What's in Your Wallet?

By Tamara Holmes

Your wallet is stuffed with crumpled currency and raggedy receipts while loose change clutters the floor of your car. That doesn't have anything to do with your ability to build a sound financial future though, right?

Wrong. The way you handle your day-to-day cash speaks volumes about your money personality, according to personal finance experts.

"Our outer financial life is really created and deeply affected by our unconscious beliefs about money," says Brent Kessel, author of "It's Not About the Money."

So how do you know what your beliefs are? Think about how you keep your wallet:

Money's there ... somewhere -- You have money in your wallet, but you never have any idea how much. But who cares, if you can't find it or can't find enough, just whip out one of your many credit cards or debit cards.

"Such behavior is what I call the 'head in the sand' -- an ostrich," says Manisha Thakor, a Chartered Financial Analyst and co-author of "On My Own Two Feet."

People who don't know how much money they have in their wallets may also be unaware of what's in their bank accounts or even their 401(k)s.

"These are people who are afraid to see what the reality of their financial situations is," Thakor says. "You may know where the pile of bills is, but you just don't want to open them."

However, there's a danger in this behavior. You may be tempted to overspend or even pull out a credit card if you aren't aware of how much you have available, says Patrick P. Astre, author of "This Is Not Your Parents' Retirement."

The key to changing is biting the bullet and facing your finances, says Thakor. You may not have as much money as you wish you had, "but it's really empowering if you know where you're starting from," she adds. Try keeping a written tally of how much money you have (and how much you owe) to get comfortable with your financial situation.

Running on empty -- Your wallet is usually empty because you can't seem to keep cash in it for long. No matter how many times you go to the ATM, you'll find yourself staring into an empty wallet again very soon and wonder where the money went. Similar to the person whose head is in the sand, this is the person who is making money but they have no idea where it's going, says Astre.
However, unlike the "head in the sand" personality type, this person likely wants to know where the money is going and may be frustrated by an inability to stop spending. The key to changing is to start paying attention to the things you do, advises Astre.

"Be aware of your spending patterns and keep a notebook," he adds. While you may not change your spending habits overnight, take a realistic first step, telling yourself: Within three weeks, I'm going to know exactly where my money goes.

Chaotic cash -- The bills in your wallet are all crumpled up and in no particular order. There's change in the bottom of your pocketbook or even in the floor of your car. Someone who treats money cavalierly often does not respect money or may not even care about finances, says Thakor. If you leave money around, you're basically saying it's not important enough to put it in a safe and protected place.

Sometimes that lack of respect comes from a subconscious level, says Astre.

"Very often people sabotage themselves because they think they don't deserve money. It's a thing where, 'my parents worked hard all their lives and now I'm making $150,000 and I don't deserve it.' So subconsciously, they sabotage themselves," he says. The key to changing this behavior is recognizing the buying power of the money you've been discarding. Try adding up all of the miscellaneous bills and coins on a regular basis. You might amass enough money to start giving your "spare change" a little respect.

Unruly receipts -- Your wallet is stuffed with receipts, but there's no sense of order to them and you never really do anything with them. This is the person who is trying, says Thakor.

"You want to know how to keep tabs on your money -- otherwise you would have thrown the receipts away. But you just can't take it to the next step to get them all organized and do something with them. You are like the person that buys all the latest exercise equipment but doesn't get around to using it," she says.

In order to change this behavior, you've got to get organized. Take a day to come up with a filing system for your receipts so you know what to do with them at the end of the day. If you're never going to use the receipts to track your spending, what's the point of keeping them in the first place?

File-folder funds -- All of the bills in your wallet are lined up from largest denomination to smallest (or vice versa). You have an idea of how much money you have at all times and you know what's available to spend.

"These are the people who have a firm grasp on how much they are spending and how much they are saving," says Thakor. If you exhibit this behavior, you probably have good financial habits. However, there still may be some potential for financial misteps.

Taken to the extreme -- having all the dead presidents right-side up and facing the same way in order of date, for example -- could mean you "could have a problem allocating enough money toward fun," Thakor says.

Identifying what your behavior is telling you about your beliefs about money is only the first step. Continuing to monitor your financial habits is key, says Kessel. Make note of the changes you make to your behavior as well as the times you fall short.

"One of the biggest mistakes people make is they think, 'now I have this new wisdom about my money life and therefore my problems are solved,'" says Kessel. Change takes time, Kessel advises, "but the moment you have a new awareness about what was driving your money behavior, your thinking begins to shift."