8 signs that tell whether you are saving money or hoarding it

Is there anything as saving too much? This what a reader asked me in a long email describing her spouse’s attitude towards money and wondering if there was a problem. Her husband is not a saver, but a hoarder. So how can one tell the difference? 

There are some tell-tale signs of a hoarder: Inability to give away money to anyone else; anxiety while spending money; difficulty in organising and keeping track of money saved; indecision about what to do when encountered with money decisions; deep suspicion of others when it comes to money matters; and obsessive fears about losing the savings. 

These characteristics apply to money as much as they apply to hoarders of material things. There is an overarching anxiety about the hoard that impedes the ability to make sensible decisions about it, and makes parting with it very painful. To save is important, but overdoing it can cause anguish and deteriorate into a psychological disorder. How can we know and remedy the situation? 

First, is there a specific purpose in mind when you save or do you save for the sake of saving? My reader wrote that her household income is Rs 4 lakh a month, but spends about Rs 40,000 at the most (excluding rent as they live in their own house). A 90% saving rate is a target her husband is very proud of and budgets everything to stick to that rate. With grown up children who are on their own, this household should pause and ask what is the saving for. Mindless saving trades off the present for the future and is harmful. 

Second, do you keep accumulating even if wealth is adequate for known future needs? Using many of the online calculators available you can estimate the money you need for your major goals such as retirement. If the corpus you have is adequate and if it is invested wisely, it would grow in value with time. Not drawing on the corpus and ensuring its rate of return is higher than the inflation rate is precaution enough. If you keep adding to a corpus, topping it up needlessly, you are overfunding your financial goal. That is precious money that can be used for something else. 

Third, is spending a very painful decision for you? All wealth has to be spent one way or the other. Your savings are meant to be spent on a future need too. With time and habit you will develop the ability to balance your present and future needs, and apportion your money accordingly. Spending need not result in material things—there are wonderful experiences the world has to offer if you choose to step out and explore. If you find that you simply cannot spend, or find yourself uncomfortable using the money you saved, you may be setting yourself up for being wealthy, but sadly poor. 

Fourth, is it too painful to give away money? My reader anguishes about how her husband is unwilling to earmark any of their wealth for charity. She thinks there is enough to help the extended family, the poor around them, or give away to good causes. Her husband however, is suspicious of anyone who comes to them for money. If you recognise that you have enough and some more, learn to give. Studies have shown that money cannot bring happiness, and beyond a point it is the act of giving that money that brings joy. 

Fifth, are you unable to make money decisions without anxiety? If money is on your mind constantly, you slowly lose the ability to choose between important and non-important decisions. You will find yourself spending disproportionate time searching for the best deals for your holiday, and every decision from choosing a restaurant to buying entrance tickets will be fraught with indecision. If you have enough money, you should be able to make these simpler decisions with ease. However, if you have moved from being a saver to a hoarder, all money decisions become complex. You then have no yardsticks to measure what matters and what does not. If you find yourself needlessly quibbling about the pennies, it is time to take notice and correct your money attitude. 

Sixth, are you keen to downplay your wealth? In a poor country like India, vulgar display of wealth is in poor taste and avoidable behavior. But the many years of liberalisation has brought about a significant change in social attitudes where being rich is no longer an embarrassment. You don’t have to wear it on your sleeve, but are you actively hiding how rich you actually are? Are you overwhelmed by the wealth you have accumulated that living in denial gives you psychological comfort? Do you make a virtue of your very frugal habits? Check your attitudes for the right balance between being frugal and being stingy. 

Seventh, are you making compromises that affect the quality of your everyday life? In the anxiety to save and secure the future, many of us are guilty of paring down the present comforts too much. There is no point in living in martyrdom in the present, as if it is the only virtue that will enable a secure future. Sensible choices that ensure a stable and balanced quality of life are what you should aspire for. Walking to work today so you can buy your child a car in the future, is an exercise in needless and excessive paternalism. 

Eighth, are most of your investments earmarked for your children and the next generation? It is fine to leave behind some assets for the children, but that should not be the sole purpose of your earnings, savings and investments. If all your assets are meant for a future unknown use, and if you preclude yourself from using and enjoying those assets in your lifetime, you have a lopsided hoarding attitude that enjoys accumulating assets for their own sake. 

Our friends and family are precious in our lives because they hold the mirror up. If we are welcoming of their comments and observations, they tell us if our behavior shows excessive anxiety, suspicion and overt cautiousness about money. Hear them out. Run a mental check to see if your money habits are in balance. Begin to ponder the various purposes that hoard of money can serve, for you and for others around you