This post challenges you to reflect internally, considering the emotions that underpin your financial ideals. Learn about the three main types of relationships that people have with their money: Spender, Saver, and Investor. Then, determine where your relationship stands and how to progress it to more effectively master your money.

Your Romantic Relationship with Money

Consider, for a moment, your relationship with money. The same way you’d think about one with a romantic partner.

Is it a healthy relationship? Are you honest with each other? Would you be attending couples therapy? How intimate would you say…relax I’m kidding!

While these questions are ridiculous, I think it’s a helpful way to prime you for this post. I want you thinking about money from an unconventional perspective. Take a step back from the numbers, spreadsheets, data and “rational” decision-making for a minute. In reality, our relationship with money is complex and human. It’s deeply emotional and psychological. Unique life experiences and defining moments might shape these relationships in unexpected ways.

This is part of the reason why it’s so challenging to master your money. See, money brings raw emotional baggage to many relationships. A natural response is to panic and ignore this fact, rather than to face it openly. Today, let’s face it openly.

Categorizing Common Money Relationships

This flow chart shows the three main stages in a typical relationship with money: spender, saver, and investor.
A graphical representation of the three main stages in a typical relationship with money.

This post explores the three most common relationships that people have with their money: Spender, Saver, and Investor. We can further organize these categories into “stages” of a progressive flow chart. This flow represents the development of an ideal money relationship: Spender -> Saver -> Investor.

With that said, humans are complicated systems, and this framework is oversimplified. In your own world, the arrows might switch directions. The order might differ. In other words, life happens.

Nonetheless, I hope this mental map provides a useful visual as you dissect your relationship with money. The first goal is to identify where your relationship sits in its development. Then, wherever you’re located, formulate a plan to move farther right on the diagram. From spender to saver to investor. Even those that find themselves comfortably positioned in the Investor group can strive for improvement.

The quicker you progress your relationship deep into the Investor category, the easier it will become to master your money.

Relationship Stage 1 – The Spender

You and money are just getting to know each other here. Perhaps you didn’t grow up with much money, and you’re not sure what to do now that you have some.

Maybe you recently graduated from college and took your first big job. Now you’re on a mission to reward yourself for all of that hard work. Or you might feel compelled to spend more to fulfill expectations that others have created for you. Beware of this lifestyle creep.

Whatever the circumstances, Stage 1 runs hot and fast. Your money moves in the door and out immediately. It’s “burning a hole in your pocket.”

This is essentially the YOLO approach to a relationship with money. Since you can’t take it with you…might as well live it up while you can.

The biggest risk facing a Spender is not simply spending every dime that they earn, but spending more than that. Once a Spender discovers the ability to leverage a lifestyle with credit cards, danger often ensues. The burden of high-interest consumer debt might very well ensure that a Spender’s relationship with money never moves beyond Stage 1.

The Spender’s Mindset

Spenders see no real use for money beyond the instant gratification that accompanies the accumulation of “things.” Money is viewed as a tool to transact with limited consideration for long term consequences or planning. Driving factors might include: personal insecurity, lack of financial literacy, cultural influences, or a desire to fit in with a certain group.

[Cash Snacks Note: Another reason you may classify as a Spender is due to a lack of sufficient or stable income. This framework assumes that you’re earning enough to support basic human needs like food, shelter and medical care. If you’re struggling to survive off a minimum wage income, a more beneficial focus is likely building relevant skills or experiences rather than critiquing your relationship with money.]

Relationship Stage 2 – The Saver

By this point, you and money are getting a little more comfortable with each other. You realize that a key source of leverage in your relationship stems from a simple concept: increasing the gap between your income and expenses. This notion intoxicates you. Suddenly, you’re motivated to spend less than you make.

The relationship grows more serious. Discussions about “the future” begin to dominate dinnertime conversation. Vacations, birthday parties, weddings, children…you recognize your goals won’t pay for themselves.

Perhaps you even immerse yourself in the world of financial analysis. Savings rates, budgets, and expenses. Fantastic! But it’s not enough.

You’re still young and naive. Awareness of these future issues and uncertainty inspire intimidation rather than progress. Think of Stage 2 as the “stuffing money under a mattress” phase in your relationship.

The Saver’s Mindset

A Saver’s relationship with money is on the precipice of greatness, but there’s one glaring emotion standing in the way: fear. While money is seen as a tool to buy “things” in Stage 1, it’s viewed as a way to buy “security” in Stage 2.

The problem is that Savers adopt a scarcity mindset around money rather than a growth mindset. This fear of loss can cripple Savers. It causes some to lie stagnant in Stage 2 forever. Driving factors might include: the experience of a profound loss early in life, a “rags to riches” rise in class status, or a misinterpretation of the correlation between risk and reward.

Relationship Stage 3 – The Investor

Finally, you enter Stage 3. The relationship solidifies and everything falls into place.

You’ve moved beyond your intoxication with saving just for the sake of it. Instead, saving becomes purposeful.

You’ve already discovered the beauty of driving a gap between income and expenses. Now, you realize that you can gain infinitely more power in the relationship by taking it a step further.

You and money aren’t just considering intermediate goals like saving for vacation anymore. You’re talking long-term career ambitions, retirement…even death. Better yet, you’re not just talking. You’ve created a concrete action plan that will take you where you want to go.

Clear out the mattress money. It’s time to invest.

The Investor’s Mindset

An Investor is learning to harness money’s full potential. Seeking to manipulate existing wealth to create more of it. The challenge is exercising patience and sound judgement. It’s a long haul, but they make it work with discipline and a mercenary mentality. Money shifts from a tool used to build “security” in Stage 2, to a means of achieving “freedom” in Stage 3. Driving factors might include: strong financial literacy, impactful mentor relationships, or career dissatisfaction.

Anything beyond a 3-6 month emergency fund sitting in cash may start to inspire anxiety for an Investor. There are infinitely more compelling ways to put that money to work. Passive index funds, real estate, a small business. With each savvy investment decision, an Investor gains confidence and the benefits increase exponentially. Compound interest accelerates.

At some point, this momentum starts overpowering all external forces. The relationship could essentially run on autopilot. While this provides peace of mind, a wise Investor recognizes that the temptation of complacency is a trap. There must never be a day that an Investor takes this blossoming relationship for granted.

Key Takeaways to Master Your Money Relationship

We could all benefit from taking time to reflect internally. What formative experiences have shaped our perspectives on money? Where on the spectrum does our relationship with money sit today?

The emotional side of finance represents a crucial aspect of the wealth building process. Yet too often, it’s overlooked. Maybe we’re scared to confront these emotions. Or maybe we’re too caught up in the numbers to care.

Whatever the reason, to master our money, we must start by looking inward.