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Abstract:
Determine what kind of spender you are based on the characteristics of a reckless spender, a squanderer, a dollar stretcher, a penny pincher, a tightwad or a miser..
I'm often accused of being a "tightwad" by my friends and family. They lovingly point out that:
- When I find a worthwhile coupon, I use it.
- If I can borrow a tool, a household item, or a pair of earrings for a special event, I do.
- If I leave the house for a weekend, I unplug appliances and turn my water heater down to the "vacation" setting
- I group errands together to save on gas
Does this make me a "tightwad"? I hardly think so.
There is a wide spectrum of spending styles and I would say that just because I'm careful with managing my money, I'm far from being a "cheapskate".
I wasn't able to find a defacto published spending spectrum so I decided to turn to the Mariam Webster dictionary to help define some spending styles. By the way, you can now visit www.m-w.com which is the free online version of the Mariam Webster dictionary!
The spending spectrum below ranges from an extreme spender to an extreme saver. The characteristics outlined are simply my observations of spending habits that I've witnessed in people while studying ways to become debt free. This spending spectrum is based on middle-class Americans who work for a living and need an income. I'm not referring to the ultra-rich or very poor in these descriptions.
"I don't know what, they want from me
Its like the more money we come across
The more problems we see."
- Notorious Big, Mo Money Mo Problems
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Go through each type of spender and see which best describes your spending style. If you are looking to tighten or loosen the belt a bit, just review the characteristics of the spending style above and below your chosen description.
"Reckless" Spender (also known as a compulsive shopper):
Pronunciation:
're-kl&sFunction:
adjective1 : marked by lack of proper caution
: careless of consequences
2 : Irresponsible <
reckless charges>
My definition is someone who:
- has no idea how much debt they are in but they keep charging
- is out-of-control with their spending
- is characterized by eating every meal out and hasn't been to the grocery store in weeks.
- has no idea how much money is in their checking account
- has a new top-of-the-line car
- goes on extravagant vacations
- believes that only the best will do
"Squander"er (also known as Big Spender)
Pronunciation: 'skwän-d&r
Function: verb
1 : to spend extravagantly or foolishly <squandered a fortune>
2 : to cause to disperse
3 : to lose (as an advantage or opportunity) through
negligence or inaction
My definition is someone who:
- knows approximately how much debt they are in but keeps buying because "I work hard and deserve it"
- shops for new clothes regularly as a hobby
- enjoys eating out often
- feels obligated to buy their children every new gadget they request
- is thinking about the next new car that they will lease
- never reviews their bank statements because it's depressing
"Spendthrift":
Pronunciation: 'spen(d)-"thrift
Function: noun
: a person who spends improvidently or wastefully
My definition is someone who:
- knows how much debt they're in and they are beginning to feel the cash-flow crunch
- is unaware of how much they pay for their cable bill
- pays for conveniences such as late fees, finance charges, car washes, and fast food
- rarely waits for a sale on anything - now is always the right time to buy
- doesn't know how many minutes they have left for the month on their cell phone plan
- looks at their bank statement and thinks about making a commitment to do something about it
- finds that there seems to always be more month than money.
- has good intentions of going on a budget but always seems to face an unexpected expense preventing them from getting ahead
"Prudent" (also known as a "Dollar Stretcher":
Function:
adjectiveEtymology: Middle English, from Middle French, from Latin
prudent-, prudens, contraction of
provident-, providens --
: characterized by, arising from, or showing prudence: as
a : marked by wisdom or judiciousness <
prudent advice>
b : shrewd in the management of practical affairs <
prudent investors>
c : marked by circumspection
My definition is someone who:
- has credit card debt but has a written plan to get out of debt
- has made a decision to change their lifestyle to become debt free
- recognizes how unexpected expenses are catching them off-guard
- is chipping away at their credit card debt, but hasn't quite figured out how to live within their means
- reaches for their credit card in "case of emergency."
- is consolidating debt into better interest rate accounts
- is beginning to pay cash for everything and leaves the credit cards at home
- negotiates their cell phone package, cable bill, and knows the statement cycle timing of their credit card
- is perfecting the art of juggling cash flow
Thrifty (also known as a smart shopper):
Function: adjective
Inflected Form(s): thrift·i·er; -est
1 : thriving by industry and frugality
2 : growing vigorously
3 : given to or marked by economy and good management
My definition is someone who:
- is definitely living within their means
- knows their income and expenses by memory
- is out of all credit card debt but may still have a car loan and/or house mortgage
- splits their savings between their 401k and a personal emergency fund
- possesses one or two credit cards but doesn't carry a balance on either of them
- looking for buy-one-get-one-free dinner coupons as a special event to look forward to with a friend or spouse
- plans to buy products and services throughout the year when they are at a good price
- considers eating rice and beans, or whatever else is in the pantry, for dinner to avoid spending money at the grocery store this week
Frugal (also known as a "penny pincher" or "bargain hunter"):
Function: adjective
Etymology: Middle French or Latin; Middle French, from Latin frugalis virtuous, frugal, from frug-, frux fruit, value; akin to Latin frui to enjoy
: characterized by or reflecting economy in the use of resources
My definition is someone who:
- is living below their means
- hasn't had credit card debt in five years
- has an emergency fund consisting of six months of their salary
- is maxing out their retirement fund
- is saving for a well-defined luxury such as a vacation to enjoy
- has been driving the same car for at least 5 years because its paid off and he/she doesn't care what the Jones' think about it
- has a strong desire to have their house paid in full
- understands that they can't have all the luxuries of life and the freedom of being debt free too
- knows their favorite clothing store's sale schedule and finds great pleasure in getting everything on sale
- struggles with the thought of paying for a health club membership
Cheapskate (also known as a "penny-pincher"):
Pronunciation: 'chEp-"skAt
Function: noun
: a miserly or stingy person; especially : one who tries to avoid paying a fair share of costs or expenses
My definition is someone who:
- is focused on spending as little money as possible on food, clothing, housing, etc.
- has no debt, including no mortgage debt or car loans
- is really focused on saving as much money as possible, perhaps dreaming of an early retirement
- considers renting out a room in their house for passive income
- has enough money set aside for their next car in cash
- struggles to indulge in luxuries such as eating out, cell phones, or high speed internet
- rarely goes on vacations further than four hours away
- enjoys fixing broken things themselves instead of paying someone; even if it requires them to read an entire book first
Tightwad (also known as "cheap"):
Pronunciation: 'tIt-"wäd
Function: noun
: a close or miserly person
My definition is someone who:
- attempts to repurpose everything they can before throwing it away
- finds pleasure in a simple lifestyle and values the independence that their savings brings them
- rarely buys anything new
- used cars, used furniture, used clothes, hand-me-downs, are commonplace
- cringes at having to buy gift wrap or greeting cards
- prefers to go camping for a vacation
- has become great at finding cheap buys at garage sales
- doesn't eat out unless he/she was invited to a wedding, a family reunion, or a pot luck dinner
- tries not to use their air conditioner or clothes dryer
- leans strongly towards vegetarian meals because it's cheaper not because of moral or health reasons
Miser (also known as stingy):
Pronunciation: 'mI-z&r
Function: noun
Etymology: Latin miser miserable
: a mean grasping person; especially : one who is extremely stingy with money
My definition is someone who:
- is an extreme saver and will sacrifice simple comforts of life because they are obsessed with not spending money
- refuses to turn on the air conditioning even if it's 90 degrees in the house
- avoids turning on any lights in the house unless absolutely necessary
- puts two or more sweaters on instead of turning on the heat in the house
- may buy an investment property so that he/she has a place to go on vacation between rental contracts
- is letting money run his/her life instead of the other way around
- worries all the time whether there is going to be enough money
It's important to strike a balance in life and find a spending style that works for you. More money doesn't bring more happiness. After you determine your spending style, ask your spouse to take the same quiz. Do you and your spouse have the same spending styles? If not, this is very often a point of disagreements. Sometimes understanding each other's financial values and compromising on a style that is agreeable to both of you may help.
Based on the characteristics defined in this spectrum, I may exhibit "frugal" characteristics but I'm definitely not a "tightwad."
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