Like preachers of the gospel, it’s common for us to preach financial truths to the financially challenged or materialistic, but why do so many of our sermons fall on deaf ears in the real world. Why is it so difficult to convince people to make even the tiniest of financial changes?

Church of Floating head puppy

Church of Floating Head Finance.

After having conversations multiple times with many friends, family and coworkers I’ve noticed negligible change on their financial plans, I often wondered why people don’t seem to see the light like I do. It must be the same frustration many religious people feel when trying to convert someone. But this is logic! It makes logical sense that saving and being frugal is extremely beneficial to your life and future! You’re explaining that the stock market really isn’t such a scary place. You may find, like I did, many people that agree with your logic but still don’t change their financial situations. So why is this?

Well, one thing that’s obvious is people are resistant to change, but I did notice people that were most receptive to the conversation had something in common. They were all pretty frugal, Do-it-yourself people that weren’t very materialistic.

Short History about Me:

When I ran across Mr Money Mustache in a short video a couple years ago and then visited his blog, it didn’t take long for a light bulb to go off in my head, especially after going through Jim Collin’s investing crash course. At that point I was already frugal and had been for sometime. I don’t think I was always frugal, but my college days sure beat a lot of frugality into me.

One thing that I believe turned me frugal is I’m a man of my word. I’ve been punctual for as long as I can remember and I keep my word whether it’s to a friend, family or corporation. Part of keeping my word is making sure I have enough money when I say I can pay for something and I make sure I have plenty of excess funds. In college I started freelancing computer repair work and had built up a small clientele base. I think the inconsistent work started making me analyze what I really needed and I began to be frugal with my money so I didn’t need another job. The last part was gradually caring less and less about material items. As a kid I loved gadgets and I used to build the highest end gaming desktops I could afford, skills that serve me well to this day. But today, I’m more than ok with my 3 year old mid range laptop and a couple year old mid-range android phone. I hate figuring out what to do with old items and would rather wait until they die to replace anything.

I ended up being someone who loves DIY, frugal, non-materialistic and I think I’m pretty trust-able. I also self reflect a lot and think about the future constantly, something I was just born with. Many of these traits seem to be a pattern I see ALL OVER the financial independent / early retirement blog-o-sphere.

With life experiences, some gut assumptions and a bit of random research over the years, here’s my theory on two basic groups of people.

Theory of Savers and Spenders

Group A: What about the future?

These people reflect on life and think about the future frequently, that makes them introverts on some level. They’re usually detailed in their work and constantly try to think 10 steps ahead. They day dream, make goals and plan steps to achieve. They also naturally weigh many of their actions with future consequences. I believe this group’s thinking ahead can also make them pretty considerate towards others, what’s good for the group is generally good for the individual(themselves) in the long run. They will usually save money for any number of possible future reasons and be less materialistic because most items are irrelevant in the future and they can often hurt our attempts to protect our future. Everything they do; vote, date, work, everything includes deep thought about the future and lessons they learned about the past. I’d bet a lot of hippies fall into this group, Scientists, Engineers, that workaholic guy who puts in 20 hours of overtime every week. I think an exception to this group saving money is if their view of the future is  optimistically rosy. While I do make predictions of the future, I’m one of those people that plans for the worst and hopes for the best.

Group B: ME! ME! ME! NOW NOW NOW!!!

That’s probably a bit comically harsh, but these people rarely think about the future or reflect on the past. It’s all about the present, the here and now and that makes them mostly extroverts. They tend to be less detailed oriented, but they often get the job done faster because they’re not thinking so much. Any goal they make is usually pretty short term, think weeks or months. Their present nature lends them to be mostly concerned with themselves and the people in their immediate circle. Everything is more about what’s immediate, what they can see, touch and smell right now. By nature, they don’t think about possibilities or how a strangers home life might be. They’re not more selfish, in fact they may want to help people or change laws, they just need to see the problem and anything they do they’ll want pretty immediate results (that 10 steps ahead thinking they tend to lack)**. They look for immediate gratifications all the time. I would guess they also struggle at long term relationships, not just because they’re more self oriented, but because they will struggle to see a brighter day ahead while they’re in a relationship rough patch, they’ll give up quicker in their assumption that it can’t be fixed or at least not in their shorter view of the future. They live for today and tend to spend money for today which makes them more materialistic. The only area I would expect less of this group to be in is Engineering and other scientific areas. They tend to be more sociable so I’d expect sales, business, healthcare, any field that works with people heavily.

I’m not saying one group is superior to the other, I think they both have their pros and cons, that being said, we can guess which group is larger.

These two groups actually work very well together too, While I may get pretty frustrated thinking 10 steps ahead on a project, struggling to even get started, the other group will jump in and get started and can help me focus. I’ll in return, bring up details they may forget to include and help check their work along the way.

Global Icon of Perfection

Global Icon of Perfection

Seeing myself in the first group obviously, I wanted to point out more flaws of people in group A, like me, so people don’t think I’m saying I’m some global icon of perfection. I probably self reflect and think too much about what I’m going to say in a conversation which makes people I meet think I’m shy or quiet. Instead of jumping into things, like starting a business, I over analyze and worry about possible future issues until I do nothing and give up. I’m not in the moment as often as most people, I sometimes have to try and force myself to “smell the roses”. If I meet a girl, I’ll already be running an analysis in my head on our chances for success instead of just enjoying the conversation and getting to know someone. I can waste a lot of time analyzing future possibilities for anything and get very little actually done. I can worry about making decisions I’ll later regret, and because of that I’m not very decisive. I can be the annoying guy thinking about getting shit done, while Group B actually gets the shit done. And I can be as selfish and ignorant as anyone else, and many times I really wish I was as selfish as most. I think Ideally someone would want to be a little of column A and a little of column B, but I mostly see one or the other in people.

How to convert someone’s financial way of thinking?

Trick question, when it comes to trying to convert Group B people, you may have a good conversation with them, but you’re all but wasting your breath if you’re trying to convert them to your frugal ways. They will always be in the present and feel it’s mostly pointless to worry or plan for the future, at least at our “extreme” levels. I just remember you never know what they’ll do, they may start putting a tiny bit of money away for retirement, so it’s worth a conversation to me. Don’t be discouraged if they don’t embrace your ways or even if they argue against it, it’s just different opinions on ways of life.

In my experience, If you want to find someone that may really benefit from your financial knowledge, look for the cues of people in Group A:

  • Frugal
  • Savers
  • Non materialistic
  • Goal or future oriented, they talk about long term future plans.
  • Into DIY and learning new things

If they have a couple of these traits and they’re green to the world of finances and investing(most are), it may just be possible to convert another fellow.

** Politically, I think many laws we pass attempt to quick fix issues today, but actually make problems WORSE in the long term.

I don’t like to think of people in terms of better or worse, I think about it in terms of different skill sets. Life isn’t a competition, but people are competitive.

I’m expecting a full on assault on my analysis. Am I too general or dead wrong, am I spewing worthless garbage in text format, let me know what you think.

Update: While I was mostly thinking about people that are already pretty well off middle and upper middle class people who are only getting in their own way, James over at Retirement Savvy brought up good points about how difficult it can be to not only plan ahead and manage money, but have high self esteem and healthy relationships when you’re in poverty and struggling to get by.

It’s a good read with interesting points: Retirement Savvy – A Richer Understanding: Thinking About Maslow and Poverty

While I’ve never been in poverty, there was a time when I worked at Walmart, lived in a tiny 350 square foot studio, tightly managed my money to make ends meet, failing to accomplish anything besides showing up to my job, didn’t know what I was doing with my life, had low self-esteem and was pretty suicidal. I remember feeling like the future was very foggy and I sure didn’t feel like my life was going to get better, on that pyramid I was probably in the “Safety” level. I also remember my curiosity of my own future and the outside world kept me going.

Afterthought: After more thought on the Group A vs Group B, I think this Idea of these two categories has at the heart of it Extroverts vs Introverts. People that internalize and reflect in solitude thought vs people that externalize and reflect in social conversation. There are different levels of Introverts and Extroverts so It would make sense that there are many of you that may have a mix of these group tendencies, I just happen to be a good boot to the far left of Introverts.


19 comments on “Theory of Savers and Spenders: Why Your Financial Advice is Ignored

    • I too want to try to get better at being in the present, which for me mostly just means taking time to enjoy being with friends and family, going out to parks, star gazing, playing my guitar, etc. I just got home and did some star gazing for a good 10 minutes, something I rarely do. Living in the country has its advantages.

  • My wife & I fall into Group A. Like you, I think it takes both groups to paint the big picture. Group B lays out the initial groundwork & it’s up to Group A to come in afterwards to turn it into a masterpiece. If it wasn’t for the B’s, the A’s might try to make a masterpiece appear out of thin air. I do at least.
    Josh recently posted…Is The National Debt A Reflection Of Our Society?My Profile

    • I try to make masterpieces appear out of thin air, but I’m just so damn slow at it. Too much planning not enough doing. Planned to program a website for home brewers, it didn’t get far before I started planning too much. My house renovation goes very slowly, because every single project I think of I start linking 20 other smaller projects to it. “As long as I’m redoing that, I may as well do those other 3 things but I’ve never done those and what if something goes wrong” and suddenly it’s a bigger more expensive project that I put off the whole thing while I plan how I should go about it.
      That’s when I try to get some of my friends over, because they’ll just jump in and force me to get shit done. It may waste a bit more money then a well planned project, but It actually gets done.

    • I think I have a friend that’s a mix of both, but I think he’s more of just a type B that plans a little bit further out than most type B’s, a type B light. I think everyone spends money on the fly sometimes, a type A isn’t necessarily good with money, just likely. I know I can splurge on the fly because I’m no where near going into debt.
      I’m not sure if there are mixes, my thought is there’s light version of A and B. Maybe that is a mix. If I can get a poll out to enough random people we could test that. A mix would be odd, “well normally I think things through(even quickly counts), but screw that for today or normally I’m an introvert but I feel like being an extrovert today”. I’m a lot more outgoing than I used to be, but I’m still a total introvert. Maybe I’m too far type A to imagine a mix.

  • I fall mostly on Group A and some in B. I always make sure that whatever I do will have an impact in the future. I make sure I plan my life ahead even if it means that I am looking way too far in advance. I want to make sure that I (partially) know what my future would look like (even though no one really knows what’s going to happen).

    I am part B because I know that while I have a goal to achieve, which is in the future, I need to make sure that whatever is in front of me as tackled because this whatever can or will affect my future.
    Allan @ The Practical Saver recently posted…Good Reads 2My Profile

    • Sounds like Group A, Just because we plan and think ahead a lot, doesn’t mean we can’t tackle what’s in front of us. Maybe we’re all a mix, I know we all think and perceive life differently, the group A & B idea was something that I had been wondering about for a while. Maybe a lot depends on your life experiences that pushes you closer to one side or the other, it’s possible I could be a type B person if I grew up with wealthy parents.

  • Great Read and so true! I guess its identical to the fact that we all think in a different way, and have several ways of possible actions, for instance, when using your computer, some people may copy a sentence using their keyboard (cntrl + “C”) while others will select the specific sentence with their mouse and then copy it by clicking the right click on their mouse and thereafter selecting the “copy” option. You could only imagine what my husband and I have been going through as he believes we should already buy our own house and I cannot think of the word “mortgage” and I think we should continue renting a house for the next couple of years….. It’s not easy but it definitely makes life more interesting 🙂

  • Group A speaks to me and Group B speaks to my girlfriend, with some notable exceptions of course.

    We both are great in terms of our long term relationship, but other than that, my girlfriend lives very much in the short term. I tend to become detached with long term thinking, so it is helpful to be brought back into the moment to simply enjoy each day.

    It is good to see your comments on how these two groups work together.
    Distilled Dollar recently posted…Personal Finance is SexyMy Profile

    • My last Ex was a type A, I think some of her shortsightedness stemmed from her upbringing in poverty. Even though I gave her everything she needed, she probably never felt fully secure, like it was always temporary to her even after being together for years. I think James’s point was accurate that she was still stuck lower in his pyramid and she never had much self-esteem no matter how much I told her she was smart and beautiful. If you haven’t already, I’d check out that Retirement Savvy article I linked in the post, I found it interesting and kind of eye opening for me.

  • I think I solidly fall into Group A for most of the categories that you have developed. I’ve been trying to learn how to get better at just “starting something.” Doing something that is good is usually a lot better than doing nothing while waiting for perfection. I also tend to over analyze things as well instead of just making the decision. It’s important to not make hasty decisions when it comes to important things, but I’ve also learned not to sweat the tiny details as much.
    Debt Hater recently posted…Luxury ApartmentsMy Profile

    • I find it’s just hard to get myself to start a project because I plan too much, but once I do get myself to jump in, I usually just go with the flow a bit and can actually get a lot done if I generally know what I’m doing.

  • Great read with a lot of insightful comments. One of the things I have struggled with during the two plus years since I wrote my book and started the blog, is understanding why so few people – at least the ones I come into contact with – make the change. As you note, “It makes logical sense that saving and being frugal is extremely beneficial to your life and future!” I’ve come to believe that clearly the underlying logic isn’t enough to turn most … there are an indeterminate number of factors – covered a little in my post [thanks for the mention] – that prevent people from working toward change. It is a tough nut to crack!
    James recently posted…The Money – Lifestyle TradeoffMy Profile

    • Your post really made me think in a different perspective for the people I’m close to in Chicago that barely scrape by. I always got frustrated thinking, “if you just get your resume out there and try, I know your smart and hard working. You have a good chance of landing a job that makes 150%+ more and has benefits”. Which I still think is true, but I started thinking about how we trivialize our accomplishments, like they were simple and easy. Just do what I did, it’s so easy! When I thought more about how I got to where I am, I realized it was anything but easy, It was a pretty tough road and I was lucky to have my family at least provide a roof over my head and food in the fridge. I worked many jobs, spent 6 years going to 3 different colleges. Thanks to another family member, I pretty much tripped and fell into this engineering field I’m in. I know I have a lot more confidence today and I’m on top of that pyramid, but it’s crazy to tell people it was easy or that it’s easy for them to accomplish more. You realize how crazy it is when a guy that’s better off than you tells you it’s easy to be as successful as they are. It’s never easy, but sometimes it’s not as hard as we think either.

      The other part I’ve thought about is connections and culture, I used to hear about connections are important in business life, now I know how true that is. It seems certain cultures naturally have tighter bonds like Cubans and Chinese for example have pretty tight societal bonds. It seems like the more people you’re well associated with around you, the more people thrive. I don’t have quite the same societal bonds as some of those groups have, but I do have a big family that generations before me have worked hard at keeping together and I know how much those people have helped me along my way.
      I don’t know if it’s technology driven, but I see my big family ties falling apart and it makes me sad.

      • Connections, or relationships, are definitely a huge factor; more so than many are willing to acknowledge. While I think I’m fairly bright and have worked hard, it would be disingenuous of me not to acknowledge that I’ve benefited from relationships and had a couple lucky breaks along the way. What about the individual that is just as bright but had fewer connections and was a little less lucky? It isn’t that hard for me to imagine those differences could translate to a $30,000, $40,000 or $50,000 difference in salary, which of course can impact savings/investment rates and returns … which of course can impact what type of resources can be shared/passed down to family and friends.
        James recently posted…Life or Debt: A ReviewMy Profile

      • Interestingly, I just finished reading this article that nicely addresses how those with connections build on inherited advantages. That is not to suggest that they aren’t bright or they don’t work hard. However, their success – and how they see themselves and others – is often skewed by the paradigm in which they live/operate, and likely, is the only awareness they have …
        James recently posted…How a For-Profit College Targeted the Homeless and Kids With Low Self-EsteemMy Profile

        • Interesting article. Even on the lower end of the social spectrum, I know some people where their parents were decently well off and paid for their college, probably gave them an allowance the whole time and a new car, sometimes even a house believe it or not. They don’t usually understand how much that boosted their start in life, because they were spoiled like that all their life. Meanwhile, I worked through college, graduated with student loan debt, paid for the junk mobile that’s barely running with 200k miles on it and had to find a job and figure out how to pay for rent, food, student loans, keep my pos car running, etc on a tiny entry level salary with no benefits. But even I had a boost above others who weren’t even as lucky as me and it’s always hard for people to relate to those they don’t share similar experiences with.

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