Introduction: The Present vs. The Future
The spender often focuses on the present, giving little thought to future needs or long-term self-sufficiency. There’s a natural tendency to prioritize immediate pleasure or comfort, believing that living for today is the way to go. However, this is often a mindset that is imbalanced , as it ignores the inevitable needs and demands of the future. True balance requires considering both the present and the future as equally important. While it may seem obvious, many people swing too far toward one side at different stages of their lives or for some throughout their whole life. If you tend to focus more on the now and trust that the future will take care of itself, this article is for you.
Wealth and Spending Patterns
The spender can come from any economic background—poor or wealthy. However, the very wealthy often can fit this pattern although it seems counterintuitive , in ways that would seem almost inconceivable as they face different financial challenges and opportunities. In my practice, I’ve seen many people earning hundreds of thousands of dollars a year who still live paycheck to paycheck due to overspending.
One memorable client of mine, a world-famous musician making millions annually, struggled with this very issue. Despite his fame and consistent income, he was often living in the moment, spending money for the next deal long before he earned it. At one level, he was fortunate—his fame guaranteed the future money. However, if health issues or unexpected challenges arise for him, the consequences of neglecting future needs would be severe. He turned out to be a relatively short term client, because he was convinced that he was the expert, and in the end he did end up in undesirable circumstances for a person of his wealth.
The Importance of Categorizing Your Spending
Whether you’re a spender or not, it’s vital to categorize your expenses and understand where your money goes. Break your expenses down into three categories:
- Category 1: Mandatory Needs
These are the essentials—expenses you cannot live without. They should be the priority in your budget. - Category 2: Important but Flexible
These are important to your lifestyle but can be adjusted or reduced if necessary. - Category 3: Discretionary Spending
These are non-essential expenses that can be cut without much impact on your daily life, and if you’re not able to save anything then this category ideally would be dropped from your life until you can afford it.
If you realize that you’re living beyond your means and the future is uncertain, making cuts in your discretionary spending is crucial to ensure long-term financial health. It’s vital to think long-term, not just short-term comfort. Often, spenders avoid this categorization because it feels threatening and so undesirable to their current lifestyle. But facing this reality would be the best decision you make for your future, with the only exception being one where you either die young or some stroke of luck or inheritance happens.
A Personal Experience with Saving
When I was 23, I coordinated a residential treatment center for schizophrenic patients. I was paid only $250 per month, with room and board. Despite my limited income, I had the discipline and even desire to save a small portion of what I earned. My family had taught me the importance of saving, and I followed that wisdom, setting aside $50 to $75 per month. Over time, this discipline allowed me to save up enough for a down payment on a cabin with two friends. That $1,500 investment turned into $25,000 over seven years. It doesn’t take a lot of imagination to see how you can put yourself ahead with a nest egg, by taking great care of the present in a balanced way.
Though the financial landscape has changed, the principles of saving and living within your means are timeless. Even today, with limited resources, it’s possible to live frugally and make your money work for you. It only takes determination, willpower, and a bit of wisdom to stretch your resources and make the most of what you have.
The Wealthy Spender: A Cautionary Tale
In my counseling career, I worked with a highly successful financial planner who was earning millions annually but spending it all—$1 million per year—and saving nothing. Despite my recommendations to save at least 10%, he was unwilling to change. This highlights an important lesson: regardless of your income level, excessive spending habits can lead to financial instability. Even the wealthiest individuals can fall into the trap of overspending if they don’t manage their finances responsibly.
Psycho-Economics: Practical Choices for Well-Being
When you understand the psychology of money—how every dollar affects your well-being—it becomes clear that practical financial choices are essential for a healthy life. For everyone, whether rich or poor, there are ways to save money and make smarter spending decisions. Thrift stores, estate sales, and discount outlets like Ross or TJ Maxx offer affordable options that almost anyone can access. The key is being open to flexibility and focusing on what’s practical and possible for you.
Psycho-economics isn’t about judging your choices—it’s about taking responsibility for your financial future because you want to care for yourself. You are in charge, and making wise financial decisions now can protect your future well-being. When impulsive urges take over, they can hurt your long-term security.
Choose Essentials for a Secure Future
If you identify as a spender, I encourage you to take a moment to reflect on how you can adjust your spending habits. Consider cutting back or eliminating discretionary expenses and focusing on what’s truly essential. You don’t need to deprive yourself of all enjoyment, but aligning your present lifestyle with caring for your future will help ensure a secure and fulfilling future.