People have different attitudes and approaches to money, according to their lifestyles and income. Be you a spendthrift saver, or a compulsive spender, research shows that both types can learn from the other.
There are also similarities between savers and spenders – a major one being that spenders and savers alike have regrets and fears over missed purchases and opportunities.
Professor Ewan Gillon, the clinical director of First Psychology Scotland recently stated that “our attitude to our money is influenced by psychology… some people don’t spend because of fear – they are anxious people and deny themselves things that could be helpful to them. Others take it to the other extreme, spend more than they earn and get themselves into debt – encouraged by our current culture and the easy availability of credit.”
It is easy to make a spreadsheet on Excel or similar, and track personal finances that way. However, there are many interactive or online tools – for example, free apps such as OnTrees or MoneyDashboard– could help you to see where the money is going. These and other tools can be configured to be linked to bank accounts and credit cards. They automatically categorising spending on the accounts, giving an insight into his much and how often money is spent on social activities, bills, food, clothes and anything in between.
This information can be very helpful, according to Moneydashboard CEO Steve Tigar; “if you monitor your spending over a period of a few months and continue to revise your budget based on the results, you will have a much better idea of how you use your money…. You might want to cut down on the amount of takeaways you buy, but not really know what a realistic goal would be. Start tracking this and you might be amazed at just how much extra money you have left over to add to your savings at the end of the month.”
Setting aside such information, many these days often struggle. Even those with decent salaries can regularly struggle with monthly outgoings. Those can learn budgeting tips and prioritising spending from those who are able to balance their household finances. For those regularly in debt, is imporfant to know that help is available, and that they can feel supported at such times.
There are also those who struggle to spend what money they have, even when spending would improve their lifestyle. Many of those may be suffering from anxiety about the future – or have experienced debt and financial pressure previously. A survey carried out for the BBC by behavioural finance experts discovered that men were much more likely than women to see money as a form of security. A tenancy to hoard, or avoid spending, can often arise. That aside, over a third of people surveyed said that they felt guilty about spending on themselves. Monitoring personal finances, and setting aside some money for little lxuries may help those to spend guilt-free. Those that are hoarding money due to worries about unexpected life events (such as illness) should perhaps consider a form of life insurance to take away the anxiety.
As a final word, Professor Gillon has advice for both savers and spenders. For spenders, he advises to wait a day before making a significant purchase: “after 24 hours your emotions will have changed. If you still want to make the purchase it will be a logical one, not an emotional one.” For savers, and those with anxiety over their finances, Prof Gillon suggests finding someonewhose financial strategy and sense can be related to, admired – and copied. “You’re unlikely to relate to someone at the other end of the ‘saver or spender’ spectrum, so just pick someone whose balance seems better than yours.”