Are your spending habits hurting you?
Understanding your relationship with money is your saving grace when it comes to improving your finances.
When you consider what money means to you—and why—you realize why you treat money the way you do. For example, if you reflect on your spending habits, what do they look like? Are you an impulse buyer? Or are you frugal?
Oftentimes when we struggle with our finances, it’s because we are either abusing or neglecting our money.
If you’re curious about how your spending habits are hurting or helping your wallet, take this quiz to reveal how you handle money. Then read on to explore how your spending habits can affect your attempts to save and budget.
How do you view money?
We know that money provides access to tangible items such as shelter, food and luxuries like electronics or jewelry. However, money can also guide us to a certain state of mind, like peace, security, etc. This is not attributed to the physical cash itself so much as it is the ideals that we assign to it. In a perfect world, essentials and indulgences would be the standard for every human being; and yet money is unfortunately the determinant for how we either enjoy or struggle in life.
Because of this, our relationship with money can fluctuate depending on our psyche and incessant need for the things money can buy (see: shelter, food and etc.). How we use money once we obtain it unveils our money mindset, and that mindset is determined by three things.
● Emotions
● Anxiety and/or Stress
● Childhood and Current Lifestyle
These three components create the five types of spenders: Spenders, Shoppers, Savers, Debtors and Investors.
The category you relate to (and you can fit into more than one) the most may explain how you view money, as well as how to reflect on improving your relationship with it.
● Spenders
You are frivolous with your money and enjoy buying and spending. Regardless of the price tag, you make it a point to indulge in the things you want, usually new “must-have” items such as a phone, pair of shoes or video game console. You often disregard the financial setback and/or debt it will leave you in.
● Shoppers
You are emotionally attached to a sale or bargain. You enjoy spending money, but only if you can get away with what you deem “good” savings. You’re not as interested in big ticket items like the newest iPhone or car like Spenders, but you’ll go all out in a clearance aisle.
● Savers
You are extremely economical with your funds. Right down to using cold water to wash your clothes and making sure to turn off the lights in the rooms of your home you’re not in. You are the opposite of the Spender and Shopper because you don’t enjoy spending money, even when you have to.
● Debtors
You neither enjoy or dislike spending money. For you, it’s just something that happens when it happens, and you rarely check your expenses. For this reason, you don’t keep a close eye on your bank account, and often find out about your overdraft fees or debts on your credit cards when it’s too late.
● Investors
You’re very calculated about your spending. You make your money work for you. You have a tight grip on your finances, and you use the majority of them to invest in equity markets like stocks and binary options. You expect your money to yield high profits so you can afford to make a living.
Know thyself and thy wallet.
The type of spender you are correlates with your money mindset. When you review the events of your life, individual events and long-term circumstances produce elements of your personality and characteristics, as well as your relationship with money. For example, someone living paycheck to paycheck may become a Shopper because they want to be able to treat themselves. Or someone who’s accumulated a vast amount of wealth may be a Saver because they refuse to part with the money they’ve worked to make.
These traits can be harmful to your outlook of yourself and money. For a healthier relationship with money, consider what molds who you are and your money mindset (see: emotions, anxiety, lifestyle, etc.), and live and spend with intention.
For Spenders
Review the value you place on material and trendy goods. Ask yourself, “Do I need this as much as I want it?”
For Shoppers
While a flash sale can earn you savings on an item you’ve coveted, don’t spend any money you know you don’t have.
For Savers
It’s great that you value money, however, it’s okay to live a little.
For Debtors
You need to become more conscious about your finances as soon as possible. The sooner you do this, the better (and more responsible) your relationship with money will be.
For Investors
You are doing an awesome job managing your money, but make sure you don’t risk more than you can afford to lose.
If you identify with one or more of the five types of spenders, it may be time to consider working with a fiduciary.
Schedule a complimentary discovery call with Fyvie Financial to know more about how your spending affects you. We’ll match you with one of our financial advisors to improve your behaviors and income.