Spending Money: Pleasure or Pain? Why Some People Spend Money Easily While Others Have a Problem with It?

Abstract

Money management is a skill that a person starts learning from the first years of their life. However, this ability does not come with equal ease to everyone. Some people, even low-income earners, may always have some kind of savings, while others, despite being high earners, may still grapple with financial problems. This chapter discusses the different factors affecting how a person manages their finances, how much control they have over them, and how much pleasure they get from spending. The decisions concerning spending or saving money also depend on mental accounting (mental categories where money is assigned) and emotional accounting (emotional meaning of the source of the money). How a person spends their money, whether they control their spending or not, also depends on various psychological factors such as self-control, time perspective, or the level and type of materialism. A new concept of Money Spending Styles identifying four styles, Thrifty Spending, Belt Tightening, Happy Spending, and Spendthrift, is introduced in this chapter. These styles differ in two dimensions: control over finances (high or low control) and the emotions that money spending or controlling elicits (positive vs. negative).