Are you a tightwad or a spendthrift? What influences our money habits?

“The most common reason we leave a Peak too soon is arrogance, masquerading as confidence. The most common reason we stay in a Valley too long is fear, masquerading as comfort.” Spencer Johnson M.D., Peaks and Valleys.

Last week we made a call for each of us to strive to be more financially prudent. T. Harv Eker, author, businessman and motivational speaker known for his theories on wealth and motivation said, “There is a secret psychology of money. Most people don’t know about it. That’s why most people never become financially successful. A lack of money is not the problem; it is merely a symptom of what’s going on inside of you.”

Recently I attempted to equate the amount of money I have wasted by paying someone to do something I could have done myself or, having to redo something I would have paid to get done. I am working better at time management and at investing time in areas that save me money.

Recently, I invited a professional to conduct a money management and budgeting session with a group of people. I must admit, during the initial opening I pondered whether I made the right decision. It was not the usual approach. However, to my amazement and that of the participants, he pulled it together in the most unexpected way. Instead of telling participants what percentage of their salary should go towards mortgage/rent, food, savings, etc. He challenged them to work on themselves, the brokenness and hurt so that they could control the compulsion that drives the spending.

In an AARP Magazine article titled “Do you have cheap Genes” subheading: “Being a spendthrift may run in the family” by MP Dunleavey, Scott Rick, a behavioural economist, and professor at the University of Michigan concluded that impulsivity influence people’s real-life money habits. Rick is known for a test called the spend- thrift-tightwad scale: Based on a short survey about your money habits, you rank as either a tightwad, a spendthrift or somewhere in between. From his survey Rick found that tightwads outnumber spendy types by about 37 percent and that men are three times more likely to be cheap than extravagant, while women were split more evenly.

To be wired too much as a spendthrift or a tightwad can be disastrous. Want to know how to curb your spendthrift habits? Here are three suggestions: Identify your triggers. Don’t give in to online envy. Don’t give in to easy credit. Join us again next week for more details.