Natural spender or natural saver?
24 Oct, 2021
I’ve been thinking about the concept of “natural spender and natural saver” for quite some time.
When people email me, they will often reference themselves as being very clearly one or the other. They have popped themselves into a category and then used that to explain their views and actions around how and why they handle their pūtea (money) the way they do.
It’s never sat quite right with me, and it feels too restrictive and concrete to categorise yourself that way.
I say that because if you are born with the trait to be one or the other, how come I get so many emails where people tell me that they have always been a ‘natural spender’, but they have just transformed themselves into a saver. Like, over the course of a week?
If it’s an inherited trait, you can’t just switch from one to the other. Or can you?
This makes me think, if it were natural and innate to be a spender, it would take a long time to evolve into a saver (or vice versa). But people email me repeatedly who have simply flicked the switch and rapidly transformed themselves, usually from spender to saver (I’m yet to hear of anyone going the other way).
But, how can they turn against nature like this?
What gives?
Nature vs Nurture
I think I’ve worked it out, but as with all my blog posts, this is just my opinion, so I’m keen to hear your thoughts and experiences in the comments below.
I only believe in the spender/saver concept up to a point, and I think that we tend to lean in one direction or the other. But the rest is a bit of an excuse; I guess we can easily use it to explain our crappy financial decisions and the behaviours we have built up over a lifetime.
One of my podcast questions asks people what their parents taught them about money. Was it good or bad, do they think?
Without fail, people credit their parents for their financial education or, in far too many instances, lack of it. They say things like:
“My parents were always bad with money.”
“We never had any money growing up.”
In the early years, many parents and caregivers do a stellar job at turning a future saver into a spender by giving them prolonged exposure to poor financial decisions at home.
What I’ve noticed is that, yes, you can lean more towards spending or saving, but the things you were taught at home, and the things society has taught since, have far more bearing on your financial outcomes than the trait you were born with.
We can change direction
We can unlearn the things that don’t serve us well. Our brains are never full, and we can always learn something new.
I think that is why people can change so fast from spender to saver.
People will often say to me, “I always had an inkling that there was a better way of handling money”, but they went through life using the information they had learned to:
Get a job - and spend their entire income
Go to tertiary education - and get a student loan
Buy a car - and get a car loan
Get a credit card - and use someone else’s money
Too many of us are taught that this is the correct way to handle money, but to many, this advice has always felt a bit off, misguided, and WRONG. Ultimately, they didn’t see and feel all of these supposedly ‘good’ actions making their life better; instead, they were living their lives always using their paycheque to pay for the things they had done in their past. To many, it feels like a strange way to get ahead, and they start looking for an alternative.
So, when they are presented with new INFORMATION about simple things such as:
F.I.R.E (Financial Independence Retire Early)
Using a debit card instead of a credit card (because the rewards points were confusing and pointless anyway)
Setting up a better banking structure
Creating a sinking fund so they can pay cash for a future purchase
Paying off debt and not taking on any more because you don’t need to
They RAPIDLY go on a journey of discovery and essentially rewrite the narrative they were taught about money.
The beauty of it is that if you want to, you can change.
It’s entirely up to you!
That’s quite liberating, don’t you think?
Sometimes when I’m having a Phone A Friend chat, and there is repeated reference to how poor their parents were with their money hence the trouble they find themselves in today, I’ll point out that it’s been 30 years since they left home, don’t they think it’s about time they stopped using their upbringing as an excuse? Perhaps it’s time to rewrite the narrative? Maybe it’s time to decide for yourself what’s right for you? They set about re-educating themselves. And it works.
What DO we teach our tamariki?
A frequent comment I hear is, “why didn’t anyone ever teach me about money?”
Instead, I think many children are actually ‘taught’ to be spenders, without their parents even realising it.
I had a neighbour once whose heart was in the right place. She was ‘teaching’ her kids to work, showing them that money does not grow on trees. If they wanted something, well, it would not be handed to them; they had to work for it. After all, that’s what the parents were doing day in day out when they trotted off to work themselves. When they were pretty young, about 13, each child got a summer job, and the money started rolling in. They were made to save up all of their money and set it aside until they reached the amount they needed to buy what their parents refused to buy for them.
Once they reached that goal, they went to the shops to spend ALL of their summer money. And I’m not talking about buying a $2 lolly mixture here. Heck no, I’m talking about the latest phone or motorbike. They worked their guts out all summer long and all they had to show for it, in the end, was a consumer item that plummeted in value soon after purchase.
They were pretty much taught from a young age to live paycheque to paycheque.
Make money. Spend it all. Work for someone else. Wait for the next payday.
Another lesson taught in another household was how to “handle debt”, which is similar to teaching your kids how to smoke. The parents bought a $5,000 car for their teen, and then he got a job and paid it back over the next two years at $48 a week - so for two years, he handed over half of his pay each week. At the same time, there was no thought given to all the running costs of that car, each expense appeared to be a complete surprise and therefore a financial emergency. How to pay for it? Borrow more money off the olds of course! A better lesson would have been to encourage the child to save up and pay cash for their first car, plus budget for all running costs. It honestly horrified me to hear of a 16-year-old being “in training” for taking on debt because today it might be the bank of Mum and Dad he has a contract with, but soon enough it’s going to be a large bank, pay later scheme and student loans. Kids don’t need to learn how to handle debt for goodness sake, we are setting them up for failure if we do so.
I clearly remember earning money and saving it all up and then going and spending ALL OF IT. I also remember feeling dejected when all my money was gone, and the ‘thing’ I had bought was used up or broken. It sucked. I recently had a conversation with a teenager who said they were saving all of their money to buy a new iPhone. Next, they were saving for a car. Earn it, save it, spend it all. A pattern was emerging here.
I always leaned towards saving, but I recall instances where whanau told me that I was a scrooge and a tightwad by NOT spending any money I had available. I was trying to hold some money back in my very early attempts at saving, but if my friends knew I had that money, they pushed me to spend it. Two things happened here; I learned (and have since unlearned) that you don’t talk about money because other people will want it and that you should spend all that you have. I was a ‘natural saver’ being actively taught to spend.
Rarely is there any pressure or information (apart from joining a KiwiSaver scheme, perhaps) to save and invest.
Please teach some more valuable skills
We were each taught a lot of valuable things by our parents, caregivers, teachers and the broader community, and in turn, if we become parents ourselves one day, bit by bit, we begin to teach our tamariki things that we think will help them lead a great life. With constant repetition, we were taught manners, taught not to whack our siblings, taught not to walk out in front of moving cars etc. We were each gently and sometimes forcefully moulded over time to become who we are today.
Money and how to use it is no exception. If in small doses, we repeatedly pass on great money habits to our kids, they are going to stick.
Those who are succeeding financially in life were either raised with some sound financial principles along the Earn, Share, Save, Invest, and Spend lines, or they acquired them as adults.
If you were not taught it growing up, it’s not difficult for those who feel they are ‘born spenders’ to learn better habits. It’s even easier for those who were ‘born savers’ yet taught to spend to flip their financial outcomes.
It just takes a willingness to learn and change.
Are you creating a spender or a saver?
Every time we get our kids to work for money, save up for an item and then blow the lot, we are teaching them to spend all the money they earn, setting them up to live pay to pay. Those who are more inclined to spend anyway take to this approach like a duck to water. Once easy credit enters the picture at the age of 18, they are screwed. It’s like throwing them in the lion’s den. Those lessons taught to a natural saver play out differently, but they tend to save up carefully but STILL spend it all on a purchase. They might be more hesitant, but it’s the same outcome.
Therefore, it is not surprising that we carry this through to adulthood: make money, spend money.
We have inadvertently raised a bunch of spenders. Oops!
Having had the privilege of a bulging inbox at The Happy Saver for many years now, I see when the switch flicks and people who have called themselves “natural spenders” because that’s how they were raised suddenly change to savers.
It was not in their genes to spend; they got educated about spending. As soon as they acquire some new information about another way of handling money, BOOM, they run with it.
So, while I think that we do lean towards one or the other, that’s just a tiny part of the puzzle; the rest is the result of upbringing and education.
How to raise a saver
Be a good steward of your own money first.
A phrase I’ve heard and like is: “More is caught than taught” (Rachel Cruze)
Young people are watching us, so we had better set a good example. That’s what Jonny and I do in our whare. We talk about money a little and often and never with raised voices.
Our homes need ever-present kōrero (talking) about money and discussing daily decisions made with cash. I always say it’s “not a one and done conversation”, just like we were taught to have nice manners; it’s lots of small teachings regularly. And if I were rude to my Mum today (at the age of 47), she would still pull me into line! The learning never stops. It’s not taboo to talk about money, and you don’t stop when they leave home either. It’s just a different conversation and an understanding that they still want some guidance while they get to make their own decisions now. If anything, you should step it up because young adults face a barrage of temptation that you need to help them fend off: AfterPay, credit cards, car loans, student loans etc. If you don’t discuss money with your kids, a friendly credit lender will be more than happy to chat. And it’s not just the topic of what debt to avoid. It’s the simple stuff; like how much is normal to spend on groceries, how much a tank of petrol costs, what insurance you should have. It helps our tamariki build up a mental map of the community around them.
A simple example
We just had a trip away, and when we do, we spend freely, which confuses our daughter. She is used to seeing us live quite frugally at home, so she is confused when we spend so freely while away. I tell her to “buy whatever you want. If you see it, you want it, then buy it as you might not come across it again”. It’s confusing to her as we are measured spenders the rest of the time. But I remind her we save and invest for our future, but we also set aside a portion of money into a holiday sinking fund, and now that we are on holiday, that money is there to use if and when we like. We planned for it; we saved for it, now we get to have fun with it. It’s awesome! See what I mean? We just have lots of small conversations about money. It helps her see how the world works.
I blog a lot about how I help my daughter learn about money, so I encourage you to go back and read those posts too. The gist is this though, for every dollar she earns, she invests 50c. From a very young age, I automated and structured her money so that she has spending money, short term savings goals (sinking funds), long term investment goals (uni perhaps, business start-up money, house deposit?) and retirement. We have weekly conversations as to why, just little snippets here and there. She rolls her eyes a lot! As the years roll by, she and I contribute to these accounts, slowly building them up. Slowly she is learning how to manage her money and seeing that she can spend and have a great life today AND set up a fabulous future at precisely the same time. When she leaves home, she will feel confident that she can manage her pūtea, as will Jonny and I.
For the adults who are reading this and want to transition from spender to saver, automation is the key to ensure you lean more towards saving than spending. Budget your income and expenses, not to limit your spending, but to give your spending some purpose. I say to my daughter that if she invests 50% of her income the moment she receives it, she can spend the remaining 50% freely, in however way she wants, because she knows that she has covered all her other obligations.
For a spender, once you have sent a portion off into investments or to a debt you need to get gone, and you have paid your bills, then you can spend the rest in whatever way you like. Having this control of your money permits you to spend guilt-free. It’s perfectly possible to still categorise yourself as a spender, yet not have it destroy your financial future.
Also, if you are inclined to spend, then investing money ‘for the future’ is meaningless. So, I explain it to my daughter in this way:
You invest money, which in turn, due to compound interest and dividend payouts, makes more money. That’s income, and you can also spend 50% of that income if you want to. So my daughter sees investing not as some deep dark hole of nothingness but as an additional and ongoing source of income.
We are raising both savers and spenders
I talk to parents who have a couple of kids, and one is a saver and the other a spender. Mandy explained this well in this podcast episode, for example. Both of her boys are exposed to the same financial conversations, but both process the information differently.
If you have kids who lean in a different direction, don’t give up!
They just need a bit of extra effort and, dare I say it, enforcement of the family rules around money while they live at home.
Do you think my daughter was delighted to hand over 50% of her pocket money so it could be invested for her unseeable future? Nope! Do you think she got used to it? Yep! Lot’s of kōrero is had about why this is so important. And it’s still ongoing.
For the child who is a saver, keep teaching them, keep encouraging them, they will soak it up. For the spender, just keep showing them where their pūtea and investments are, how it works, how it grows and what portion is there to spend and enjoy now. Perhaps just don’t give them the login details to their accounts until you absolutely have to!
Spenders can learn to save and invest and plan for the future that they can’t yet imagine or see, but it’s something they have to be taught, something they have to work at, and it doesn’t come naturally. Spenders also feel they are making logical and responsible decisions with their money when you and I see that they are not, so just keep talking (not nagging) and hang in there.
You have to be prepared for that carefully educated spender to throw all your wisdom straight out the window as soon as they leave home. But take it from me, that information remains in their head. It might be ignored in the years ahead, but one day, something wakes them up, and they do go back to their roots.
These are the people that contact me. They swerve off the track as is their teenage right, but once they get back on it, having put a few years of living under their belt, WHAM, they are off with an almighty pace. I’ve witnessed so many financial trainwrecks be set to rights.
If you have a child who is a ‘spender’, don’t give up. Keep educating them about sound money management while you have them at home and under your spell. They may well stray from your good teachings, but I’ve noticed that they often come back around to it as the years go by, and they start to reflect on what their elders were trying to teach them while they were growing up.
Opposites attract
Trouble can start when a spender and a saver fall in love. Love can be blind, so blind that you fail to pick up the glaring differences between the way you both save and spend.
The conversation of:
“OMG, he is SO romantic! On our first date, he whisked me away on an all-expenses-paid trip that he put on his credit card”.
Can turn, when you are married, into:
“OMG, what an idiot! He whisked me away on an all-expenses-paid trip that he put on OUR credit card”!
Even more reason to talk about money from the get-go! I don’t recall the conversation itself, but Jonny does, of me asking him on date #1 or #2 how much he was earning and how he structured his money. Yep! In my defence, I’d had relationships in the past with both a rampant spender and a miserly saver, and I knew enough to know to avoid that type of bloke again!
Money issues break up relationships all the time, so save yourself the heartache by chatting about it early, reaching a compromise early, working on your money goals together and before you have the house, kids and cars.
Set shared goals on which you both agree. Even if one of you is more interested in handling the family money (like I am), still keep your partner fully informed and plan to structure your money so that you can both be happy. Give the spender spending money while investing as well, which will keep the saver happy. Don’t overdo either. Find the middle ground.
I don’t think it’s enough to solve your differences by keeping your money apart. That’s pushing the problem under the carpet. I always wonder what happens to those who have never reached a consensus when they both get to retirement age and only one of you planned for it? Are you going to watch your spouse starve or not be able to pay ‘their’ bills? You need this stuff sorted out early on, and combined finances give each visibility of the others spending and saving patterns and let you aim for common goals.
Face facts. You just ‘like’ spending money.
YOLO - I get it; you only live once. Still, for women, that’s going to be till about 84 years old and for men, about 80 years old. Once is a very long time, so the sooner you realise that the excuse of “I’m a natural spender” can get you in severe financial trouble and you become a better manager of your own money, the better.
I spoke to someone recently who likes spending money, and she likes the rush of spending, the brief enjoyment it brings, but it was making her spend more than she was comfortable with and she was missing out on reaching other goals because of it. I asked her to grab a pen and paper and write down my phone number. Why? Next time she was poised over the “buy” button, I told her to ring me, and I’d talk her off the ledge! If her self control were lacking, I’d back her up! I’ve not yet heard from her, which I’m taking as a good sign.
If you are finding it hard to change the carefully cultivated spending habits of a lifetime, find that support person to be in your corner, that person who will encourage you that you can undo what you have been taught and retrain your brain to put your financial future first for a change, instead of that new Ebike or kayak or whatever other things it was you thought you needed. Your desire to have it now comes up hard against a lack of self-control, so get people in your corner to help you do better.
Change your habits, remove the triggers. I visited a family member recently, and they admired a top I was wearing and went instantly to the website to try to buy it. The speed of the hunt was impressive. It was ultimately fruitless though, it was out of stock, BUT had it been available, the time between seeing my top and buying it could have been 5 minutes - dangerous stuff.
So, clear your browser history, unsubscribe to email lists, put more time and distance between you and temptation, and use a debit card instead of a credit card, so you instantly feel the pain of purchase.
It’s never too late to decide to change
The people I meet who transform their lives from spender to saver have one simple thing in common: They decide to change.
That’s it!
One day, they just decide, F**K IT, I’ve had enough of being broke, I’m over it, I’m doing things differently from today. And they do.
They don’t have all the answers, but they have decided to at least go out and look for them, which is what leads a lot of people to The Happy Saver.
People have to want to change and learn new information. You can’t make people do something they don’t want to do, but you can tempt them by modelling good behaviours yourself! If they ask for your help one day, then do it willingly and with an open heart.
Learn something new
I practice yoga. I’m not ‘naturally’ flexible, and it’s taken me years of working on my bendiness a couple of times a week. But I can touch my toes with ease, get up off the floor without using my hands and plank with the best of them. These were things I couldn’t do, and now I can. It took commitment, education, practice and consistency.
Same with money.
Exactly the same.
A commitment to learning something new, a commitment to ongoing practice. A commitment to getting right back on the horse if you fall off it.
Even if it might be true that you are inclined one way or the other in terms of a spender or a saver, it doesn’t give you the excuse that you can’t change. To be fair, kids have it tough; they have less choice about the decisions they make, but once they leave home, the gloves are off.
It’s 100% up to you as an adult to take control of your financial future.
From then on, if you muck it up, don’t blame your upbringing; blame yourself.
And know that it’s within your control to fix it.
I’m calling BS on the excuse that I’m a natural saver or a natural spender.
I truly believe that inside every person who has told themselves that they are bad with money is a person who is outstanding with money, just screaming get out.
Let them out.
It’s so possible because I meet so many people who do just that. They just reach a point in time and say, “I’ve had enough of this; I’m going to change”. From the moment they decide to change, progress is swift.
It’s exciting to be on the sidelines watching the progress. People send me photos of chopped up credit cards, of their new debit card (with an inspirational message sellotaped onto it like “don’t buy it” or “debt-free by 50”. I follow people on Instagram who are transforming their lives and documenting their progress. They sell cars to pay off debt. They pack their lunch. They stop shopping for entertainment. They increase mortgage payments. They pay off their student debt in full. They get a better career. They just decide that they will now call themselves a “natural saver”, so that’s what they become.
A picture of a chopped up credit card sent in by a fellow Happy Saver.
Decide to make a change for the better.
Educate yourself.
Find out what happens.
Only good can come of it.
