Are You A Spender Or A Saver?

I am quite opposite to my best friend: I am frugal, thrifty, and cost-conscious, while she is lavish and generous with her spending. However, at the end of each month, both of us end up disappointed about our financial results. On one hand, you have me wondering why I spent a lot, because the numbers on my account doesn’t approach my monthly saving goals; on the other hand, my broke bestie is expecting to cover up her debt with next week’s paycheque!

Just as how we stand on the opposite ends of the spending/saving spectrum, we often argue about each other’s financial habits. I am highly critical of my friend’s spending habits: she has multiple credit cards, with which she spends on clothes, cosmetics, and takeouts every month, in addition to her fixed expenses. She is also fond of charity and donates to several charitable foundations, which she feels caters to the causes she stands for. She lives paycheck-to-paycheck and borrows from friends often.

Myself on the other hand, is an aggressive saver, and a compulsive budgeter. I save atleast 25% of my salary, which I invest in the stock market. I spend my free time trying out different side gigs, and try to buy used/non-branded items, depending on the frequency of their usage. Due to my under-privileged upbringing, I am not an emotional spender, so charity doesn’t appeal to me. I am often approached by peers asking if I could lend them some money, which they return later with interest.

We are both critical of each other’s spending. My friend claims that I am too stingy and am lacking much needed leisures in life. She believes that bigger brands offer more quality, and advices me to buy more branded items for personal use. She also feels that investing in stocks and crypto are like gambling, and that I should rather donate to organizations that promote ethical practices. On the contrary, I am always criticizing my friend’s expenditures. I find no interest in all the Gucci, Prada, and Gap that she blows her paycheque on. I always tell her that the money she spends on charity doesn’t reach the right hands…

In this scenario, my spending habits reflect savings and investments, while spending and donating are the characteristics of my friend’s financial outlook. And these differences in our economic behaviours have caused heated debates. People spend money differently, just as they choose to earn and save it differently. These habits are often influenced by experiences of childhood poverty, family background and religious outlook, lifestyle choices, etc.

Based on attitudes towards money, Diane McCurdy, a Canadian financial planner and author, explains how people can be categorized into four financial types:

1. The Saver

These are the type of people who take extra time while shopping, because they keep thinking and rethinking about their purchasing decisions. Often seen with their bagged lunches at work, they tend to be the best budgeters out there, who are keen in adding more digits to their bank balance. They spend time looking out for coupons and deals, while shopping at the boxing day sale, on a fixed budget.

Savers tend to remain middle-class, and unless they make up their mind to invest the money that they’ve accumulated, they can never become wealthy. But overall, they experience fewer financial crunches in life.

2. The Spender

They are totally opposite in terms of spending habits as compared to their saver counterparts. They crave the latest of everything: the brand new line of perfumes from their favourite brand, latest gadgets, etc. Spenders often pay extra to get additional features on their purchases, which may or may not be necessary. They can be quite brand-conscious and are mindful of the car that they drive, the house they live in, the vacations that they take, etc.

They often end up broke (even after winning the lottery), and if even they earn high salaries, they tend to be financially “under-achieving”. They can be anywhere between lower and upper-middle class.

3. The Giver

They make up the majority of the volunteers and charity donors with well-dressed grandchildren! They often have religious upbringing and attitudes towards money, and sometimes live by religious messages like “Money is the root of all evil”. Givers also tend to support the brands that they feel, stands for good causes like charity, such as, educational funding in third world countries, poverty eradication, animal cruelty, etc.

Givers come in all economic classes, however, they have trouble climbing up the ladder due to regressive and stubborn attitude towards wealth-building.

4. The Builder

They invest their hard-earned savings into crypto, stocks, or a business, rather than letting the money remain in their bank accounts. Their monetary goals are more long-term, and are focused on building long-lasting passive incomes and financial pipelines. They are risk-takers, and tend to be “over-achieving” in terms of wealth-building, and make up the majority of the business people.

Builders, on average, are the most successful in accumulating wealth in comparison to savers, spenders, and givers. They end up anywhere from upper-middle class to ultra-rich, towards their retirement age.

The categories mentioned above are solely based on the attitude towards money and its accumulation. Even then, individuals tend to have conflicts with others whose money style differ from theirs. Like if a spender and saver were to know each other, you’re going to get fireworks! So does that mean we should never get along? No, I strongly believe that each financial group can learn something about different monetary attitudes from each other!