Law School
Personal Finance

Tightwads and Spendthrifts Are Both Screwy, in Different Ways


Personal finance blogs often rail against compulsive spending. It makes sense. If you want to have more money, you have to spend less. Often these compulsive, or spend-thrifty individuals have to overcome messed up ideas about money. They have to completely rewire their brain in regards to money.

But what often gets overlooked are the individuals in the opposite of the spending spectrum- the tightwads. Tightwads also have messed up ideas about money and their screwy ideas can create stress in their own lives and the live of their loved ones.

In this month’s issue of Men’s Health, an article features observations about people and money from behavioral scientist, George Lowenstein. Dr. Lowenstein conducted an experiment in which he divided people into two groups- spendthrifts and tightwads- based on responses to a survey. Spendthrifts are individuals who derive pleasure from spending, while tightwads experience pain. He then presented both groups the opportunity to buy different products. He asked them first to list advantages and disadvantages of each purchase. The result was that spendthrifts spent less money when forced to deliberate, while tightwads spent bought much more. Conclusion: tightwads are just as irrational when it comes to money as spendthrifts.

Lowenstein suggests that tightwads loosen up a bit when it comes to spending money. It’s just as unhealthy to be a tightwad as it is to be a spendthrift.

If you ask my wife, she’ll tell you that I walk the line of tightwadness. She’s right. I can go overboard with the frugalness. Tightwadness is misery. Frugalness is enjoying life while keeping costs to a minimum. If you think you’ve crossed the line to tightwadness, go out and splurge on something. Within reason, of course.