What kind of spender are you? Take my Spenders’ Confessional!

New research from the Post Office and CEBR has found that British adults “unconsciously spend” more than £900 of their potential savings pot every year.

But the problem REALLY escalates on payday, when a third of us drop £55 in just 24 hours – twice as much as we normally spend in our daily life (£26). What is it about this date that turns many of us into spending piranhas, gobbling through cash that needs to last the whole month?

It’s completely understandable and nothing to be ashamed of – blame our brains and how they tend to function around money. But the good news is that I have a solution: take the Young Money Spending Confessional!

via GIPHY

A few years ago, I devised a list of all the main spending personalities I have come across for my book Spare Change.

Readers loved it, telling me it was one of their favourites parts of the book because the characteristics I listed was so easily identifiable. Everyone belongs to at least one of the Spending Types and some of us have multiple spending personalities, showing different kinds of spending behaviour depending on the time and situation.

But most of us fall into one category more than another. Seeing your tendencies in black and white really puts your overall attitude to money into stark relief. You start to realise what your spending triggers. This is the first, crucial step towards managing those unwanted splurges.

The Post Office loved my list too, so I’ve become a member of their “Save More Squad” this Spring to highlight the potential savings we can all make by being more mindful spenders. After all, it could make all the difference if you want to save nearly £1000 a year – that’s a decent chunk of a first home deposit, or a budding business fund or even your golden ticket to a debt-free life.

So are you ready to take my confessional? Which Spending Type are you? Let’s find out…

The pick-me-up spender

Are you having a dreadful day? Missed a deadline, spilt your coffee, got caught in the rain? Why not buy something to perk you up…yep, you’re a pick-me-up spender. Indeed, the Post Office found in its survey that 20 per cent of us are more likely to spend money after a bad day.

The hurried spender

Are you always in a hurry? Maybe you missed breakfast, so you’ll grab something on the way to work. Or you have a wedding at the weekend so you’ll race down the shops or go online to buy a new outfit…if so, you’re the hurried spender.

You’re not alone – 13 per cent of us confess to spending more just to make life more convenient (13%), which tends to happen if we’re tired and stress.

The promo spender

Are you incapable of resisting a bargain? If you can’t walk past a sale without buying something, or if 2-for-1 always gets you…you’re a promo spender.

It’s a widespread myth that super-scrimpers have more money in their back pocket than the rest of us. Some of them do, but others sign up to every discount newsletter, scheme and service under the sun, only to spend more money in the long run than they really intended.

The magnet spender

Are you always in buying mode? Perhaps you can’t walk past a shop or go online without buying a little something…time to admit you’re a magnet spender.

Commercial opportunities surround us today, and we don’t even have a break in our homes thanks to mobile internet and the growth of online shopping. For some people, this means they’re always switched onto spending, finding it difficult to take that break from buying that we all need. Smartphones make it easier to spend money than ever; a quarter (25%) of weekly spending is done online with one in 10 (8%) admitting they find it difficult to browse online without spending money.

The unintentional spender

Do you always buy more or spend bigger sums than you intended whenever you’re looking for something specific? If so, you’re the unintentional spender.

We’ve all been there, scratching our heads wondering “how did I spend that much?” Spontaneous sprees can blow a big hole in our budget, yet Brits make two unplanned purchases³ on average each week (costing £25), spending an extra £901 on average each year.

The payday spender

Do you blow your budget every payday? Of course, you’re the payday spender! This was the biggest danger highlighted by the Post Office research, with more than a third of us admitting we overspend on payday.

Payday has a huge psychological effect on people, creating an unconscious bias which makes us think we instantly have more money – despite our pay needing to last the whole month! This illusion of abundance is powerful, and influences people to burn through their money quicker. We make bigger purchases at the start of the month, with three in ten (29%) shopping for non-essential items.

But by the week before our next payday, many of us will start to feel stretched. One in four of us – 19% – will dip into our savings to cover costs, while 28% of us will feel cash-strapped until we get paid.

The FOMO spender

Do you hate to miss out on amazing social occasions, even if you haven’t quite got the funds? You’re a FOMO (fear of missing out) spender.

Around one in four (26%) of us like to book tickets or plan future social occasions in the first week after payday. Nothing wrong with that, of course, but big social periods of the year like Christmas and the summer holidays can really derail our budget. Unsurprisingly, three in five (61%) of people say they spend more around the December, followed by November (24%) and July (20%), due to the summer holiday season. Quieter months for socialising like February, March and April are the least likely to be high spending months.

And it’s younger people living with housemates who tend to spend the most on socialising – an average £132 each week – compared to £69 spent by those socialising with extended family and £46 with siblings. People who spend time with their parents spend the least at £44 per week on average (hardly surprising!)

Here’s the average weekly spend for a UK adult today:

We can learn to manage our spending – but only if we become mindful. Okay, much of the time, we fall into these tendencies without causing too much harm. But repeated overspending can be incredibly detrimental to our personal finances.

Of course, much of our spending is unavoidable, but it really helps to be able to recognise situations where you’re under pressure to spend more. For example, if you know December is an expensive month, you could try to save more in a specific account the preceding months, so you don’t become too indebted or raid your long-term savings.

Many apps now allow you to label savings pots to remind you of your goals – so trying setting up a “Christmas fund” now and stashing away whatever you can afford. Direct debits are also your best friend (at least when it comes to saving!) so make sure you set up a regular amount to leave your account every payday to go into savings. That way, you’re keeping something aside for the future without having to think about it too much.

Another good way to crystallise your spending habits is to keep a spending diary – whether it’s pen and paper or an online app, doing this will help you to recognise the times and situations where you overspend. Take time out once a month to really study that spending diary (or just to take a look at your online accounts) and really think about the reasons behind your purchases. Understand what is truly “essential” for you – and what isn’t. Check every non-essential item against the spending personalities above and ask which one crept out when you made that purchase. You’ll quickly see where the problems are occurring.

Staying in touch with your budget, setting spending limits and sticking to them will (over time) resolve some of your more outlandish spending problems. But doing this all in one go can feel daunting, so start with small wins to adjust your behaviour gradually. Go for the easiest tweaks – one less takeaway or taxi ride a week, say – and give yourself a month to bed in the changes.

Finally, check out the Post Office Money’s How to Save Money calculator to help you understand where you’re spending your money, and how your monthly expenditure compares to others like you, to help you identify your saving potential.