How Life Experiences Can Shape the Way You Think and Feel about Money: Savers vs. Spenders
What would you do if you were given $500 right now, no strings attached? Take a moment and think about it.
While there could be hundreds of answers, they are all likely to fall into one of two buckets: you save it or spend it.
This example is just one way to observe how you think and feel about money. But why did you answer the way you did?
Saving vs. Spending Mentality
Savers tend to be “big picture” people. They are more cautious about where they spend their money and are more future-focused.
Spenders are much more willing to take risks. They tend to be more spontaneous with their purchasing decisions and make these decisions based on current circumstances.
Neither of these mentalities is better than the other. It all comes down to a matter of perspective. However, the best financial strategies are found within a balance between saving and spending.
How Life Experiences Shape Your Perspective About Money
You’d be surprised to realize how much your perspective about money is shaped by your life experiences, even from a young age.
How did your parents talk about money? What was your socioeconomic situation growing up? When did you get your first job? When did you become financially independent?
One of our advisors attributes his saver personality to a house flood that occurred when he was only six years old. Even at a young age, he was greatly impacted by the truth that everything you have can be gone quickly. As a result, he leans toward caution in financial decisions.
We have a client who grew up in a large family, and money was always tight. They never had to worry about a roof over their head or food on the table, but there was little room for fancy toys or family vacations. As an adult, they often impulse buy “fun” purchases and like to take their family on big vacations every year.
In both of these examples, our individuals are shaped by an experience that significantly impacted them. It led one to become a saver and one to become a spender.
How Does This Impact Your Financial Decisions?
We encourage both of these mentalities in our clients. By saving and investing, they can strategically plan for the future, allowing them to find financial freedom in retirement and leave the legacy they imagined.
At the same time, it is valuable for these same clients to invest in what matters to them right now. This could be a married couple finding a hobby to increase their quality time or setting aside a monthly amount to generously give to their community.
Learn more about Common Roadblocks with Money Management.
How Do You Think and Feel About Money?
You may already know if you are a saver or a spender, but how do you translate your desires with your spouse, who might feel differently? We use several tools with clients to help them learn more about their financial personalities.
One tool helps you identify why you make certain financial decisions. Do you see money as a means for pleasure or security? How important are the financial needs of others compared to your own? This questionnaire calculates your primary, secondary, and tertiary influences when making these decisions.
We also help you to think about what you want most financially. Maybe it’s retiring early, reducing work hours, purchasing a vacation home for your family, starting your own business, or anything in between. This is especially beneficial for client couples who may have overlapping or differing priorities. It begins a conversation where we can identify long-term goals and short-term steps to reach them.
Want to learn more? We’d love to talk! Our advisors are intentional about getting to know you so they can serve you better.
Schedule a consultation today to learn more about how we can help you reach your financial goals!
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