Are you a “Spender” or a “Saver”?

By Ken Teegardin from Boulder, Boulder (Piggy Bank On Pennies) [CC BY-SA 2.0 (https://creativecommons.org/licenses/by-sa/2.0)], via Wikimedia Commons

In my coaching practice, I find most DaVincis (i.e. multi-talented people) are either ‘spenders‘ or ‘savers‘. How you spend money — or don’t — affects your finances, of course. By recognizing if you are a spender or a saver, you can use proven financial tips to better manage your money. How you spend money also affects other aspects of your life. Knowing if you are a spender or a saver will give you insights into the state of balance in your life as well as your approach to your creative work.

First, are you more of a ‘spender’ or more of a ‘saver’? You probably know already, but in case you don’t, consider the following descriptions. Which one sounds more like you?

Signs you’re a Saver:

You minimize the money you spend. Having money in the bank is important to you, so you contribute to your savings accounts faithfully. (Yes, you probably have more than one savings account). You live modesty, within your means. You tend to save up for major purchases, rather than buying them before you have the money available. You pay off your credit card bills in their entirety, every month. Your finances are well organized. You never pay late fees or penalties on your bills. You clip coupons and you buy very few Groupons — just the rare ones you know you’ll actually use. You are probably generous with your friends and family but you seldom spend money on yourself. You rarely splurge. Spending money makes you tense and possibly nervous. You research like crazy before buying…and you probably subscribe to Consumer Reports. You are susceptible to ‘buyers remorse’. You go out rarely. When you do eat out, you excel at bistro math — dividing up restaurant bills, including the tip, fairly and accurately.

Signs you’re a Spender:

When you get the urge, you splurge. You don’t hesitate to purchase something you want — you buy it on the spot, whether or not you have the money available. You might just be a shopaholic. You tend to spend more than you have in the bank. You probably carry a balance on your credit cards from month to month. You probably incur late fees and penalties on your bills. Your finances would benefit from being more organized. You buy Groupons often…and it’s not uncommon for them to expire before you have a chance to use them. You are generous with your friends and family and also yourself. When you’re feeling down, spending makes you feel better. In fact, spending makes you feel very good — possibly even high. You tend to purchase on instinct, rather than research. You go out often and rarely consider the expense. You leave the bistro math for the savers at the table and just plunk down whatever they tell you to pay.

Financial Tips for Savers:

The good news is that your finances are probably in reasonably good shape and well organized. By definition, you no doubt have money in the bank.

One financial challenge you may have is fear. If your frugality is rooted in anxiety about having enough money now or in the future, ask yourself why? What is the source of your financial fears? How realistic are they? What events in the past have affected your beliefs about money?

A second financial challenge you may have is in actually spending money — especially on yourself. You probably deny yourself simple pleasures and treats for no good reason.

To balance your money management, here are some financial tips for savers:

1. Examine your beliefs about money.

How was money talked about when you were growing up? What words or phrases do you remember?
To what extent is your present attitude about money and finances similar to — or different from — that when you were growing up?

As you think about money and finances, how do you feel? Why?

2. How are you treating yourself? Are you enjoying regular simple pleasures? Are you being miserly with yourself? Are you denying yourself things you can afford? Be honest with yourself. What adjustments can you make to treat yourself better, within your budget?

3. Establish a “play” fund — a reasonable amount of money (say 10% of your after tax income) that you must spend on yourself each month. For fun. Guilt-free. Find ways to get play into your daily and weekly schedule.

4. Establish an “education” or “personal development” fund — if you haven’t already, set up a mechanism to invest in yourself. Just as you sock away money into long-term savings as well as specific short-term savings goals (e.g. for a trip or a sofa), set up an account for your personal development. This is money to spend on classes, courses, workshops, books, coaching, skill development, personal enrichment and so forth.

5. If you haven’t already, set up a fund for ‘giving’ — say 5% or 10% of your after tax income. It’s not financially healthy to save save save without circulating your money judiciously.

Financial Tips for Spenders:

The good news is that you probably treat yourself well and invest in yourself regularly.

One financial challenge you may have is in managing your money, including your financial paperwork.

Another financial challenge you may face is in moderating and balancing all the spending you’d like to do.

To balance your money management, here are some financial tips for spenders:

1. Organize your financial paperwork. Here’s how.

2. Put your finances in order.

Would you like to know how you really spend your money? If so, pull out your financial information for the past three months. Tally up how much money you have spent on what kinds of things. Tailor your assessment to make sense for your unique life situation. Create categories that make sense for you (e.g., “work,” “home,” “personal,” “food,” “pets”, “entertainment,” “learning,” “leisure”, “health and fitness,” “travel,” “vehicle,” or whatever else is relevant).

After you crunch the numbers, answer the following:

What do you notice about how you’re spending your money? What patterns do you see?

On what are you spending more money than expected?

On what are you spending less money than expected?
What adjustments would you like to make, going forward?

3. Divide your after tax income into different discretionary funds so that all your financial needs are met. Here’s an easy, proven technique to manage your money.

4. Learn to prioritize. When contemplating a purchase, pause to identify what it is that is really, truly, deeply important to you. Is this a ‘need’ or a ‘want?’ What will be the consequences of this purchase? Rather than reacting to whims and random urges, try identifying what you really want, then devising and implement plans to accomplish your desires.