What would you do with £1 million?

What would you do with £1 million? (pic: Thinkstock)

What would you do with £1 million? (pic: Thinkstock) - Credit: Getty Images/iStockphoto

What would you do if you were handed £1million? The answers can be revealing, says Justin Lavery of Aston Shaw

NFK FEB17 Justin Lavery

NFK FEB17 Justin Lavery - Credit: Archant

Roman philosopher Lucius Seneca once said: “You are your choices”. This is to say, that the choices we make are ultimately what define us as a person. This is also true when it comes to finance. The financial decisions you make eventually determine your financial success, while also revealing something about your personality.

As humans, we are prone to focus on the outcomes of our choices, and this is important. But just as important is how we approach the decision-making process. Once you recognise the style in which you make decisions, it becomes easier to adapt it to a mode more beneficial to the outcomes you wish to achieve.

To find out what your financial decisions say about you, take a look at the question below and pick the answer that best describes the choice you would make.

You pass go and collect £1million, your first impulse is to…

A) Spend it - you were managing just fine before you received the one million pounds, so why not spend it on luxuries?

B) Immediately put it somewhere safe so that it doesn’t get squandered.

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C) Postpone any decision making until you feel less overwhelmed.

D) Begin figuring out ways to invest it in order to get the best possible return.

If you chose…

A) You’re a spender. You enjoy spending money on whatever will give you immediate pleasure. There is nothing wrong with enjoying the things that money can provide, however, a downside to this is that you may find it difficult to put money aside for future purchases and long-term financial goals.

B) You’re a hoarder. You like to save money and you prioritise your long-term goals. You probably set yourself a budget before making a purchase and might view spending money on luxuries as frivolous and unnecessary. The problem with being too much of a hoarder is that you can miss out on opportunities to make a substantial return on your cash for fear of the risks involved with investing.

C) You’re a sidestepper. You tend to put things off and may not be very prompt when paying bills and making necessary purchases. At any given time, you might not know how much money you actually have, how much you owe or how much you spend. It is easy to feel overwhelmed when making financial decisions, but you need to be careful not to let that deter you from making advantageous decisions.

D) You’re an accumulator. You possess the decision-making style most consistent with successful business people. You like having large sums of money to do as you please with, whether that’s spending, saving or investing. You may become bored if you’re doing none of those things at any one time. You probably enjoy making your own financial decisions, so it may be quite difficult for you to relinquish control to financial professionals.

We will always have to make choices, that cannot be changed. However, you can change how you approach decision-making to ensure you make the right decision to achieve the result you want.