The Small (but Crucial) Difference Between Being Frugal and a Tightwad

Where do you fall on the tightwad to spendthrift scale?

There are four types of people when it comes to spending money.

1. Spendthrifts

2. Tightwads

3. Frugal

4. Unconflicted

In this article, I explain the research that describes each personality type. Read to the end to take a quiz to determine which of these personality types best describes your relationship with spending money.

The pain and the pleasure of spending money

I recently wrote a post about how modern convinces like credit cards and automatic bill payments ease the pain of spending money, contributing to overspending.

In a 2007 paper, (Scott et al.) make an important point: no matter how easy or difficult it is to spend money, not everyone feels the same pain when parting with their money.

Some people feel so much pain from spending that they spend less than they can afford—and less than they should— on things they genuinely enjoy. The researchers refer to these people as “tightwads.” Others feel so little friction when spending money that they spend too freely and are prone to impulse buying. The researchers refer to these people as “spendthrifts.”

The tightwad to spendthrift scale

Scott et al. created what they call the tightwad-spendthrift scale, which measures the differences in the pain people experience when paying for things.

They surveyed people, asking them how their desired spending level compared to their actual spending habits.

Here’s a summary of what they found.

• Tightwads outnumber spendthrifts by a ratio of 3: 2.

• Women are no more likely to be a tightwad than a spendthrift.

• Men are more than two and a half times more likely to be tightwad than spendthrifts.

• Tightwads tend to be only slightly older than spendthrifts.

• Tightwads are somewhat more educated—9% more likely than spendthrifts

  to have at least a bachelor’s degree.

• Spendthrifts were three times more likely to carry debt than tightwads.

• Tightwads have more savings than spendthrifts—especially at either extreme. Spendthrifts are more than twice as likely to have less than $10,000 in savings, while tightwads are more than twice as likely to have more than $250,000 in savings.

Frugal people and tightwads are not the same

The researchers also distinguished between being a “tightwad” and being “frugal.”

While both terms describe a person who doesn’t spend much money— what separates, the two groups of people is why they choose not to spend.

Frugal people are motivated by the pleasure of saving, while tightwads refuse to spend because of the pain that spending causes.

Frugal people make intentional choices, while tightwads deprive themselves of happiness by spending less than they would like and feeling pain even when they spend on the things they value.

Being frugal is great, but being a tightwad is miserable.

One of the more surprising results is that differences in income explain very little of the difference in debt and savings by spendthrifts and tightwads.

A reasonable conclusion is that it’s the psychological differences in how people view money that, in turn, determine their spending, saving, and debt levels.

Put differently, making more money won’t automatically fix your problems.

I would have been accurately described as a tightwad for most of my life. There was a long stretch where spending any amount of money on anything caused me visible pain. Anytime I had to spend money, my body would tighten up, and my heart rate would elevate.

The cause was entirely psychological and disconnected from my personal financial situation. Even after I made a six-figure income, I spent years feeling great pain spending any money. The pain I experienced when spending only eased when I addressed the root issue: financial trauma in my teenage years to my early 20s.

Like with all things in life, more money raises your margin of error—but if you want to have a healthy relationship with money, focus on your mental health as much as your paycheck.

Take the tightwad to spendthrift quiz

Here are the questions listed in the appendix of the 2007 study I reviewed in this post.

Q1: “Which of the following descriptions fits you better”—pick 1 to 11.

1. I have difficulty spending money

6. About the same or neither

11. I have difficulty spending money

Q2: Do you have trouble limiting your spending?

1. Never

2. Rarely

3. Sometimes

4. Often

5. Always

Q3: Do you have trouble spending money?

1. Never

2. Rarely

3. Sometimes

4. Often

5. Always

The researchers give the following scenario prior to the last question, which is as follows:

“Mr. A is accompanying a good friend who is on a shopping spree at the mall. When they enter a large department store, Mr. A sees the store has a “one-day-only sale” where everything is priced 10%-60% off. He realizes he doesn’t need anything but can’t resist and spends $100 on stuff.

Mr. B is accompanying a good friend who is on a shopping spree at the mall. When they enter a large department store, Mr. A sees the store has a “one-day-only sale” where everything is priced 10%-60% off. He figures he can get great deals on many items he needs, yet the thought of spending money keeps him from buying the stuff.”

Q5: In terms of your own behavior, are you more similar to Mr. A or Mr. B?

1. Mr. A

3. About the same or neither

6. Mr. B

Add up the number that corresponds to each of your answers. Here’s how to interpret the results:

• Tightwads score 4-11

• Unconflicted score 12-18

• Spendthrifts score 19-26

Which category do you fall and are you happy with that? Let me know in the comments.

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This article is for informational purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any major financial decisions.