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Are You a Spender or a Saver? Why? | Cash Coach

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Lauren Szeto
Spender or Saver money mindset

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This is Part 9 of the series Money on Your Mind. We want to help expand financial education and make you the best at saving money. We all have different financial personalities, some of us like to spend, some of us like to save. Why is this? And how does it affect our money management?

I’ll admit that I can be a bit of an emotional spender. If I’m feeling down, that pint of ice cream and new makeup brand look equally appealing to try. While I actively try to work against this habit, the gratification spending gives me is a temptation that is often hard to resist. Given my personal habits, I was surprised when I found out other people can match the satisfaction I get from spending when they save money! Now, a question arises: are you a spender or a saver?

What Makes Savers and Spenders Different?

Dealing with money is an inherent part of existing in the modern world. It connects almost every part of people’s lives including work, hanging out with friends, and even just maintaining basic human needs like food and shelter. Obviously, everyone is different. Knowing how deep-rooted money is in our lives makes it easy to see why money can be such an emotionally charged subject and why people have vastly different mindsets when it comes to spending and saving.

There are two main buckets that people can be categorized as: spenders and savers. What’s the difference? Typically, spenders tend to get more pleasure from spending money, while savers feel more gratified from saving up. The real enigma is understanding why a difference between the tendencies and feelings of the two groups exists in the first place.

The answer is surprisingly simple: your mindset. Your mindset dictates how you feel about money, and thus how you spend it. A study published in 2019 details that spenders tend to treat money as a “means to an end,” while savers consider money as “an end in itself.” In other words, spenders see and will utilize money as a pathway to achieve goals, while savers are more attached to their money and see the possession of money as the true goal.

Analogously, another study asserts money has two main attributes. Money can be used as a tool to accomplish tasks and objectives, but it can also be considered a “drug” due to its personal value and gratification during acquisition.

Spenders usually focus on the benefits of their purchase, rather than the money they have spent. On the other hand, savers tend to focus on the fact that they are losing money and can downplay or lose sight of the advantages of their purchase.

Your Financial Personality and the Brain

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Whether you’re a spender or saver will impact how your brain deals with money. Both spenders and savers activate a part of the brain called the **medial orbitofrontal cortex,** which helps dictate how willing you are to commit to a purchase.

Money mindset: spender or saver

If you’re a saver, you may naturally steer away from spending because spending money can be somewhat of a fear. Parting with money can be painful, and I mean this literally when it comes to savers. The insula, a part of your brain that reacts to pain, disgust, or fear, lights up more when savers make a purchase. Knowing that there is a physical difference in the brain’s reaction of savers and spenders, it makes sense why savers experience more fear when shopping than spenders do.

Since money can instill powerful emotions of fear and pain in savers, it also makes sense that money has an opposing effect on spenders. Even if spenders previously decide against a purchase, the final decision to make the purchase can be extremely tempting to spenders and influence them to make a purchase on the spot. Spenders don’t feel the extent of the pain and restriction that savers feel, pushing spenders to buy more.

How Can This Impact Your Life?

Whether you have saving or spending tendencies can influence your life past your financial decisions. Another way money is ever-present in your emotions is by participating as the link to the perception and ranking of others. Let’s say your friend introduced you to his friend, Penny, during a nice (and overpriced) Sunday brunch. Instantly, you notice she is well put together and is courteous enough to reach for the pricey bill without hesitation. While spenders will likely first take note of Penny’s gold earrings and Louis Vuitton purse, savers will likely focus on how easily she paid the entire bill.

Saver vs Spender

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People, especially savers, will often associate a person’s financial state with success and status. Spenders place more judgement and emphasis on the items that people own as an indicator of wealth. To both people, Penny will likely seem like a successful person, which can subconsciously increase your approval of her as a person.

Similarly, spenders and savers may naturally gravitate towards people of their own type. When a person buys expensive items, spenders will likely judge the person to be more successful compared to savers who will value financial status over appearance.

This doesn’t solely apply to your opinion of other people, but also the opinion of yourself. You’ll tend to have boosted confidence and a feeling of security when you save money or purchase the items that you feel add value to your life.

It’s pretty clear how being a spender can definitely be negative for your finances. When spenders choose to purchase unnecessary items or impulse buy, the bills add up. The build up of purchases, no matter how small, can be extremely detrimental and normalize bad purchasing habits in the long run.

Savers, unless excessively frugal, usually enjoy greater financial freedom. Research shows that they are usually less satisfied, as budgets and the personal pressure to save money can often feel restrictive. This drives them to set more ambitious financial goals than spenders.

What Should I Do Now?

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Identifying whether you lean more towards a saver or a spender can show you where some of your financial weakness may lie. However, it is likely that you are a mix of both.

are you a spender or saver?

When you make a purchase that aligns with your interests and core values, you’ll feel that the purchase was valuable and worthwhile. On the other hand, when you find out that you only have to pay $5 instead of $15 for that sandwich you’re buying, it’s going to taste considerably better. These tendencies are definitely not exclusive to just spenders or savers.

While budgets can feel suffocating, remind yourself that saving up brings a sense of safety and confidence in your future. Purchasing items may bring a quick rush of adrenaline, but without focusing less on materialistic goals tends to lead to less stress and a greater feeling of financial freedom.

Equally as important, spending on quality items can be a necessary and long-term money-saving tactic. To avoid the fear of large purchases, take a cooling period to make sure you really need the item you are about to buy. Additionally, doing extensive research into your specific purchase can assure you that the purchase you are about to make is worth it.

For both spenders and savers, planning a certain amount of money every month to be spent for enjoyable activities or items can mitigate the fear of saving money and allow you to control how much you spend in this category if you set a hard limit.

Overall, it is vital to keep reminding yourself of both reasoning behind each mindset to maintain a balance between your spending and saving habits.

If you are interested to learn more about money mindset we invite you to read about “Optimist or Pessimist? money mindsets” as well as the rest of our Money on your mind blog series.

Whether you consider yourself a Spender or a Saver it is important to always have control of your finances! Cash Coach is a free gamified financial app which is here to help you start your financial journey and become the best at saving money. Download now on the App Store or Play Store!

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