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Have you ever thought about what your money tendency says about your spending habits? In her book, Know Yourself Know Your Money, Rachel Cruze identifies 7 money tendencies that we all naturally have.
For each of these tendencies you can be one or the other, or somewhere in the middle. Neither of them are good nor bad, it’s just how you are naturally wired. Knowing your money tendency can help you understand your spending habits, as well as how other people in your life spend their money.
1. Saver or Spender
The first money tendency is saver or spender. When you have some extra money do you stash it away for later or spend it right away?
I am a natural saver. Ever since I was a kid I would stash birthday money away, sometimes forgetting about it until later (which was really exciting!). For spenders, they have a hard time holding onto money. They need to send it right away.
2. Nerd or Free Spirit
The second money tendency is nerd or free spirits. Nerds love to crunch the numbers and do the budget. Spreadsheets are their love language. Free Spirits have no interest in crunching the numbers but that doesn’t mean they can’t follow a budget. I am a total nerd when it comes to budgeting! I love seeing the numbers and making the budget.
3. Experiences or Things
The third money tendency is experiences or things. What do you like to spend your money on? If you would rather go to a nice restaurant, or enjoy a spa day, then you prefer experiences. If you prefer tangible items then things are more important to you. People who prefer experiences over things can still enjoy buying nice things and visa versa.
For me, I prefer experiences and building memories. I think this has become more important as I get older and each year our house gets fuller and fuller with Christmas toys. I would rather go do something special than fill our house up with more stuff. But I still enjoy nice things and have a wish list of furniture for the house.
4. Quality or Quantity
The forth money tendency is quality or quantity. Would you rather have several cheaper items or a single quality item that lasts longer? You may be one or the other but I think it depends on the item.
I’m all about stretching the dollar and getting more for my money (natural saver remember) but if it’s something that I want to last longer or work better then quality is important.
A great example of this is grocery shopping. In my article, 5 Tips for Saving On Groceries I mention that buying generic brands is cheaper than buying common name brands. There are a few things I make an exception though. and paper products are one of them. When dealing with spills and liquids, those cheaper paper products just don’t hold up. I would rather spend a little more money on things that will get the job done.
5. Safety or Status
The fifth money tendency is safety or status. The safety tendency is about having peace of mind with your finances. Having money gives you the sense of security that you can cover your bills or unexpected expenses. For status, money is an indicator of success.
I fall under the safety tendency. I do not want money to be something to worry about. I feel better knowing that we can pay for things without going into debt. I also want to be able to have plenty in our retirement fund so that we don’t have to worry about money in the future.
6. Abundance or Scarcity
The sixth money tendency is abundance or scarcity. Abundance vs. scarcity is all about your money mindset. People with an abundance mindset are the “glass half full” outlook. People with a scarcity mindset have a “glass half empty” perspective.
By default I am in the scarcity mindset, but working on more of an abundance mindset. These mindsets are formed as you are growing up by things you hear or are taught. One indicator of a scarcity mindset is holding onto things you don’t use because “you might need it someday.” I heard this growing up but I have learned that it is just encouraging me to keep things that I don’t need.
As I am in the process of decluttering the house, I try to tell myself that if I haven’t used it in a long time then I don’t need to keep it. And if someday I need it again, I can buy a new one (working on the abundance mindset.) I share more on some of these mindsets in my article, 5 Money Myths That Are Keeping You Broke.
7. Planned Giving or Spontaneous Giving
The seventh money tendency is planned giving or spontaneous giving. If you have a set organization that you donate to or need more time to think about who you are giving to, then you are more of a planned giver. If you are more of a free spirit when it comes to giving, giving to anyone that is in need without thinking about it too much, then you are a spontaneous giver.
This is another category where you can also be a little of both. Maybe you tithe to your church on a regular basis but also like to give to those in need when the opportunity occurs. I consider myself more of a planned spender. I need to know who I’m giving to and the purpose it serves, not just throwing my money and any Go Fund Me page.
Understanding Your Money Tendency
This is just a brief overview of the 7 money tendencies. I hope it provided a little insight into your own tendencies. If you are curious about diving deeper into each tendency then I encourage you to read Rachel Cruze’s book, Know Yourself Know Your Money. She shares how anyone can be successful with their finances, no matter what their tendencies are.
Also, I would love to hear from you! Share 1 or 2 of your money tendencies in the comments below!