Personal Finance

Love and Money: When Tightwads Meet Spendthrifts

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Doves_VerdanceSometimes shopping can be a pain in the brain, says behavioral decision researcher Scott Rick, Ph.D.

Or not. And the degree to which you anticipate the “pain of paying” is basically what determines whether you are a tightwad or a spendthrift.

“People differ in the extent to which they have this distress reaction to spending situations,” says Rick, assistant professor of marketing at the University of Michigan’s Ross School of Business. “People who experience a lot of distress, we call them tightwads; people who don’t experience enough distress, we call them spendthrifts.”

In honor of Valentine’s Day, let’s consider what happens when the two pair up in a relationship. Humans have known for centuries that, in affairs of the heart, opposites usually attract. That’s great romantically and socially, but it can be disastrous financially.

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As a graduate student at Carnegie Mellon University, Rick and a team of researchers from the University of Michigan, Northwestern University, and the Wharton School at the University of Pennsylvania performed a study that surveyed 1,000 adults who had been married 16 years on average about their attitudes toward money. The results indicate that, when it comes to spending money, opposites do attract. Thus, if at all possible, spendthrifts and tightwads should be cautious when marrying one another.

“There are all kinds of important financial decisions to be made in a marriage,” Rick says. “So when those conflicting spending differences raise their ugly heads, that doesn’t tend to work out well.”

Their findings also indicated that spendthrifts who marry spendthrifts will have more debt and save less than spendthrifts who marry tightwads. However, if they want to avoid marital discord, Rick explains, spendthrifts should marry a spendthrift to have a marriage with less conflict in it.

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“They will be happier because they’ll argue about money less and, if they go into debt, they can share the blame,” he says.

On the flip side, when tightwads marry, they are more likely to limit their spending enough to interfere with their ability to have fun. Nevertheless, they may also enjoy better financial outcomes combined with greater marital contentment because they don’t argue over money.

The Science Behind it All »

Image: Verdance, via Flickr.com

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