Marla Sofer
Jan 24 4 min read

Knomee Financial Identity

Knomee Financial Identity

What is a Financial Identity and Why Do I Need One?

The term "financial identity" conjures a behavioral metric easily distilled into a mere credit score – a number that supposedly encapsulates your financial trustworthiness. However, should your financial identity be defined solely for those looking to judge you by your perceived ability to repay credit quickly? And should it only be based on your payment history, borrowing habits, and balances?

Your identity makes you unique, and your finances are a tool for expressing your identity. When you spend and invest your money, it comes alive as a reflection of your priorities, your values, your fears, and your aspirations. Your financial identity, therefore, should encompass all of the multifaceted aspects that define who you are. Exploring and becoming familiar with your financial identity puts you in control of how your money is used, reflecting your purpose in every transaction. 

What's wrong with limiting your financial identity to your credit score?

Credit bureaus like Equifax, Experian, and TransUnion wield significant influence with their proprietary credit score based on your credit and transaction history. While these factors offer providers a way to assess your financial behaviors quickly, they present only the tiniest fraction of your complete financial experience. Your credit score doesn’t help you determine how to invest, spend, or allocate your money. It doesn't actually serve YOU at all. It's a heuristic to help lenders and employers assess you using a limited set of your demonstrated financial behaviors. Late payments and credit applications may tell a story, but they miss the nuances of your personal financial journey. 

Is it my risk tolerance?

If you have ever worked with a financial advisor, you likely encountered the ubiquitous risk tolerance questionnaire. This tool aims to gauge your attitude toward risk and reward, yet it often fails to capture the complex emotions you harbor about money and risk. The questionnaires are often impossible for any human to answer. Are you comfortable with a 10% upside or 8% downside in a volatile market environment? Huh? Your financial identity should capture three aspects of your risk attitudes: tolerance, capacity, and proven behavior in different risk scenarios. Your financial identity captures all three of these metrics. Knowing them empowers you to make decisions that feel right emotionally. 

What role does financial wellness play?

The term "financial wellness" has gained prominence, emphasizing a person's ability to meet financial obligations, feel secure about the future, and make life-enriching choices. Like other aspects of wellness, financial wellness measures your health. A healthy relationship with money has been proven in many studies not to be correlated to the amount of money you have accumulated. For many, financial health and beliefs about money, like eye color, are inherited through the family. If you have experienced financial trauma, your wellness may be significantly impacted. Like any other wellness journey, financial wellness isn't a destination. Instead, it's an ongoing process of self-discovery, goal setting, practicing healthy habits, and maintaining a positive outlook. Knowing where you are in your financial wellness journey is critical to your financial identity and helps those who support you personally or professionally understand your context and needs.

Values, beliefs, and interests are the why of your financial identity.

Today's definition of financial identity often overlooks personal values, beliefs, and interests, yet these things exactly inform your goals and purpose for your money. Your values drive every financial decision – from purchases to charitable donations – and are an intrinsic part of your identity. The more precise you are about your values, beliefs, and interests, the more effectively you'll channel your money into them, demonstrate them, and communicate them to providers whose job is supporting your financial choices. Living your values may be reframed as spending your time and money in alignment with your values. Your financial identity guides you as you leave your mark on the world.

It is your financial identity that helps you achieve your goals.

Your financial goals, akin to your fingerprints, are unique. Knowing where you're going entails deeply understanding where you are, where you came from, and what imprint you're looking to leave once you're gone. Metrics for achieving your goals may only be defined by you. When you reach a savings goal, the feeling you get is enriched when you know exactly what that money will be used for and how it relates back to your identity. 

So, how do I get a financial identity?

Knomee is here for you. We shepherd you through the journey of discovery to articulate your financial identity and use it to help you take control of your future. Start here by taking a financial personality quiz. Reach out to us here! We can't wait to get to know you!

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