88: Are You a Spender or Saver in Life & Biz?

As entrepreneurs and business owners, money is a huge part of our everyday lives — from the few bucks we spend on that morning latte to our home expenses and how we use it to invest in new hires for our business. We all have a different experience with money, and most of us have different “money styles” than our loved ones or business partners. Why is that?

Well, we think it’s because most people boil down to one “type”: a Spender or a Saver. Now, we know this is a generalization and that we all have a little Spender and a little Saver in us. However, we think that, in general, people lean more one way or the other. We also think that your “type” dictates a lot about how you work with others, whether it’s a spouse or a business partner.

Do you know which type you are? Listen to this episode of Worth It and read on to identify your “type” and to get some tips for how to work with your type (and your partners who may be the opposite). 

WHAT YOU’LL LEARN 

[01:43] The spending styles of Dustin and Danielle (and their partners)

[09:46] What role childhood plays in your spending or saving style

[12:50] How spending/saving types affect business partnerships

[14:17] Considering when to spend on things like new hires and tools to grow your business

[15:11] Why Spenders may be able to grow faster in business than Savers

[15:45] The tendencies of a Spender

[17:25] The cycle of Spenders’ guilt

[19:37] Why a “certain standard of spending” is hard to come back from

[21:16] The tendencies of a Saver

[23:14] The downside of being a Saver when it comes to building long-term wealth

[24:03] How to know where YOU fall on the spectrum of Spenders & Savers

[24:34] How the differences in spending/saving types play out IRL

[25:57] Navigating a business relationship between a Spender and Saver

Tendencies of Spenders and Savers

When it comes to saving and spending, many of us believe we’re somewhere in the middle. You can spend when the occasion arises, but you save if you need to. But we think that, in general, we all fall closer to one side of the spectrum. So… which type are you? Below are a few signs you might be a Spender or a Saver.

Spender: You work hard and believe that makes up for/gives you license to spend as you see fit. You don’t (usually) worry that money will run out. You may make hasty spending decisions and wonder why you spent so much later. Prompt: Do you look at prices on a menu before you order? Do you want to buy the most expensive thing on the menu because “it has to be good”? 

For example, Dustin is the Spender in both his marriage and his business (you’re shocked, we know!). This means he tends to order the Surf n’ Turf at any restaurant he visits and he loves spending money on high-quality items that will last a lifetime. He does tend to spend a lot of money easily and sometimes worries he’s spent too much. But he works really hard and makes good money, so he feels he is justified.

Saver: You’re afraid the money is going to run out. You may have had a situation in childhood that made you feel there wasn’t enough money. You compensate for others’ spending tendencies, especially if you have a life or business partner. Prompt: Do you find the lowest-priced item before you decide what to order from a menu? Do you limit going out because you worry about spending too much?

Danielle has always been a Saver, although she can spend money where necessary (and sometimes just for fun). When she does spend, she usually has buyer’s remorse, aka spending guilt. She remembers her dad talking about “tightening up” on spending when she was younger, and worries there won’t be enough money down the road so she shouldn’t spend now. She’s also the Saver in her marriage and feels the need to spend less if her husband spends more (her dream dining table notwithstanding). 

Of course, these are by no means the only examples Spender and Saver personalities; it’s just what we’ve seen in our work and lives. Now that you have a general overview of Spenders and Savers, let’s talk about how these play out “IRL.”
 

How Spenders and Savers Interact With Life and Business Partners

While we’ve talked before about spending vs. saving, we haven’t really talked about how this plays into your relationships or how it affects your business. That’s why, on this episode, we talked about the different “roles” Spenders and Savers play in their romantic relationships and in their businesses.

Because “opposites attract,” there are often Spenders and Savers in the same relationship — whether romantic or business. This balances you both out well, but it can also lead to problems. For example, Spenders may feel “looked down on” by their Saver partners, or rebel against the restrictions a Saver puts on spending. 

Savers, on the other hand, might feel like “The Bad Guy,” always imposing rules or shooting down new ideas that require a large investment. They may also feel resentful that they “can’t” spend as their Spender partner does. Overall, though, they have a practical mindset when it comes to money and believe that they balance out the Spender in their relationship well.

In both cases, working together to talk about your decisions can help balance you out well. Communication is key when you have different personalities and values. It’s also important to work together to cultivate the view of “investment” instead of “spending.” When Spenders and Savers think of spending, they have two different reactions. Whereas, if they focus on what they’re investing in, they may have an easier time finding middle ground.

We also talked about how Savers and Spenders have the same weakness: building wealth.
 

Spenders & Savers & Wealth, oh my!

You’d probably think that it’s just the Spenders who aren’t able to build wealth. But it’s actually both Spenders and Savers equally — and sometimes it can be even more of a problem for Savers. How in the world!?

Well, Spenders obviously spend too much and don’t save (or invest). But Savers often save too much — and put money in places where it’s actually not doing them any good. For example, many Savers are afraid to invest in things that make their lives or businesses better. We’re talking about the new AC unit that will help reduce your monthly energy bill, or that new hire who will help you scale your biz. Spenders may also put all their cash in a low-interest savings account, when they could actually invest those funds and accumulate compound interest that builds wealth.

As a general rule of thumb, both Spenders and Savers should be saving or giving 25% of their income. Once certain “funds” are funded — like your emergency funds and any short- and medium-term saving goals — you can start investing your money. For Spenders, this may take a while if they’re not used to saving anything. For many Savers, though, it might be feasible to start investing sooner because they have already built that habit of saving. The key here is to not just keep saving in a basic savings account. You want to build wealth, not stagnate it!

For more tips on how to build wealth based on your spending or saving type, check out this episode of Worth It. You can also see all the resources we referenced in the show notes below.

 

This material is for general information only and is not intended to provide specific advice or recommendations for any individual.

 

Resources & People Mentioned Our FREE go-to financial and life planning resources The Toujours Planning Quiz — Are we a good fit for your financial planning needs? Adulting 101 Series: Life – Episode 83 Spending vs. Saving: Mindset and Differences - Episode 67