INTRODUCTION
Lessons on Money and Happiness from Sin City
What is so troublesome about our relationship with money that we’re so elusive or dishonest about it—to ourselves, to others? When it comes to money, many of us are completely contradictory, often evasive, and irritatingly indirect. We won’t ask people about their incomes, yet we peg our social positions by where we think we stand comparatively. We disguise our appetites by manufacturing “needs.” We never reveal how much money we make, or what we have in the bank. We defiantly spend when we know we shouldn’t. We’re reluctant (sometimes afraid) to negotiate for better salaries and find it humiliating to haggle over prices. We amaze our husbands, lovers, and friends with reports of the things we bought on sale that never ever were.
—Liz Perle1
For many of us, the way we think and feel about money is not ideal. That’s obviously true if we’re having trouble making ends meet. But even when our finances are in decent shape, the psychological experience of earning, spending, and managing money can be fraught in many ways. Consider, for instance, the experience of finally paying off a large debt. We might hope and expect that final payment will spark some joy, or at least offer relief. The psychological reality is often more complex. Anne Helen Petersen, a writer and expert on millennial burnout, has documented some counterintuitive reactions from people who recently paid off large debts:2
When I made the final [student loan] payment, I actually felt shame. I should be happy, but it seems like a lot of my cohort paid theirs off like a decade or more ago?… Instead, I’m just ashamed of my life that it took this long and I still needed help to do it and it was all just luck I was finally able to finish paying it off anyway.
—Amelia, age 45
I thought paying off my loans would be amazing relief and that I would be elated. And it is, but it isn’t? I feel a little mad—like somehow I was tricked? I tricked myself? I’ve always felt like I should have been smarter and not put myself in this position. I looked forward to paying it off for years, but, if anything, paying it off made me angrier at myself for ever having it in the first place.
—Joanna, age 37
That’s just one of many cases in which our thoughts and feelings about money are not what we’d like them to be. We might ruminate too much about our bills or our income or our colleagues’ income. (As a professor at a public university, I can learn how much my colleagues make with just a few clicks. Thus far, those clicks have not produced any happiness.)3 We might not only have bad feelings about money, but also bad feelings about those bad feelings—as Liz Perle noted in her memoir, “I consider my financial fears a privilege.… I feel guilty, like so many women I have spoken with, that I have so much and still feel so anxious.”4 Our relationship with money is complicated, no matter how much of it we have.
That complexity only grows when we’re in a romantic relationship. Some partners will proactively grapple with that complexity (e.g., by talking with a financial planner or setting up a shared bank account). Some engaged Catholic couples take Pre-Cana classes, which cover how partners should manage money (among other topics). But even if partners would love to sidestep delicate conversations about money, the topic is unavoidable. Most of life’s major decisions—which jobs to pursue or take, where to live, how many children to try for, when to retire—are inextricably linked to money and are often made within intimate partnerships. The decision to marry is itself, in part, a financial decision. For example, when same-sex marriage was legalized nationwide in 2015 in the United States, David Sedaris immediately proposed to his longtime partner, Hugh, but it wasn’t because he loved him. The proposal was entirely aimed at reaping the financial benefits of marriage. David assured Hugh that they wouldn’t tell anyone but the accountant. Hugh was ambivalent, noting, “It’s just money.” David had a hard time wrapping his head around that reply: “It’s just a mango-size brain tumor. It’s just the person I hired to smother you in your sleep. But since when is money just money?”5
Money is not only a source of tension when partners need to discuss and jointly navigate important decisions. Whether they like it or not, partners often get to observe each other’s individual financial decisions, such as how they handle their student loan debt or how they assist a financially strapped parent. For example, in a recent advice column on Slate, one man reported, “My wife used our savings to bail her family out of a pyramid scheme. That’s $30,000, gone.”6 (The advice included a recommendation for couples counseling.) Moreover, if I’m worried about what my partner might say upon learning about a particular purchase, my partner can influence that purchase—prompting me to postpone it, avoid it altogether, or at least hide it—without even knowing he or she has had an influence.7
So how much do these financial tensions matter for relationship quality? Isn’t money just one of many stressors in a relationship? Not quite. Arguments over money are particularly corrosive—even more than arguments about in-laws.8 In a famous study that tracked married couples from 1980 to 1992, Paul Amato and Stacy Rogers found that thinking in 1980 that a spouse “spends money foolishly” was an excellent predictor of being divorced by 1992.9 (Known infidelity was the best predictor of subsequent divorce, but irritation with how a partner spends money was still high on the list.)10 Likewise, when newly divorced people are asked to reflect on why their marriage failed, they frequently cite disagreements over money.11 It is difficult to overstate just how easily financial decisions can derail intimate relationships.
Now, you might be asking, what are we really arguing about when we argue about money? Many relationship experts propose that these arguments are really about something deeper12—that arguments that are superficially about money actually deal with some preexisting, foundational tensions within the relationship (e.g., imperfect communication, conflicting goals, a power imbalance). That’s sometimes true. However, the way we handle financial matters can create psychological dynamics that might not otherwise occur. For example, newlyweds might choose a bank-account structure that provides too little or too much transparency about how each partner is spending, shaping conversations and arguments about money for years to come. Or suppose that one spouse is a stay-at-home parent and the other earns an income. Is it obvious how that income should come into the home? Should it be direct-deposited into the earning spouse’s individual bank account or into a joint account? If it’s deposited into a joint account, how should both spouses go about using or withdrawing what they need? Answers to these seemingly trivial questions can influence the extent to which the stay-at-home parent feels valued and loved. Our psychology not only influences how we handle money, but the way we handle money also influences our psychology.
If some of these examples of money-related distress feel familiar, I can help. I’ve spent years studying how people balance their financial and psychological well-being, both on their own and within relationships. It’s a difficult balancing act to pull off, and focusing too much on only one aspect of well-being often leads to regret. My research indicates that these problems of prioritization often stem from our chronic psychological orientations toward spending money. For many of us, those orientations are a source of distress, and that’s particularly true when we’re in a relationship with someone who has a different orientation. This book is based on the premise that deeply understanding our spending orientation is crucial for modifying our behavior and how we navigate our relationships. With guidance, people can change.13 My goal is to offer that guidance and ultimately help you create a game plan for navigating financial decisions and the financial aspects of your intimate relationships.
My approach differs from others you might encounter on the well-being or personal-finance shelves of your bookstore. The guidance I’ll offer is rooted in rigorous behavioral science (in fact, conservative personal-finance guru Dave Ramsey once called me an egghead).14 Behavioral science has not addressed and solved all aspects of money and relationships, and I’ll highlight which pieces of advice are more speculative, or where scientists disagree. But before we begin our science-based journey, I think it’s important to share how I became interested in the complicated psychology of money. I didn’t come to this topic as a completely detached observer.
What Happens in Vegas, Stays in This Book
Spending money was a big part of my childhood. Growing up as an only child in Houston, I spent lots of time with my mother, Eileen, and her mother, Grandma Mollie, at department stores, garage sales, bingo parlors—anywhere people were opening their wallets. I enjoyed all that, but Grandma Mollie eventually got bored with the same old, same old. When I was ten, she convinced Grandpa Eddie to move to Las Vegas. It was sad, but my parents and I visited often during my adolescence, sometimes for weeks at a time. And we weren’t exactly touring the Hoover Dam or taking in some of the natural beauty of Nevada. No, we were hitting the casinos, and all the expensive delights contained therein—the shows, restaurants, shops, bowling alleys, and so much more. I looked older than my age (still true, I fear), so I didn’t draw much attention from the security guards when I quietly strolled through the casinos on my own or watched baseball games at the sportsbooks. I got to covertly participate in some of the action: the casino restaurants made it easy for guests to bet on keno, a lottery-like game, conducted every ten minutes or so. When the keno runners came around to collect any betting slips and wagers from the tables, they weren’t exactly investigating who at the table was betting. The small losses—a dollar here, a dollar there—were quickly forgotten, but getting a cut of a rare $10 or $20 win was exhilarating and memorable.
In all these adventures, I never witnessed any obviously reckless spending. My family usually stayed at a modest (for Vegas) hotel popular among locals—the Palace Station (probably best known as the place where O. J. Simpson broke into a room to steal sports memorabilia at gunpoint). Everyone just seemed a little sad after an unlucky afternoon—it never felt as if we were in real financial danger. Plus, we might win tomorrow! The debt-building nature of these trips was not apparent to me. (I only learned just now, while reminiscing with my mom, about the time my dad, George, had to wire her money during a particularly unlucky streak on one of our extended trips. He had stayed in Houston, not able to take that much time off work.) What was apparent was that seemingly relentless spending need not be stressful. It could be quite fun.
Still, it was also apparent to me from an early age that not everyone was enthusiastic about endless spending. I have vivid memories of Grandma Mollie hiding how much she had spent on designer clothes (by quickly getting rid of tags, bags, and receipts, and keeping purchases in the trunk until the coast was clear), to avoid grumbling from Grandpa Eddie. Stark differences were also apparent among my friends. For instance, my friend Jonathan was (and is) such a freewheeling spender that he was once featured in a USA Today article about people who had purchased TVs so large that they jeopardized their marriage.15 (He joined me in Vegas for my twenty-first birthday, of course.) By contrast, it was hard to convince my friend Eran to spend any money, and he always seemed amused and puzzled by my willingness to spend. For instance, when Pearl Jam toured in 2000, they released “official bootleg” recordings of each of their shows. These two- or three-CD sets each retailed for around $20. As a longtime fan who had only been able to obtain live Pearl Jam recordings via unofficial means, I was hugely excited. I did not buy all seventy-two sets, but I definitely bought more than I should have (by any reasonable definition of should). Eran enjoyed listening to them with me while we drove around town, but he posed some fair questions about all the purchases. For example, “Didn’t ‘Even Flow’ pretty much sound the same in Boston, Jones Beach, and San Diego? Were all these different recordings really necessary?” Yes! “Even Flow” was preceded and followed by different songs in each city—it was a completely different vibe each time!
With all this exposure to different orientations toward spending and saving, I couldn’t help but become interested in the psychology of money. But not until graduate school could I put names to the orientations I was noticing over and over: tightwads and spendthrifts.
Now Let’s Get to Know You
In the coming chapters, we will dive into the psychology of tightwads and spendthrifts and explore how both types can improve their well-being. But before we do, it’s important to assess our location on the Tightwad-Spendthrift dimension. So please take a moment to complete the Tightwad-Spendthrift Scale, and then we’ll discuss how to interpret your scores.
The Tightwad-Spendthrift Scale16
Please circle one number in response to each question below.
Some people have trouble limiting their spending: they often spend money—for example, on clothes, meals, vacations—when they would do better not to.
Other people have trouble spending money. Perhaps because spending money makes them anxious, they often don’t spend money on things they should spend it on.
Q1. How well does the first description fit you? That is, do you have trouble limiting your spending?
Q2. How well does the second description fit you? That is, do you have trouble spending money?
What follows is a scenario describing the behavior of two shoppers. After reading about each shopper, please answer the question that follows.
Person A is accompanying a good friend who is on a shopping spree at a local mall. When they enter a large department store, Person A sees that the store has a “one-day-only sale” where everything is priced 10 to 60 percent off. Person A realizes they don’t need anything, yet can’t resist and ends up spending almost $100 on stuff.
Person B is accompanying a good friend who is on a shopping spree at a local mall. When they enter a large department store, Person B sees that the store has a “one-day-only sale” where everything is priced 10 to 60 percent off. Person B figures they can get great deals on many items that they need, yet the thought of spending the money keeps them from buying the stuff.
Q3. In terms of your own behavior, are you more similar to Person A or Person B?
Q4. Which of the following descriptions fits you better?
Your Tightwad-Spendthrift score can be computed as follows:
12 + Q1 response − Q2 response − Q3 response + Q4 response
Tightwad-Spendthrift scores range from 4 to 26. I typically use the following ranges to label different consumer types:
4–11: tightwad
12–18: unconflicted consumer
19–26: spendthrift
I want to add some context to help you interpret your score. Whenever a “continuous” measure such as scores from the Tightwad-Spendthrift Scale is broken up into categories, small differences around the cutoffs can appear more meaningful than they actually are. For example, people who score a 12 might come away with a very different impression of themselves than people who score an 11. In fact, the psychological difference between them is smaller than the psychological difference between someone who scores an 11 and someone who scores a 4, even though 4 and 11 would both be considered tightwad scores. So when updating how you see yourself, try to keep in mind whether you are clearly situated within a category or whether you’re more of a borderline case.
Also, you should complete this scale again after reading the first two chapters, which go into depth about the psychology of tightwads and spendthrifts. The scale normally has high “test-retest reliability”: people who complete the scale today and then again a year later tend to get almost identical scores.17 Still, those initial chapters may clarify and refine how you view your psychological reactions toward money.
If you’re in a relationship, I encourage you to have your partner complete the scale, too. As we’ll see in later chapters, the extent to which you and your partner differ on this dimension has big implications for your relationship. Before the two of you share your scores, I’d also encourage both of you to complete the scale for each other—for example, Q1 would become “How well does the first description fit your partner? That is, does your partner have trouble limiting their spending?” Comparing those perceptions (e.g., how you see me versus how I see myself) will provide a useful ballpark estimate of how well you and your partner understand each other’s feelings toward money. That understanding is critical, but it is only a first step—for instance, I might perfectly understand just how much of a tightwad my spouse is, but have no idea what to do about it.
A Preview of What’s to Come
Life provides only so many opportunities to learn about money and relationships. For example, if you only marry once and only try one bank-account structure, you can’t exactly learn from personal experience about the best way to manage shared money. Surely other couples in your midst seem to handle money well or not so well, but from the outside we are usually not privy to some all-important details. Many people aren’t comfortable discussing money in polite company. Even if people tell you about an approach that seems to have worked for them, it can be hard to trust their diagnosis. Maybe they’re just a good couple, and many alternative approaches would have worked just as well. Maybe they have a substantial inheritance that cushions the impact of any financial errors. My hope is that this book, which is informed by classic and cutting-edge research and a wide range of experiences, will help you navigate a variety of difficult financial decisions.
This is a book for learning and doing. We’re going to learn about our individual dispositions toward spending and saving money, and we’re going to learn how to modify those tendencies. We’re also going to learn how those tendencies influence romantic relationships and parent/child relationships. Throughout, we’ll develop a game plan for how to improve the financial aspects of those relationships, with the ultimate goal of finding an optimal balance between financial and psychological well-being.
Copyright © 2024 by Scott Rick
