You are what you spend

What does your money mean to you - do you splash it or save it? Therapist Dorothy Rowe says personality can be a key to financial fortunes.

"MONEY has moved centre-stage in our lives, beforehand it was just something we earned and our concerns were about getting a pay rise," says Dorothy Rowe, one of Britain's foremost self-help authors and psychologists.

"When I was working in the Fifties and Sixties, we always knew when the next rise was due and concentrated on that. Now we have a much broader focus and more anxiety. It is difficult to find out what is happening and the implications."

We might be richer, but we are more confused about money than ever before. With no shortage of financial experts anxious to help us invest or explain the latest economic theory, we have reached information overload.

"It was only during the Eighties that people started thinking of money in a broader context and all national newspapers, including the tabloids, started carrying financial sections. Money used to be something you left to the bank manager, the chancellor of the exchequer and people who understood about those sorts of things.

"Going abroad for our holidays has meant that ordinary people have had to pay attention to the strength of the pound while the Thatcher government talked all the time about money."

The result is that we are bombarded with figures but have little understanding of our emotional relationship with money. So the time is ripe for Ms Rowe's eleventh book, The Real Meaning of Money.

As any therapist will tell you, the starting point of all voyages of self-discovery is the past. Rowe herself was born during the depression in an Australian coal and steel area, inappropriately called Happy Valley.

"My father was a commercial traveller for a food firm. Towards the end of the week we needed to see what Dad had in his brown leather suitcase of samples for our dinner! It was very difficult for my parents to manage.

"My father was very generous and would give money away, while my mother was a hoarder who tried to make certain that nothing was wasted. Special things had to be hidden and kept for special times."

Rowe's own personal conflicts stretch back to this time. "My father would impress on me that money could disappear and it was nothing you could rely on. He would explain that there were situations where money was valueless - you can't eat it.

"In my marriage, money certainly disappeared very quickly, my husband did not look after it at all. Even though for the past 10 years I haven't had to think about money, in terms of getting from one payday to the next, I still have this idea that money can vanish."

Money will always be misunderstood because we use it in two very different ways: to maintain physical survival and maintain our sense of identity. Unfortunately our need to feed the later can override our better judgement of the former.

"It is difficult to unhook the real necessities from what we just consider are necessities," says Rowe. "Our incomes have steadily increased, but our absolute needs have increased much quicker. I like to eat the very best parmesan from the fromagerie up the street, rather than a packet of grated from the supermarket - it is a difference I just cannot give up."

As a society we may find it easier to discuss personal matters more openly than our parents did, but money is still a very difficult topic, with friends happier to reveal their favourite sexual position than their bank balance. In a larger public arena it is even more difficult.

"It is easier to talk about money with somebody who is on the same earnings band as yourself. When there is a discrepancy, or could be, it becomes difficult because it raises issues of envy and pity. "Being pitied is horrible. It really diminishes you," she explains.

Talking to Ms Rowe, it becomes clear that only by understanding ourselves can we really understand money and what we are doing with it. "Sometimes people are fighting old battles and staving off disasters that are not real," she says. "Of necessity, I've always been a very independent person and had to look after myself; it is a very important part of who I am. Hopefully, when I'm older and need help, I will recognise that this desire could get in the way of what is best for me."

If the key to making good decisions about money is knowing yourself, we might need to think again about who we put in charge. "Although a lot of people today have gone to quite a lot of trouble to become self-aware - unfortunately Gordon Brown is not one of them! Men, in particular, rationalise to avoid looking at who they are. I'm sure we could find the explanation for his tight fiscal policy in his puritanical Scottish upbringing.

"The ideas we overvalue are the ones we over-rationalise and defend to the death. Politicians, in general, are the last people to trust with money because they have no self-awareness whatsoever. In adversarial politics, MPs are forced to lie to toe the party line. What's worse, some of them even lie to themselves and if you lie to yourself you are bound to end up in trouble."

The central theme running through all Ms Rowe's books is that although we can not control events, we can change the way we view them. "What determines our behaviour is not what happens to us, but how we interpret these events. It is something that even well-educated people do not understand."

Her technique involves peeling back the layers of meaning until the essence of our existence is revealed. Ms Rowe calls this effect laddering, each step is linked with the question: why is it important to you that, in this case, you are careful with money?

"If I look after money, I am more likely to achieve what I want," she replies. Why is it important to you to achieve? "It is what life is about."

By understanding our psychological bottom line it is easier to prioritise spending and divide the essentials from what society in general considers important. If we are more honest about our attitudes to money, perhaps we will feel less anxious.

However there is one central problem. "Money relates to the past and the future, and you can only be happy in the present," Ms Rowe believes. "Although you need to think about the consequence of your actions, the secret of a satisfying life is the ability to live in the moment."

'The Real Meaning of Money' is published by HarperCollins, price pounds 7.99.

ARE YOU A FINANCIAL INTROVERT OR EXTROVERT?

1. In a financial crisis, would you find a solution where a) other people like you but won't respect you, or b) others won't like you but you will respect yourself?

2. If you had a small win on the lottery would you spend it by a) throwing a really good party and inviting all your friends, or b) taking a course which would significantly advance your career?

3. When out shopping do you a) enjoy spending and treasure beautiful things, or b) make practical purchases and have a theories about what do with your money?

MOSTLY A

You are a financial extrovert. Enjoying your money today, you are not keen on putting something by for retirement. Extroverts have beautiful possessions like silverware, which introverts think are waste of money, needing too much cleaning - unless they hope to impress their boss! While many extroverts like to achieve, their top priority is to create and maintain relationships. They would rather be active than sit around introspecting. Famous financial extroverts include Nick Leeson (who always looked after his friends) and Ronald Reagan (who always wanted to be liked).

MOSTLY B

You are a financial introvert. Your top priority is having a sense of achievement, individual development, organisation and control. You are good at introspection but not necessarily good at understanding yourself; many male introverts would rather concentrate on theories about the perfect football team. You have a well-funded pension but life can sometimes seem one long grind. By planning the next rung up the ladder of success, you can fail to enjoy today's achievements. Famous financial introverts include Margaret Thatcher.

SECRETS OF SUCCESS

Extroverts and introverts screw themselves up in equal numbers, so there is no advantage in being one or the other. However, by learning to develop the other side of your personality you can have a better relationship with money. A good business or romantic partnership is one of opposites - where an introvert and an extrovert appreciates the other's top priority and abilities - just think of Maggie and Ron. An introvert will create the grand plan while the extrovert maintains good relationships.