Understanding money mentalities to build your wealth

By Jessica Power, Head of International Wealth and Personal Banking, HSBC Australia

The recent HSBC Money Mentality study (the study) uncovered some interesting insights - some people are savers, some are spenders, and others are investors, with each type of mentality demonstrating both good and bad money behaviours.

Understanding your money mentality is the first step to building wealth. Here's how each mindset can thrive financially.

1. The Saver
Savers prioritise financial security – the study found 40% of Australians have up to $40,000 saved. Savers often have strong budgeting habits and avoid unnecessary risks. While this is a solid foundation for building wealth, savers may miss out on growth opportunities if they’re too risk-averse.

Tip for Savers:
Start small with investments and consider building a diversified portfolio. Over time, compound returns can help your money grow without jeopardising your sense of security.

2. The Spender
Spenders enjoy life’s pleasures and aren’t afraid to treat themselves. The study found 55% of Gen Z spent about the same or more of their money on travel and tourism in 2024, despite the cost-of-living crisis. While this mindset fosters enjoyment, it can lead to financial instability if unchecked.

Tip for Spenders:
Set clear priorities for your spending. Create a budget that allocates a portion of your income toward saving and investing before indulging in lifestyle expenses. Automating savings can make this habit easier to maintain and can keep you accountable.

3. The Investor
Investors are focused on growing their wealth through calculated risks. They tend to have a long-term view and are willing to endure short-term losses for bigger rewards.

Tip for Investors:
Balance your portfolio to manage risk. While focusing on high-growth opportunities can be appealing, ensure you have a safety net by diversifying your investments.

4. The Giver
Some individuals prioritise using their wealth to help others, whether through charity, supporting loved ones, or contributing to their community.

Tip for Givers:
Incorporate giving into your financial plan. Set aside a specific percentage of your income for donations or support, ensuring the amount is aligned with your own financial security ad goals. Also consider any tax implications for donations.

No matter your money mentality, the key to building wealth lies in balance. Understand your strengths, address your challenges, and adopt strategies that align with your values.