Is your spending personality leading you to poverty?

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How you spend your cash today is a good indicator of the potential money hiccups you will face in retirement, according to finance guru Jackson Millan, who also goes by the moniker ‘the Wealth Mentor’.

Your income may fall short of your expectations unless you understand your spending habits thoroughly, he told YourLifeChoices.

Mr Millan, who wrote Enjoy the Journey: Creating Wealth and Living the Life You Desire, has helped clients save towards goals by identifying how their spending habits are likely to impair or enhance their retirement income. He then helps to reprogram their attitude to money so they can feel financially secure later in life. The seven spender types are:

  • the Cash Stasher – fear tends to rule this category. Perhaps they lost money with a bad investment or during a financial crisis. They tend to become paranoid when they hear speculation of financial bubbles bursting. They stockpile cash and do not have a plan to guide them to a financial goal
  • the Cash Splasher – this group is generous, often shouting drinks for others or paying the restaurant bill on behalf of companions. They do not lack motivation to save, but they have not formulated a vision. Without a plan and their inability to delay spending gratification, Cash Splashers rarely have reliable savings
  • the Cash Makes Me Happier – these are retail therapy diehards, whether it is a way to mask their internal unhappiness or because they can’t resist the temptation to shop till they drop. Instant gratification seems more satisfying to them than the rigours of budgeting
  • the Chicken Little Investor – they think they know how to play the stock market or manage other types of investment. But they don’t have long-term goals for how they wish their assets to perform. They react to each bit of financial news, and buy or sell using their gut instinct. They are more likely to brag about their wins than discuss their inevitable losses – and without thorough planning, losses can be substantial
  • the Points Accumulator – this person cannot resist a bargain or a discount, and fool themselves into believing they will be ahead of the game by spending when an opportunity too good to be true presents itself. They are guided by the scarcity or fear of the ‘missing out’ principle and this limits their ability to thrive financially
  • the Ignorer – this group is in over their heads in debt, but pretends it doesn’t exist. They are so busy ignoring the reality of their dire situation that they can’t bear to bring themselves to start planning and save. The result is that their money woes deepen
  • the Midas – these people live a life of abundance and spend lavishly. They know they need to start planning before the money runs out, but they procrastinate. Without paying more attention to their spending, they may find out one day that their finances are in a worse state than they imagined.

According to Mr Millan, many retirees think it is too late to change their savings plans.

“But they are wrong. They mustn’t overlook the fact that how their assets are allocated today will have a substantial impact on how long their retirement savings will last.”

Tomorrow, the Wealth Mentor will explain which YourLifeChoices retirement tribes are likely to fall into the spender profiles he has identified. He believes people who understand why they are easily parted with their money are more likely to succeed at money management and to create wealth.

Can you identify with one of these spending categories? Have you ever sought out advice to help you change your attitude to money and start saving?

Read tomorrow’s follow-up article: Do you have your retirement tribe’s spending profile?

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Written by Olga Galacho

8 Comments

Total Comments: 8
  1. 0
    0

    Whilst income and circumstances have a lot to do with future savings the way people live their lives is almost always the determinant of what is in the nest at the end of the day.
    It has been an interesting experience reading all the different scenarios of YLC when a discussion of this topic comes up and it often comes down to the have nots being unhappy with the haves.
    From personal experience creating a nest egg has been a long hard path strewn with hard work, self deprival as well as forgoing what other people take for granted…plus some good luck along the way. It’s not a path many would ever choose but it did build capital on an average income so I have to agree with the thrust of Olga’s story.

    • 0
      0

      Not bashing the government today – you must have had a good long weekend Mick! This may surprise you, but I agree with most of your surmising, above.

    • 0
      0

      Nicely put Mick – that is exactly the way it is. Does not really matter
      what party is in power. Only really bother to vote because I have to.

    • 0
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      This is a special day, it’s the second time I have agreed with MICK without reservation. MICK, I can’t add anything to your post and I support it wholeheartedly because it mirrors what we did.

    • 0
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      Thanks for the kudos. Maybe you’ll buy me a drink after all. Chuckle….

  2. 0
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    Dancing girls woopee..

  3. 0
    0

    I don’t fit any of those spending patterns at all. I can’t see myself fitting into any of Life Choices Tribes either. Oh dear I’ll just have to stay the outsider as it’s been so good to me.

  4. 0
    0

    I can’t identify with any of those. How many people would fit into any of these models?


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