someone else.
Final thoughts: Trust is not one-size-fits-all
When it comes to money, trust must be earned and maintained. Whether it’s a friend, family member, or partner, we all bring different financial habits, mindsets, and values to the table.
Recognizing these 10 types of individuals helps us navigate relationships more carefully, especially when it involves sharing resources or making financial decisions together.
While it’s important to offer support and trust in our loved ones, it’s equally important to protect our own financial well-being. No matter how much we care for someone, safeguarding our own financial future should always be a priority.
Remember, money is not just a tool; it’s a reflection of our values, our decisions, and our approach to life.
Stay aware, stay informed, and don’t be afraid to set boundaries when necessary.
Trusting someone with your money should always be rooted in mutual respect, transparency, and a shared understanding of financial goals.
The post originally appeared on following source : Source link
