Knowing Your Money Personality
Part 5 of 6
The Saver (The Hoarder)
One would think that having a saving attitude with your money would be ideal. It’s good to save isn’t it? Much like everything in life, they key is moderation. Although saving is a great skill to have, the extreme of this behavior is hoarding, which may not always serve us. This is another of the financial personalities that Dr. Judith Orloff speaks about—The Hoarder/Saver.
What it Means to Hoard
Back in 2009, a show on the television network TLC, called Hoarders, caught the notice of the world. It offered a glimpse into the seemingly bizarre phenomenon of people unable to part with the most ordinary things. For some, they could never understand the attachment people had to garbage bags, boxes, or old food containers. For Hoarders, throwing out these items was an emotional experience.
We all have something we keep in excess: wrapping paper for the next birthday or holiday; wine corks you are saving for the next crafting project; that never-ending shelf of shoes. The desire to hold onto things is natural, for fear of wasting or needing it ‘at-some-point’.
In terms of money, if you have a hard time letting it go, you may be a Hoarder/Saver. For those inclined to save their money it’s just as important to learn how to spend it and use it wisely. Whether you put money into investments, to travel or just buy things it’s important to reward yourself for doing such a great job saving.
How Saving Too Much Can Hurt You
The word inflation is tossed around a lot. It’s often used to instill fear. Many use this term along side stories of the Great Depression, when the price of bread was so high in comparison to wages that even the middle class struggled. You hear of foreign nations with such extreme inflation that money is worth more as a source of heat by burning it than to spend. But what is inflation compared to spending?
So what is inflation? Simply put, inflation is a general increase in prices and a fall in the purchasing value of money, which varies from country to country. For Canada, the inflation rate (or Consumer Price Index (CPI) values) for the past ten years has ranged from 0.3% to 2.9%. In America, the rate ranged from 1.55% to 3.39%.
So does this mean that bread is getting more expensive? Yes, but its more than that. By continuing to store your money in a savings account, you are only growing your money by the interest rate, which isn’t always higher than the rate of inflation. Standard savings account interest rates are under 1%. Investing in a High Interest Savings Account could yield rates much closer, or higher than inflation rates.
Other Impacts of Hoarding Cash
You may be thinking, “Well that’s a great idea but it just doesn’t feel that simple. I’m unsure and I worry about giving up my hard earned cash.” The first thing a Saver/Hoarder personality must accept is that your are not “giving up” your money. You’re trying to make it grow. Stats show that over a 10 year period, if the money is left untouched, in a low-risk portfolio you would have never lost money (since 1945). Fear of our financial future is real, but if it’s unfounded, there may be a larger issue. Ask yourself this:
- Am I able to invest in someone else’s future?
- Am I able to easily donate even the tiniest of bits to charity during good financial times?
- Can I spend money on necessities I can afford without anxiety?
- Am I able to invest, even conservatively?
If the answer is no to these questions, then you may be experiencing extreme fear or scarcity of your money. This is particularly true for those who have been through rough times like days in college or if you got hit hard during the financial crisis of 2008-2009. We place a value on our cash—we worked hard for it. The accumulation of wealth is what many people strive for to feel financially secure. However, it can easily lead to feelings of greed.
Everyday Health recognizes the excessive frugality (or a hoarder hoarding) as a form of Obsessive Compulsive Personality Disorder (OCPD). Dr. Hudak says that excessive control to the point of adversely affecting your lifestyle can be risky. If severe, it could lead to avoiding necessary purchases and may require counseling.
Learning to Let Go
Learning to let go of your cash and have it work for you is the first step towards reduced anxiety and greater financial wealth. Today presented a study that came up with four coping mechanisms that can help break the cycle of hoarding money:
- Pay with a card instead of cash – Research has shown that you have a more physical attachment to cash. Many choose to budget this way because you can visually see exactly what you are spending. Try using a card more so money becomes more abstract.
- Develop long-term investment strategies – As hard as it may be to let go, if you can see that the benefits far out way the risks, it is easier to think about investing. Start small, do research and develop a plan that you are comfortable with.
- Use fun budgets – If penny pinching is comfortable for you, than budgets may cause more strain than they are worth. Allocating money in your budget for fun activities, splurges and entertainment will help you feel comfortable spending that cash since you can see you have it to spare.
- Package it up and let it go – Avoid seeing the add-ons that give you anxiety by ordering items as a package deal; the fewer numbers you are adding up, the better.
The fable “The Miser”, tells the story of a man who sold everything he had for a block of gold. He buried the gold in a hole, but to his dismay, robbers found his gold and stole it. He sobbed and sobbed. A neighbor heard his plight and told him to go bury a stone and pretend the gold is still there because it would do just as well. The moral of the tale is that gold buried is as useful as a stone buried.
Media, Triami. “Historic inflation Canada – CPI inflation.” Historic inflation Canada – historic CPI inflation Canada, www.inflation.eu/inflation-rates/canada/historic-inflation/cpi-inflation-canada.aspx
Vann, Madeline R. “Penny-Pinching May Signal Mental Illness.” EverydayHealth.com, Everyday
Health, 25 Sept. 2014, www.everydayhealth.com/news/are-you-sensibly-frugal-mentally-ill/
Crouch, Michelle. “When being cheap becomes an obsession.” TODAY.com, Michelle Crouch, 4 Apr. 2011, www.today.com/news/when-being-cheap-becomes-obsession-wbna42276725.
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