Holidays bring out clash in money-handling styles

By CHRIS FARRELL

Last update: November 7, 2009 - 5:16 PM

We're entering the holiday season. It's a wonderful time of year. But the holidays can also put stress on a relationship because the season often highlights the different approaches people have to handling money.

It's not surprising that we're attracted to someone who has another approach to money. Savers like it when spenders convince them to take a vacation. And spenders can be persuaded to build up a fund for financial emergencies. But these charming differences bring conflict during holidays when a couple also is juggling a mortgage, credit card debt, living expenses and retirement savings.

Indeed, a group of scholars began a study on love and money with a quote from the fourth Circle of Hell in Dante's Inferno: "They were so skewed and squint-eyed in their minds, their misering or extravagance mocked all reason."

Dante called them the Hoarders and the Wasters, opposites condemned to torture each other for eternity. The scholars use the terms Tightwads and Spendthrifts. Scott Rick and Deborah Small of the Wharton School at the University of Pennsylvania and Eli J. Finkel of Northwestern University confirm what poets have long known: When it comes to money we're often attracted to our opposite, but eventually, different ways of handling money have a way of dividing couples. The name of their study says it all: "Fatal (Fiscal) Attraction: Spendthrifts and Tightwads in Marriage.''

It has almost become a personal finance parlor game to place yourself and your partner somewhere along the tightwad-to-spendthrift spectrum. But looking into the research, the overall message echoes the insight of my favorite personal financial planner, the Greek philosopher Aristotle. His most famous idea is the Golden Mean, the desirable middle between two extremes. Between the spendthrift and the tightwad, the saver and the spender, lies frugality. And the research shows happiness is positively related to being frugal.

A major reason is that frugality isn't cheapness. Frugality means treating people with consideration. Cheapness doesn't take their needs into account. The frugal approach seeks out quality, not quantity. The frugal are conscious consumers mindful of the effects of their purchases and activities.

So, how do you get there? I would place giving at the core of your money management. It makes you much more conscious of what you're doing with your money. Another tactic is the short weekly money meeting, held at the same time and same place. You go over anything financial, and then you go out on a (frugal) date.

Chris Farrell is economics editor for American Public Media's "Marketplace Money." Send questions to cfarrell@mpr.org.

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