BankerGirl

Posted by Heidi on December 1st, 2007 in banking, saving, track expenses

In my previous post I did an armchair analysis on the psychology of my spending.  I blamed everyone from my parents to society for my fiscal irresponsibility - and then received a thought-provoking comment from Becky, a reader coming from a similar background.  As a result of circumstances much like mine, Becky is more frugal and considers each purchase carefully, as her parents did - but she does have a sibling who has some debt issues.

That got me thinking about my family.  Both of my sisters have always been pretty financially conservative. My folks bailed me out of a couple thousand of credit card debt early in my college career - neither of my sisters would even consider getting themselves in such a mess.  Now that they are both married they continue to make frugal choices - both live in homes they can afford, have comfortable savings accounts, and spend less than they make.  Clearly, my parents’ examples about money made a very different impression on my siblings than they did on me.  Why is that?

I don’t have an answer, but I do have some observations about spenders and savers from my days as a personal banker.  Here are some sweeping generalizations:

• Savers always pay themselves first. “Put a percentage of every cash inflow into savings.” My father has been preaching this since I can remember - and while I haven’t followed his advice, my customers with the healthiest balance sheets have.
• Spenders fall victim to perceived peer pressure. I have touched on this in the past, but it bears repeating. Spenders obsess with keeping up appearances, having the “right” car and house and clothes. I used to be one of these individuals - I could justify just about any purchase as something I “needed” to fit in or belong. I had an epiphany about this earlier this year - it’s a game I can’t possibly win, so it’s time to stop trying to play.
• Savers control impulse spending. One of my dearest friends is a saver. There was an instance several years ago when she needed a new CD player. We went to the store with the intention of purchasing one - and while there she talked herself out of it. She decided she would rather keep the money in her savings account. At the time, I thought she was crazy. Looking back, she was practicing frugality - I should have paid closer attention.
• Spenders spend tomorrow’s paycheck today. I am guilty of more than one ‘night before payday’ shopping spree, and last year I bought new living room furniture in anticipation of my annual bonus. In both of these instances, I made purchases before I had the cash in my account - giving myself no opportunity to pay myself first - the money was already spent!
• Savers take comfort in their personal financial statement. Savers would rather see a healthy number on their bank or mutual fund statement than have almost any material good. In one extreme example, about ten years ago I had a customer with $2.3 million in her bank accounts (no one on our staff could get her to invest in anything more sophisticated than CDs).  The highlight of her week was coming into the branch and getting her statement printouts.  She drove a 20 year old car, wore threadbare clothes, but she had money in the bank.  
• When spenders partner, problems multiply. My fiancé is a bigger spender than I am. While I don’t blame him for my existing debt load, I do know that we enable each other’s worst behaviors. While we were talking about this subject last night, my beloved revealed to me that there has never been a point in his life when he hasn’t lived paycheck to paycheck. What a miserable existence! I’ve seen this phenomenon in my clients lives as well - spenders that team up tend to do exponentially more damage to their net worth than those who couple with a saver.
• Savers see the big picture. Savers understand that a dollar they don’t spend today is a dollar invested in their future. My friend who decided to forgo the new CD player understood this, and I’m beginning to come around as well.

Personally, I am in transition.  Clearly, I have a history of being a spender, but I have exhibited some of the saving characteristics in the past and hope to draw on those for the future.  Are they any other reformed spenders out there that would like to share their secrets? 

Stumble it!