Some women you know are earning decent money and yet they seem to live like paupers. You know they’re not burdened with debts. They don’t spend on clothes and they drive old cars. They have no one siphoning off their money or ex-husbands they have to support. To your knowledge they don’t have any costly bad habits. So where is their money going?
What you may well be looking at is a classic Underspender: someone who has somehow come to believe that spending money is unsafe. In short, this behavior can be based on feelings of fear or anxiety, or simply the uncomfortable need to be self-sacrificing. No matter how much money she actually has, she is loath to spend any of it, including on herself. She keeps herself emotionally poor.
Underspending, or “frugality taken to extremes,” is one of the twelve classic money behaviors. Of the three general categories these behaviors fall under (pushing money away, pulling it towards you, and using it to mess up relationships), this is in the first category.
Instead of passively ignoring the existence of money as a Money Denier would or pushing money away as a Money Repeller would, an Underspender pays close attention to money and allows it in. But she doesn’t allow it back out. This behavior affects her lifestyle, often to the extreme of affecting her relationships, health and well-being.
Where Does This Underspending Come From?
Probably the best known Underspenders were the people who were raised during the Great Depression—or their children—because the impact was so great it lasted several generations. We’ve all heard stories of grandmothers who never got beyond living bare-bone existences or news reports of octogenarians who were discovered to have fortunes despite living like paupers.
Underspending can be witnessed among displaced populations such as Japanese-Americans who were interned during World War II. More recently we think of the Cubans who fled Cuba after the arrival of Fidel Castro or the Syrians whose country has been shredded before their very eyes. Any dispossessed peoples—and that list is endless.
But the disruption doesn’t need to be that dramatic for it to result in underspending. Because of a child’s lack of perspective in the early years, events that would otherwise be processed and forgotten can take on a disproportionate importance. A temporary reversal of the family’s finances, for example, can lead to a fear of financial ruin, or bankruptcy, no matter how much money she actually has as an adult.
Interestingly, we may be in the process of creating a whole new generation of Underspenders. This would come out of all the children whose lives were changed drastically by the job loss of one or both parents—or by the loss of the place they called “home” due to a foreclosure—as a result of the financial tsunami of 2008.
Another form of underspending can result from deep-seated money patterns that were adopted consciously. The decision to live very frugally in order to save for retirement is admirable if it is going to result in peace of mind and enjoyment in later years. Yet after living that way for enough years, some women have difficulty enjoying the fruits of their efforts once they reach their financial target—and retirement age. By then, the fear of landing on the streets as a bag lady can be so strong that they can never spend the money they saved. As a result, they might be eating unhealthily, not getting adequate medical care and avoiding getting the physical help they need as they age.
Telltale Signs of an Underspender
Look at a woman who you know has money and yet avoids going to doctors or dentists because she “hates to spend the money.” Or who squints to read, knowing her eyesight is changing, but won’t change her prescription because eye doctors and glasses are expensive.
An Underspender may also let her house go to ruin, not paying for basic repairs such as leaky faucets or roofs, despite knowing full well that she’s destroying her asset by doing so.
You might see her piggybacking on you by joining you at lunch and not picking up her fair share of the tab. Or she might leave a miserly tip. She might even eat part of her meal and then complain to the waiter that it wasn’t good and have it removed from the bill. (Have you ever thrown a few extra bucks on the table to compensate, so the waiter won’t suffer from a friend’s stinginess?)
Whenever someone is providing her with a service, she’ll complain about that service so she can negotiate a better price on the bill. Or she’ll return an item that she’s used to get her money back. She might purchase an online program from you. Then she’ll copy it or somehow get the benefit from it and return it before the money back guarantee has expired, giving some lame excuse.
You would call her a cheapskate. Or a miser. Or just plain miserable. But don’t confuse her with someone who is being thrifty simply to get out of debt or to reach a particular financial goal. Some women may choose to live a modest lifestyle. This is a healthy way for them to manage their resources, to make the most of what they have and to catch up on savings if they feel they’ve started late.
The difference is that in the case of an Underspender, she’s not behaving that way out of choice. It physically pains her to spend her money.
Granted, some women have some of these traits because they’re just miserable people, not because of any psychological damage received while they were children, or since then.
Where Underspending Leads
Underspenders are somewhat difficult to help. Rather than see anything wrong with their behavior, they take pride in their thrift. What they don’t see is that they have pushed thrift to an extreme. Here it is actually resulting in deprivation: not only depriving them of life’s joys, but also of basic self care. They may accrue wealth as a result of their underspending, but it’s not wealth that will serve them in any way.
This is another form of pushing money away, one that denies them the enjoyment that money could bring. The result is a life lived as “emotionally poor.”
Note: This is the third of a series of twelve articles, identifying each of the classic money behaviors that trip women up and keep them from controlling their money … and their life. If any of these behaviors feel familiar, be sure to stay connected with me on Facebook so you can continue on this exploration.
And let us know in the Comments section below if you know anyone who fits this profile of a classic Underspender.
Bio: Sharon O’Day fixes financial lives. She is a tell-it-like-it-is money expert with a successful career in global finance, plus an MBA from the Wharton School. Today she specializes in getting entrepreneurial women over 50 back on their game so they can have more money, less stress and more joy. With her “Over Fifty and Financially Free” strategies, they take actions that lead to their ultimate goal: financial peace of mind.