The two sides are locked in a seemingly endless tug-of-war over budget issues. Again and again they say they’ll work together for the greater good. But when it comes down to making actual decisions about money, it’s a different story. They’re stuck in opposite positions and can’t reach a compromise.
You think I’m talking about the recent budget battle in Washington, of course. But I’m actually describing the personal finances of many American families.
That’s because financial tug-of-wars among politicians and families alike are about more than specific budget issues. They’re also about two fundamental philosophies of handling money: Let’s call them the “tightwad” and the “spendthrift.” While national budgets and family finances are structurally different, they both reveal these underlying human patterns.
(MORE: Republicans’ Debt Ceiling Charade is Downright Dangerous)
Professor Scott Rick at the University of Michigan has researched these patterns for years. And as it turns out, many couples have one of each. That’s because this is a rare case where opposites often really do attract. One spouse is the tightwad, with a philosophy that’s more like Speaker of the House John Boehner and the Republicans. That spouse believes that spending less is always a good thing in itself, and thus borrowing is to be avoided. The other spouse is the spendthrift, with a philosophy that’s more like President Obama and the Democrats. That spouse believes that spending more on the right things makes life better, and thus borrowing is justified.
Both patterns have their upsides and downsides, of course. Tightwads focus more on financial security but can miss out on spending that would increase well-being. Spendthrifts focus more on quality of life but can spend unnecessarily and get into financial trouble.
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Rick’s research has shown that these two patterns are deeply embedded. They may be inherited and formed by early life experiences, and they’re not easy to change, even for those who wish to change them. That’s why the Washington budget battle is often played out in homes across the country, right at the kitchen table.
So is the household version of this debate as intractable as the one in Washington? Well, there are some ways to move it forward:
First, recognize that if you focus on the greater good, tough financial times can actually bring you together rather than drive you apart.
Second, remember that you may actually need each other, because each side of the debate is right in some ways and wrong in others.
Third, acknowledge that you need to compromise every now and then — as our representatives in Washington finally appear to have done.