7 types of people you should never trust with money, says psychology

Money—it’s a tricky subject. Handing it over to someone else requires a level of trust that’s not always easy to give. After all, not everyone handles money responsibly, and psychology has plenty to say on the matter.

There are certain types of people who, according to science, are more likely to mishandle your hard-earned cash. Identifying these individuals can save you a whole lot of grief and potentially protect your business from financial pitfalls.

In this article, we’re diving into the seven types of people you should think twice about trusting with money. Not because they’re bad people, but because their psychological profiles might make them unsuitable for financial responsibilities.

So, let’s get started and ensure your finances stay in the safest hands possible.

1) The risk-takers

Taking risks is a part of life, and sometimes it pays off. But when it comes to money, risk-takers can be a dangerous breed.

Risk-takers are often driven by the thrill of the gamble, the rush of adrenaline when they take a chance. They’re the type to invest in volatile stocks, or throw money into a business venture without carefully considering the pros and cons.

But as famous psychologist Carl Jung once said, “Every form of addiction is bad, no matter whether the narcotic be alcohol or morphine or idealism.” In this context, we can extend Jung’s thought to include financial risk-taking as a form of addiction too.

While it’s true that some risks are necessary for business growth and personal development, an excessive appetite for risk, especially with someone else’s money, is a red flag.

So, keep an eye out for these types. They might bring an exciting energy to your team or project, but entrusting them with financial responsibilities could lead to unnecessary losses and instability.

2) The impulsive spender

My cousin Laura is a classic example of an impulsive spender. She’s the kind of person who can’t resist a sale, even when she doesn’t need anything. A ‘50% off’ sign is all it takes for her to whip out her credit card and make a purchase.

This type of person is typically ruled by instant gratification. They see something they want, and they buy it, often without thinking about the financial consequences.

Renowned psychologist Daniel Kahneman said, “We’re blind to our blindness. We have very little idea of how little we know. We’re not designed to know how little we know.” This quote perfectly describes the mindset of impulsive spenders.

They often fail to see the long-term effects of their actions, focusing instead on the immediate pleasure of the purchase. If a person like this is in charge of your money, it’s likely that it won’t last very long.

While I love Laura dearly, I would never entrust her with my business finances or personal savings. The risk is simply too great.

3) The perpetual pessimist

Ever met someone who always sees the glass as half empty? The type of person who can find a problem in every solution?

Perpetual pessimists can be really difficult when it comes to financial decisions. Their doom-and-gloom outlook often leads them to avoid opportunities for growth or investment, out of fear that things will inevitably go wrong.

As psychologist Abraham Maslow once said, “In any given moment we have two options: to step forward into growth or to step back into safety.” Pessimists often choose the latter, and this can hinder financial progress.

Being cautious is one thing, but constantly expecting the worst can lead to missed opportunities and stagnation. It’s important to strike a balance between caution and optimism when dealing with money.

So, while it’s valuable to have a range of perspectives in your team, be wary of letting a perpetual pessimist have too much control over your finances. Their negative outlook could end up costing you.

4) The over-confident ones

Confidence can be a great asset, but when it’s not balanced with a sense of reality, it can lead to reckless financial decisions. Over-confident individuals often believe they possess superior knowledge or abilities, causing them to overestimate their financial prowess.

A study conducted by psychologists at the University of California, Berkeley, found that overconfident people were more likely to engage in risky financial behavior. They tend to believe they are less at risk of experiencing negative effects compared to others, leading them to make risky investments or financial decisions.

This overconfidence can be especially dangerous when handling someone else’s money. Overconfident individuals might make bold moves without fully considering the potential downsides, which can lead to disastrous outcomes.

So, while confidence is important, be careful not to mistake overconfidence for capability when entrusting someone with your money. A healthy dose of humility and realism is often a better indicator of financial acumen.

5) The indecisive ones

We all know someone who can’t make a decision to save their life. My friend, Tom, is one of those people. Whether it’s picking a restaurant or choosing a movie, he can never make up his mind.

When it comes to money, this indecision can be a real issue. Indecisive people often struggle to make financial decisions promptly, leading to missed opportunities or sub-optimal outcomes.

Famed psychologist William James said, “When you have to make a choice and don’t make it, that is in itself a choice.” In the world of finance, not making a decision is often as impactful as making a decision.

While it’s important to take the time to carefully consider financial matters, excessive indecision can be just as harmful as impulsivity. Delays in decision-making can lead to missed opportunities and potential financial losses.

So, if you’re thinking about entrusting someone with your money, ensure they have the ability to make clear, confident decisions when needed.

6) The excessively altruistic

It may seem counterintuitive, but excessively altruistic individuals can also pose a risk when handling money. While generosity is a wonderful trait, when it’s unchecked, it can lead to financial instability.

The excessively altruistic often feel compelled to help others financially, even to their own detriment. They might lend money they can’t afford to lose or donate more than their budget allows.

As psychologist Jordan Peterson puts it, “You cannot be protected from the things that frighten you and hurt you, but if you identify with the part of your being that is responsible for transformation, then you are always the equal, or more than the equal of the things that frighten you.”

In this context, the transformation needed is a balance between altruism and financial responsibility. Altruism becomes detrimental when it interferes with one’s own financial stability or the stability of a business.

When entrusting someone with your money, ensure they can balance generosity with financial prudence. After all, you can’t help others if you’re not in a stable position yourself.

7) The overly secretive

Trust and transparency are key in financial matters. If someone is overly secretive about financial decisions or transactions, it’s a red flag.

As Sigmund Freud, the father of psychoanalysis, said, “He that has eyes to see and ears to hear may convince himself that no mortal can keep a secret. If his lips are silent, he chatters with his fingertips; betrayal oozes out of him at every pore.”

Remember, when it comes to money, clarity is paramount. Anyone you trust with your finances should be open and transparent in their actions.

Final thoughts

Navigating the financial world is often as much about understanding people as it is about understanding numbers. The way we handle money can be deeply intertwined with our personality traits, habits, and psychological tendencies.

The seven types of people we’ve discussed here aren’t necessarily bad or untrustworthy individuals. We all have quirks and traits that make us unique. But when it comes to entrusting someone with your hard-earned money, it’s essential to consider these psychological factors.

Remember, the goal isn’t to judge or stereotype but to make informed decisions that protect your financial well-being and that of your business. After all, understanding the complexities of human behavior can be a powerful tool in the world of finance.

As you navigate your financial journey, keep these insights in mind. They just might save you some trouble down the line.