Last Updated on Dec 14, 2020 by James W

The first step to managing your money is being brutally honest with yourself, especially when it comes to how you spend money. Your spending habits evolve over time as a result of dozens of factors, like how your parents spent money, how your significant other spends money, what your hobbies are and how much wealth you have at your disposal.

Before you can build a budget and a plan to accomplish your financial goals, you need to understand your habits and instincts when it comes to using your money. Then, you will be more adept at developing strategies to overcome your urges and find financial success.

To help you identify your spending tendencies, here are a few common spending styles:


Historically, those with a retentive spending style have been labeled “misers” or “penny pinchers,” but those aren’t exactly ameliorative names. The truth is if your instinct is to retain as much money as possible, avoiding expenditures like the plague, you probably don’t have a healthy perspective on spending. Saving money is difficult and should be applauded, but if you aren’t using your money to improve your lifestyle and well-being, you are doing it wrong.


If you don’t see a lack of money as an obstacle in getting what you want, you might have an inventive spending style. Bartering goods and skills is a creative way to build a comfortable lifestyle, and it can be functional if you have an ability that is in demand — like programming or air conditioning repair. However, being inventive doesn’t mean you can put off learning good spending habits forever because some things must be purchased with real money.

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Those with the attentive spending style use budgeting software to track every penny that goes into and comes out of their accounts. Being mindful of spending habits is a good step toward making smart financial decisions — but it isn’t the only step. If you have this spending style, you need to leverage your knowledge about spending into building lasting wealth.


Incentive spenders tend to be motivated to make purchases based on outside input, like special offers, promotional prices and the like. If you have more than one rewards credit card, you likely have an incentive spending style. The important thing for these spenders to remember is that a good deal isn’t a good enough reason on its own to make a purchase; you also need to need the item or service in your life.


In contrast, impressive spenders want their expenditures to dazzle and amaze. Most often, these spenders have to buy the latest and greatest gadgets as soon as they hit the market, have wardrobes packed with designer labels and have the most expensive cars. It isn’t a problem to be motivated by status and luxury — but it is important that you invest in your image only when you can truly afford to do so. You might need to find a higher paying career or work extra long hours to build this wealthy lifestyle.


Most times, passive spenders don’t particularly enjoy spending money. On the one hand, this improves their ability to save money; on the other hand, it often means that they abhor shopping so vehemently that they are utterly unwilling to compare prices or search for better deals. Paying a higher price merely for convenience isn’t a particularly good spending habit to maintain, especially when it comes to large purchases like homes, cars, appliances and the like.

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If you are all too familiar with the displays of items next to the registers or the “You might like…” suggestions that appear in online shopping carts, you might be an impulsive spender. Impulsive spending is one of the worst spending types because it often entails waiting to the last moment to make purchases or going shopping without a set plan or budget. As a result, those with this spending type tend to feel buyer’s remorse.


Closely related to the impulsive spending type is the obsessive spending type, which is characterized by addiction-like behaviors toward shopping. Obsessive spenders maintain shopping as their hobby, and sometimes spending money helps them combat sadness or feel joy. Scientists have found that spending money can cause the brain to release dopamine, or the pleasure hormone, which means shopping can become a legitimate addiction that threatens all aspects of a person’s life and health. As a result, obsessive spenders should redirect their passion to a safer hobby and gain control of their spending, stat.


If obsessive spending habits go unchecked, they can devolve into the possessive spending style — otherwise known as hoarding. There is a marked difference between buying in bulk to take advantage on deals and stockpiling all manner of purchases without a clear and necessary goal. Unfortunately, possessive spenders tend to hoard credit card debt, too, which can lead to lifelong financial struggles if not appropriately addressed.

Once you know your spending style, you can start taking steps to leverage your spending to improve your financial health. Your personal finances start with you, and knowing yourself better can give you better financial outcomes.

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