You’ve probably heard endless experts tell you how to create a budget, save for retirement, and finally pay down your credit card debt. It seems like everyone has a surefire secret plan that will change your finances forever. What most of the experts miss, however, is that a person’s money troubles aren’t just about failing to follow a “foolproof” plan, they are a result of that person’s individual money style.
Just like people have different learning styles, they also have different money styles. By identifying your money style, you can learn areas of financial weakness and strength and even use your style to help you make better money decisions. The three primary money styles are Hoarder, Splurger, and Avoider. Which are you?
Money Hoaders – Mine, Mine, Mine!
Money hoarders often think that they are excelling in the financial game. After all, they can proudly point to a savings account stuffed with cash. They love coupons and discounts and have an extremely strong tolerance for delayed gratification. Spending big is painful and is something many hoarders try to avoid. Call them penny-pinchers if you want, but at least they aren’t likely to be living with huge debt.
Living With Your Money Style
Money hoarders do a lot of things right. They aren’t swayed to buy lots of useless stuff that they don’t really need. They will also take the time and effort to sniff out really good deals. This means that they aren’t likely to rack up lots of debt. They are also likely to have a rainy day fund, save for retirement, and be able to face surprise expenses.
However, too much of a good thing can actually be bad. You should never get to the point where saving money becomes its own goal. Money hoarders can get in trouble when they deny themselves fun experiences and enjoyable little splurges for fear of the expense. Don’t be afraid to eat out at a nice restaurant, see a show, or take a vacation. These are the experiences that make life worth living.
Money Splurgers – Oh, shiny!
Money splurgers, you know who you are. You accidentally flip the channel to QVC and before you know it, you’ve just spent half your paycheck. Who can blame you for liking nice things? You want to buy what you want, when you want. Unfortunately, while this behavior means that your wardrobe and shoe collection are unbeatable, it also means you’re hopelessly drowning in credit card debt and have more dust than coins in your piggy bank.
Living With Your Money Style
Your money habits probably drive your money hoarder spouse (or friends) crazy, but there are some upsides. You know how to live life to its fullest… even if you can’t always afford it. This is a fun way to live… until you get your credit card statement or look at the paltry amount in your 401(k).
Money splurgers often have trouble saving for the future and struggle to stick to a budget. Fortunately, just by knowing your money style, you can put systems in place to temper your temptations. Money splurgers should consider setting up automatic payments from their paycheck into their 401(k) or IRA accounts each month as well as into their rainy day fund. Another great tip is to only use your debit card when you shop, instead of a credit card, or to request a credit card with a low limit to keep your spending under control.
Money Avoiders – I Don’t Know What You’re Talking About!
Money avoiders, if you’re reading this article, then good job! You’ve already taken a big step. Money avoiders come in lots of different shapes. Some grew up poor and always resented money. Others simply never learned good financial skills. Then there are those who simply have no interest in thinking about money at all. It all leads to the same outcome. Money avoiders often end up broke at the end of the month and have no idea why. Budgeting is something other people do, and as for the future… who needs retirement anyway?
Living With Your Money Style
Just because you avoid something doesn’t mean it will cease to exist. Money avoiders often get into trouble when a surprise bill hits. Money avoiders are the least likely style to put money into a rainy day fund or to save for retirement. They are the ones who can spiral into debt when the car breaks down and there’s nothing in the savings account. Money avoiders also often have to work long past their retirement years because they didn’t plan ahead.
If you are a money avoider, it’s time to face your demons. Figure out why you have such a negative relationship to money. Do you feel overwhelmed by it? Are you confused about how to budget or invest? Know that there are resources everywhere, including lots of them right here at WIFE that can teach you the basics. Best of all, you only need to focus on implementing a few good money habits (many of which can be automated) in order to start on the path to financial freedom.
Not sure of your money style? Take our money style quiz.
Money styles are one of the many topics our Money Clubs discuss. If you need help identifying and addressing your money style, consider creating your own Money Club. It’s fun, free, and will help you achieve your financial goals!