Whether you tend to save money or overspend is largely determined by your financial habits. Have you ever noticed that good financial habits come much more naturally to some people than to others?
It’s not all in your mind, but that’s the starting point when it comes to saving. Psychologically, some people are just more geared toward saving than others.
Spender or saver? Five questions to ask yourself
Here are five questions to help you determine whether you’re a natural saver or spender:
- Is the present more important to you than the future? People are often encouraged to live in “the now” rather than worry about the past or the future. However, those who live too exclusively in the present have a hard time seeing the value of saving. After all, the act of saving money is literally trading off benefits today for benefits tomorrow.
- What’s more satisfying to you: instant or deferred gratification? This is related to the first question, but it comes down to what gives you more pleasure – the ability to do what you want, when you want, or the satisfaction of setting and meeting goals. The more you take pleasure from long-term achievements, the more inclined you are to save money.
- Are you susceptible to peer pressure? Keeping up with the Joneses has a great deal to do with the spending habits of Americans. The more important you think it is to keep up appearances, the more likely you are to spend more from your savings account than you can afford.
- Do you think of debt as a natural financial condition? Most people have to take on debt at some time, and there’s nothing wrong with that. However, while some live with it as a permanent condition, others start thinking about how to pay off debt as soon as they incur it. The less comfortable you are with debt, the more inclined you are to save.
- Do you communicate with your family about finances? If you don’t communicate financial goals to your partner or spouse and kids, you are more likely to get into conflicts over spending priorities. The net result of compromising your financial goals every time is that your family as a whole will spend more than it should. It’s important to carve out regular time to thoughtfully evaluate your family’s finances. This not only includes tracking spending habits but also where you will keep the money you’ve saved. Shop around online to identify the banks that are offering the best savings account rates, CD rates, and money market account rates for your hard-earned funds.
Even if you’re a natural spender, you can still acquire good saving habits. You may have to work a little harder at figuring out ways to counteract some of your natural inclinations, but you can make changes for the better if you’re willing to try.