Why do people have such different spending habits? Spendthrifts often spend more than they can afford and can wind up with non-ideal outcomes like credit card debt and overdrawn bank accounts. Tightwads, on the other hand, are very reluctant to spend money and are inclined to save as much as possible and avoid going into debt.

While we might be quicker to criticize uncontrolled spending than compulsive saving, both tightwads and spendthrifts experience their tendencies as sub-optimal. Tightwads struggle to spend money even when they can afford to, and doing so would improve their lives, such as replacing worn-out running shoes that are causing them back pain.

Research shows that, on average, about 20-25 percent of people are classified as tightwads and about the same percentage as spendthrifts; the remaining 50-60 percent fall somewhere between these extremes. (You can take the Tightwad-Spendthrift Scale yourself, developed by marketing professor Scott Rick and colleagues and the basis for much of the research in this area.)

Additional research has shown that the following variables are linked to Tightwad-Spendthrift scores. Most of these studies were correlational, so we can't know for certain whether the variables cause a person to become a tightwad or a spendthrift.

Age: Older individuals are more likely to be tightwads than spendthrifts. Rick and his fellow researchers found that among individuals older than 70, tightwads outnumbered spendthrifts by more than five to one.

One possible explanation is that older adults have traded the youthful optimism about earning potential for the clear-eyed reality of living on a fixed income. However, this finding could also reflect a........

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