7 Factors That Can Make You a Tightwad or a Spendthrift

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Why do people have such different spending habits? Spendthrifts often spend more than they can afford and can wind up with non-ideal outcomes like credit card debt and overdrawn bank accounts. Tightwads, on the other hand, are very reluctant to spend money and are inclined to save as much as possible and avoid going into debt.

While we might be quicker to criticize uncontrolled spending than compulsive saving, both tightwads and spendthrifts experience their tendencies as sub-optimal. Tightwads struggle to spend money even when they can afford to, and doing so would improve their lives, such as replacing worn-out running shoes that are causing them back pain.

Research shows that, on average, about 20-25 percent of people are classified as tightwads and about the same percentage as spendthrifts; the remaining 50-60 percent fall somewhere between these extremes. (You can take the Tightwad-Spendthrift Scale yourself, developed by marketing professor Scott Rick and colleagues and the basis for much of the research in this area.)

What Leads to Being a Tightwad or a Spendthrift?

Additional research has shown that the following variables are linked to Tightwad-Spendthrift scores. Most of these studies were correlational, so we can't know for certain whether the variables cause a person to become a tightwad or a spendthrift.

Age: Older individuals are more likely to be tightwads than spendthrifts. Rick and his fellow researchers found that among individuals older than 70, tightwads outnumbered spendthrifts by more than five to one.

One possible explanation is that older adults have traded the youthful optimism about earning potential for the clear-eyed reality of living on a fixed income. However, this finding could also reflect a generational difference. "The data were collected across people, rather than across time," the researchers note, and "may therefore reflect the effects of growing up in different generations" rather than age per se (Rick et al. 2008).

Gender: Women, on average, are about equally likely to be a tightwad or a spendthrift (20 vs. 19 percent, respectively), whereas men are nearly three times more likely to be a tightwad (29 vs. 11 percent; I fit the profile as a bit of a tightwad).

Past Financial Problems: Money woes can cause an incredible amount of stress and cast a long shadow, according to Rick in his book Tightwads and Spendthrifts. He notes that some tightwads developed a "protective response to spending money when their financial resources were scarce. But even when their financial circumstances improve, it can be hard to shake the feelings that developed when money was tight." Once bitten by the pain of scarcity, they are twice as shy to risk returning to those financial straits.

Personality: Tightwads tend to be more conscientious than spendthrifts, which is not surprising, as well as more introverted. The average spendthrift, on the other hand, is more extraverted and open to a wide range of experiences. In the words of the study authors, "The results in many ways confirm what is perhaps the stereotype of a saver: a serious-minded, hard-working individual, not seeking out excitement," whereas "the spender is clearly curious and sociable" (Furnham et al., 2022).

Additional research shows that spendthrifts generally rate higher on impatience. "Spendthrifts are not particularly interested in waiting for the things they like," writes Rick (who identifies as a spendthrift), which contributes toward their willingness to spend.

Opportunity Costs: Tightwads are painfully aware that spending money on something means the money can't be used for other things. If they win $500 and need a new coat, it doesn't feel like having $500 to spend on the coat; their minds automatically think of all the other things they could spend it on.

"They see a price tag, and they think about, 'What am I giving up later?'" Rick told me. "They are more future-oriented, and they're very concerned about not leaving their future self out in the cold." Spendthrifts, in contrast, tend to think much less about opportunity costs.

Expense Neglect: Your financial position is based on your income and your expenses, and a $2,000 bonus at work combined with a $2,000 car repair will cancel each other out. However, most people tend to see increases in income as more significant than equivalent increases in expenses, such that the work bonus seems bigger than the car bill.

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This tendency is present to some extent even in the average tightwad, who "puts almost twice as much weight on their income-change forecasts as on their expense-change forecasts," writes Rick. But expense neglect was much more pronounced among spendthrifts: If they "expect their income and expenses to each increase by $1,000 next year, they feel as if they will have almost $1,000 in extra spare money."

Numbers Orientation: "People that we call tightwads do have a more mathematical lens on the world," Rick told me. Rather than thinking about how much they would enjoy a purchase, they're doing mental calculations.

This orientation is apparent in one's choice of college major; those in the STEM fields of engineering, computer science, and the natural sciences had the highest tightwad scores, where the highest spendthrift scores were among majors in the humanities, communication, and social work (Rick et al., 2008).

Is Change Possible?

Although Tightwad-Spendthrift Scale scores are stable over time, it is possible to shift your tendencies. Awareness is key. "Deeply understanding our spending orientation is crucial for modifying our behavior," writes Rick in his book.

Tightwads can loosen up by reducing the salience of spending money; spendthrifts, in contrast, can benefit from making the cost of their purchases more obvious. One simple behavioral tweak that Rick discusses is using forms of payment that make it more or less painful to spend. Cash tends to amplify the expenditure, making it a good option for spendthrifts, whereas tightwads could benefit from tapping their smartphones, which makes the outflow of funds less obvious.

Rick's new book provides many other helpful techniques, including ones that can help couples in which a spendthrift and a tightwad are paired. Therapy may also be helpful if you're struggling with your relationship with money; you can search for a therapist near you with the Psychology Today directory.