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What Kind of Spender Are You?

We'll help with a diagnosis and a cure for unhealthy spending habits.

Want a window into your soul? Look at why you buy. Stuart Vyse, author of Going Broke: Why Americans Can't Hold On to Their Money (Oxford University Press, $25), says there's no question that "who we are affects the way we approach spending."

TRY OUR QUIZ: What Kind of Spender Are You?

We're trained to measure ourselves by our possessions, says Dilip Soman, professor of marketing at the University of Toronto, so "we shop to find things that enhance our self-image or social status."

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Seeking status is one problem, and Soman and Vyse have helped Kiplinger's identify two others that manifest themselves in particular types of spenders. To see if you're one (or more) of them, take our quiz. If some questions strike a chord, read on for what you can do to change your spending personality.

What Kind of Spender Are You?

Shopping addictOverconfident consumerStatus seekerSmart spender

THE SHOPPING ADDICT

1. Do you shop to feel good when you've had a bad day?2. Does finding a great deal really get your blood pumping?3. Do you shop when you don't need anything?

Buying makes some people feel better about themselves. They often use shopping to compensate for gaps in their lives, says Vyse. Shopping addicts often view shopping as a competition and may rationalize a purchase by saying it was a bargain. Soman says these spenders likely hit the same stores.

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Advice: Get a life. No, really. Find other activities that offer the same feelings of accomplishment and self-worth without the cost, such as sports or volunteer work. Be aware that shopping addicts sometimes fall into a vicious cycle of buying, feeling bad about it and then buying more to feel better.

OVERCONFIDENT CONSUMER

1. Do you neglect to think about where the money's coming from before you buy something?2. Do you make large, spontaneous purchases?3. Do you use your credit limit as a guide for your spending?

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We all try to be optimistic about the future. But overconfident consumers wear rose-colored glasses when it comes to how they'll pay tomorrow for what they buy today. They have little or no savings, and Soman notes they often over­estimate future earnings based on credit limits. An overconfident consumer is more likely to buy big-ticket items.

But buying now and paying later only works "in a perfect world, where you do everything on time and have no bumps," says Vyse.

Advice: Don't push your credit limit. Save for big purchases, and build up an emergency fund.

THE STATUS SEEKER

1. Do you frequently compare your belongings to those of others?2. Do you have to have the latest "in" thing?3. Do you feel bad when you can't have what others have?

Status seekers are willing to go into debt to achieve a desired standard of living, says Vyse. And if their income falls, they can't ratchet back their lifestyle. They always have to own the latest, greatest stuff, and they figure that if their neighbors have a BMW, then they deserve one, too.

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The biggest problem with keeping up with the Joneses is that "people tend to compare themselves to the wrong Joneses," says Soman.

Advice: Adopt a lifestyle within your means. And if you strive for more, acquire it through savings, not debt.

THE SMART SPENDER

Smart shoppers can easily differentiate between needs and wants, and mostly stick to buying what they need. Though they may splurge occasionally, they comparison shop whenever possible to get the best price.

Smart shoppers also have their wits about them regarding the long-term effects of their purchases. They don't buy if they don’t know where the money will come from and it follows that they pay off their debt monthly. Smart shoppers stockpile their extra cash in savings so they have a cushion for unexpected expenses.

Advice: Keep up the good work! And try to pass along your good habits to a friend.

TAKE THE QUIZ: What Kind of Spender Are You?

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