Underspending: Are You Pinching Pennies So Tightly They Bleed?

Underspending © Hugo Félix - Fotolia.comUnderspending.  What is it exactly?

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.

  • Norma Doiron

    Let me share this story with you. A self-made millionnaire in our town came from a poor family. He lived his whole life as if he was poor, the only luxury was his car. He had an old house, crappy clothes, the whole deal. He had 5 children who lived the same way. I remember going camping one morning with hubby & children. Stopping at his store, I bought some fire starter. He looked at me and said, `You’re so lucky that you get to go camping with your family.` This man worked every hour his store was open till the day he died. Fast forward to a couple years ago. He died, leaving his fortune to his children who got into a great dispute, all the chit & kaboodle. Today, they have money but they don`t speak to each other… how sad. It could have been so different if he`d been delivered from the lack mentality…. Great post, Sharon. Appreciate it!

    • That’s a terrific story, Norma, and is repeated again and again the world over. It really riles me to know how many go through life miserable because parents and other authority figures don’t know better than to fill impressionable children with limiting messages. Lack of knowledge? Well, let’s see if future generations get it right! Meanwhile, I just do my little part … 😉

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  • Meryl Beck

    Money definitely causes problems of all kinds. It is important to know how to manage your money wisely so that you can enjoy the benefits of your labor yet also maintain a balance. So many people have such hard times with money and it destroys many relationships. Being wise with money is not always learned and sometimes we need to seek the right help so that we find a healthy balance in our lives.

    • Meryl, often we don’t “learn” about money wisdom because no one teaches us! It’s not a difficult topic, just one that is grossly overlooked. The alternative is learning from the School of Hard Knocks, which is what most people have to do. And, yes, balance is important in order to keep money in a “happy place.” 😉

  • Alexandra McAllister

    I believe it is about balance….as so many things in life. My grandfather was a penny pincher most of the time, except when it came to buying junk cars. In the meantime, my grandmother had to go without medical help unless it was an emergency. When he passed away, he left a small fortune and his 3 sons fought for every penny. What a mess! He could have had a better life if he would have shared it when he was living. Your post is an eye opener. Thanks, Sharon.

    • Funny how even the greatest penny pinchers often have a soft spot, Alexandra. For your grandfather it was junk cars. And too many women did not feel they had the right to speak up, to the detriment of their own health!

  • Maggie DeGennaro

    Loved reading this balance in everything. Right about the Great Depression era as I think my Mom does this..

    • Your Mom probably reflects something that came from her parents, Maggie. The Great Depression had such an impact … one that actually may have caused the reaction in the sixties in the form of “abundant and careless spending.” No proof, just a feeling … 😉

  • Amanda James

    I sometimes wish I had this issue! Unfortunately. I spend quite a bit. I can definitely see how many women are like this! Thanks for sharing!

    • Amanda, as we go forward with this series, we’ll get to overspending. We’re still in the “pushing money away” portion. Next is the “pulling money towards us” … 😉

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  • Yes, I know a lot of people like that too, truly sad.

    • It often IS sad, Carly. It’s one thing to be very frugal when it’s needed to close out the month and keep a roof overhead. But this often goes way beyond that … without financial cause.

  • Ashley

    I do know some people like this. It’s very interesting that you connected it to the Great Depression because I do think that had a severe impact in this mentality. Very interesting article!

    • Thanks, Ashley, for the kind words. Underspending is a psychological result of extenuating circumstances, for sure. So the fact that an entire nation was undergoing severely tough times means that many more people received those messages.

  • Yvonne

    I know someone that is ’emotionally poor’ and I refuse to be that way.

    • Yvonne, you could only be that way if you had received those messages as a kid or were reacting to an event that marked you psychologically. But say financial circumstances forced you to cut way back. Without those factors, it would simply be careful and thrifty behavior … until things changed again. For them, it only changes if they become aware and if they consciously make the effort.

  • Tina Ashburn

    Very interesting. I had never thought of anyone being an underspender. The Great Depression did a lot of more harm than good in many ways, and this is one I had never thought about.

    • There are so many interesting aspects to money, Tina, when you dig into the “why” of things. And the Great Depression certainly touched enough people to have a major impact …

  • Born Unique

    This is a very interesting post as most people are concerned with overspending. It seems like balance is needed in order to be truly happy. Thanks for sharing, I learned quite a bit.

    • Glad you learned from this, B.U. Most of us never think of why things are as they are when it comes to money. We just spend it (or don’t). That’s why I’m so fascinated and enjoy sharing what I discover with others …

  • Veronica Solomon

    I know people like this and to me it’s a form of worship of money. Almost like it’s too good to spend and the fear that they will run out. This is a very interesting article, and what I think is needed is the right balance of not over and under spending

    • You’re right about the need for balance, Veronica. But this kind of underspending actually falls under the “pushing money away” section. Next we look at the four behaviors that fall under money worship, or “pulling money towards us.” One of the behaviors there is hoarding, whether of things or money …

  • Robin Strohmaier

    What an interesting article, Sharon. You always share the most interesting things. The description of the “under spender” reminded me of a very dear person that was raised during the Depression. Although this person was a multi-millionaire, you would have never guessed it. One thing he did practice was a wonderful sense of generosity to others. I’m looking forward to more articles on the classic money behaviors.

    • Some people who are underspenders CAN have a soft spo, Robint. For Alexandra’s grandfather it was junk cars. For the person you refer to, it’s generosity to others. At least there was generosity, even if not directed towards himself. 😉

  • Diane Bester

    I loved this article, I can see some of me in it, and also my new husband. I liked him because he didn’t spend money he didn’t need to and was careful when he did. LOL….I guess we are learning to change, a little at a time. But it’s not easy, as you know!

    • Fortunately, Diane, we have the option of learning and changing with time. If we didn’t get the lessons from our authority figures as kids, we can absorb them … but it’s certainly harder this way! (Glad you found someone who understands money and uses it wisely!)

  • Susan Schiller

    “Underspender” is such a nice term for someone we used to call a “cheapskate”! It’s good to have an eye out for the traps we all can fall into. I find myself nearing the edge of this one too often. Thanks for helping us keep our eyes open, Sharon!

    • Susan, you “near the edge” as a result of what you’ve been through in the past years. So it IS a psychological reaction to events. But your awareness of that fact is what will help you keep things in perspective and, as things get better and better, they will become more and more of a distant memory. Yet you won’t have forgotten the lesson to the extent that it protects you.

  • What an interesting post, Sharon, I think I can partly recognize my own mother as an underspender, Never spending any money on herself, always thinking of bad days looming on the horizon. I look forward to the other categories, I have an inkling of where I belong!

    • Most of our mothers carried forward something from the Great Depression … or the Second World War. The Depression more in the U.S.; WWII more in Europe. Understandable, isn’t it? Glad you’re looking forward to the remainder of the categories … I find this stuff fascinating!

  • Ginger Pugliese

    Great article, Sharon. This affects families…men and women. They deny themselves by saying everything is ‘good enough’, even if it really isn’t. That’s not being a cheapskate. That’s fear.

    • I agree, Ginger, that fear is the underpinning of this behavior in almost every case. What changes is what the fear is about. And, yes, it is transmitted from generation to generation through stories and actions … sometimes mirroring them and sometimes reacting 180 degrees in the opposite direction!

  • Pat Moon

    I can see a little of me in your article but not real extreme. I am terrible about putting off spending money on something I need or I hate to spend money on fixing the house or car. My husband keeps me in balance on that one!

    • You’ve been through some financial challenges since 2008, Pat. (Especially with real estate, if I’m not mistaken.) So don’t be too hard on yourself about not spending where it’s not totally essential in your own mind. But I sure am glad your husband is there to help keep things in balance until things smooth out!

  • I’m not at all a underspender. Granted, there’s been situation where I don’t want to spend the money even though i need to. For example I waited very last minute to buy a winter coat. And Now I need new shoes but I hate how expensive it is to get some really good quality shoes. So I end up buying cheap shoes and of course my feet pays the price =(

    • Those are our famous “false bargains,” Marielle. We know we need something, but we hold off too long before buying and then find we either have fewer choices, worse prices or something else that makes it less than ideal. What’s important about your comment is that you are aware of the behavior; that’s the first step towards changing it! 😉

  • robindavidman

    Another excellent article, Sharon! Looking forward to the rest of the series!

  • working in the restaurant industry you do see this type of person often. I do believe that it can be emotionally damaging to not spend money.

    The gift of giving and spending money is what allows us to express our desires. This was a fabulous article and thank you so much for sharing.

  • You make a great distinction between being thrifty and being an underspender here Sharon. I spent time with some friends recently with friends who like me are careful with their money and we had a great time hunting for bargains and finding a good but less expensive place to eat. Perfect! On the other hand I have a friend who is such a lovely person but hates spending anything so will do exactly what you describe in your post – haggle to get the price down to next to nothing, complain about faults that don’t seem to be there, bring along their own food to eat in the restaurant or bring along their own teabag and ask for a free cup of boiling water! Awful!

    • You’re so right, Carolyn, especially because the underspender seems to be oblivious of the fact that their behavior can be disconcerting or uncomfortable. But your observation brought up something I hadn’t thought of before: are we uncomfortable with people who have different spending patterns mostly when we’re in public, in the view of others? Or do their patterns bother us just as much if they are only affecting their own lives, out of the sight of others? Hmmm, have to think about that one! 😉

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