Some people have a hard time spending money, while it easily slips through the hands of others. Why is this?
There are a lot of reasons, but a lot of it has to do with our internal motivations and attitudes toward money. For example, I find it easier to spend money on other people than I do to spend money on myself – especially if I am spending money on my children. It’s not that I’m scared of spending money or that I have an overly restrictive budget. It’s just that I usually have a bigger long term goal for my money than buying myself the latest and greatest in clothing/gadgets/cars/fill in the blank.
When you take a moment to reflect upon your spending habits, you will likely learn a few things about yourself. For example, through the years I have learned that I prefer taking a long term approach with my money, and if I do make a big ticket purchase, I want it to be something that I will truly use and enjoy, not just a purchase that was made to fulfill a fleeting emotion.
Your spending patterns often show direct correlations with your priorities and overall financial health. Good indicators of your priorities can be often be seen in the amount and type of debt you have (for example, large amounts of consumer debt), or in your savings and investment accounts. If you are big believer in delayed gratification, you most likely have a larger retirement fund than people who buy things at whim.
Three Types of Spenders
If we want to break things down further, we can take a deeper look at our spending habits. It’s possible to break things down into three general types of spenders. They are:
- Minimalists – Less is more
- Consumers – More is more
- Investors – Spend to make more
Minimalists. If your primary expenditures are only items you need, such as food, clothing, shelter, and normal bills, then you may be a minimalist. There are a lot of great things about living a minimalist lifestyle, and it works for many people. But in it’s truest definition, a minimalist lifestyle doesn’t work for everyone. Abstinence and delayed gratification can be beneficial, but self-denial can be detrimental to your physical and emotional health. Trying to force yourself to do something that isn’t in line with your beliefs or lifestyle is a quick way to being unhappy.
Consumers. Do you think shopping is a sport? Do you go shopping for fun, or to lift your mood? Are you an early adopter of new technology and gadgets? Then you may be a consumer. Spending money in and of itself is not bad. It only becomes a problem when it interferes with your lifestyle or ability to meet your financial obligations or other commitments.
Investors. If you primarily spend money to make money*, then you are most likely an investor. (*excluding normal bills). This includes traditional investing, such as buying stocks, bonds, and other “traditional” investments. But it can also include investments such as rental properties, a small business, education, or anything else where you can receive some short or long term ROI.
We Are All a Little Bit of Each
It’s easy to jump to conclusions and say you are only one type of spender. But most of us are a combination of all of these, at least to some degree. And that is a good thing.
If you live your entire life as a minimalist, you may miss out on some of the things you or your family enjoys. Spending money is good, but not if it means you are living in debt or struggling to make ends meet. Investing is essential for your long term planning, but not at the expense of giving up your ability to enjoy a healthy or happy lifestyle in the present.
A Healthy Balance is the Key
Many people will tell you how you should spend your money – the most common example being that you should cut your spending to get ahead in life. But that is broad, and quite frankly, baseless advice. It’s all about setting and maintaining your priorities to achieve your financial goals. You should spend your money how you like – so long as you are in control and your financial habits aren’t hurting you. Money is only a tool. It can buy you things and it can give you security, but it doesn’t buy happiness.
Which type of spender are you?