Problems With Frugality– The Flip Side of the Coin

by Martin

In the spirit of Financial Literacy Month, I wanted to tackle the epic battle of– frugality vs. earning more. A classic debate that will never end. Instead of fully re-opening it for today, I wanted to look at some of the negatives of frugality.

As you get acquainted with the world of personal finance, I don’t want you guys to think that you have to cut every single cost in your life just to save money. That’s not what Studenomics is about. Personal finance gets really boring once you start dwelling about finding more and more ways to cut back on your spending. I’d rather find a level of spending, where my savings are increasing and I’m happy overall with my lifestyle.

Let’s jump into the flip side of the coin and look at some of the negatives of frugality:

You don’t pay for value.

I could be wrong but it seems like frugality advice often entails cutting costs on every area of life. I’m a firm believer of saving money but I’m a stronger believer of paying for value. I like to pay more for good stuff. I won’t wear cheap cologne. I won’t wear second-hand clothes. I won’t cut my own hair. I won’t cut my gym membership to work out at home. These are all things I absolutely refuse to do simply because I believe in paying for value. In all of the scenarios mentioned above I see value, hence I’m willing to pay. If you find value in a purchase, go for it.

You don’t value your time properly.

I don’t mind squeezing in the odd frugal activity or money saving task into my schedule. I do have a limit though. There’s only so much time I’m willing to dedicate to cutting costs. I personally feel that my time could be better spent on something that I enjoy and could improve my financial situation (working on this blog for example).

There’s only so many costs you can cut.

You’ll eventually get to the point where you’ve cut every cost possible. What’s next? One summer I drastically cut all of my costs. It wasn’t long before I realized that I simply needed to earn more money if I wanted to improve my financial standing. Some of you might disagree with this. I do stress that frugality is an important tool for financial independence. It just isn’t the only tool.

Many people take it to the extreme.

Once you see your bank account hitting record numbers, a sense of euphoria will hit. Unfortunately, the next step usually involves figuring out how to become a complete miser. Many of us that follow the financial media and read about personal finance, have experienced this. It’s really easy to pass the point of being financially conscious and reach the infamous stage of pinching pennies. You need to watch out for this stage. You don’t want to get to the point that you save money by not getting your parents a Christmas gift. You also don’t want to reach the point where the quality of your life begins to deteriorate because you’re always worried about saving money.

Do you guys agree with my flip side of the coin for frugality tips? Or perhaps are you a major proponent of frugality no matter what?

I hope you enjoyed this piece!

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{ 8 comments… read them below or add one }

1 Anthony

I would have to disagree with you…

But I guess it would depend on how you define “frugality.” In my eyes, frugality is saving costs by restraining oneself from purchasing/using unnecessary products/services. Your first two items (paying for value and value of your time) are built into the definition of frugality, I think.

For example, say I “needed” (I won’t argue need vs. want here) to buy another TV. A frugal person would not necessarily buy the cheapest TV available. Rather, a frugal person would buy the cheapest TV, after comparison shopping, looking at quality of the products, comparing the expected lifespan of every product, evaluating any known defects, etc. So, in my eyes, “frugality” is “value”/”quality.”

As another example, I pay for lawn care services. It costs me $80/month. Although I *could* mow the lawn myself, I believe outsourcing this activity is frugal. In turn, I am able to work a second job (grossing a lot more than $80/month), I can spend more time with my wife and daughter, I can take care of other household things, and the neighbor youngster learns a little bit about hard-work.

Sorry to ramble on… but frugality is NOT about buying cheap things. It means looking at value and evaluating the benefits of the product/service.

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2 MD

It’s a fair assessment Anthony. I simply wanted to present the other side of the coin.

I like your opinion on the lawn care services. I myself was that neighborhood youngster that worked on lawns all summer long. You got yourself an amazing bargain though. I charged much more than $80/month.

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3 Budgeting in the Fun Stuff

I prioritize our spending, which allows my to be frugal – as in not buying stuff we don’t really want or need – and it allows us to cover our wants and needs while saving for the future.

So, yes, I believe frugality is important, but no, you will never find me spending hours to save 20 cents on cans of tomato sauce.

There’s an inner- time/cost analysis to my frugality. I will spend 15 minutes a week total for cutting and using coupons on things we regularly buy and save $30-$50 a month, but I won’t spend a couple of hours every Sunday playing the grocery game to save $100 a month…I rather spend the 2 hours with my husband or friends…

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4 MD

15 minutes of your time is definitely worth the savings. I just personally don’t see the value in minor cutbacks/time consuming activities that save a minimal amount of money. Don’t get me wrong, I’m all for having more money in my pocket. I just draw the line when lots of time is required to save money.

Do you find that you focus more on saving money or earning more money?

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5 Abigail

I definitely have to disagree with you about paying for value/quality. In fact, it seems like, at least every other week (if not more often), some blogger I read has decided to unfurl this rather tired flag of a subject.

The post almost always reminds us that frugality is about conscious spending/spending wisely/saving on little things to splurge on things that matter. Sorry for the bitter tone, but I was just an hour ago musing how the subject was being trotted out again over at Enemy of Debt. (He at least had the decency to make the story personal by giving examples of times he cheaped out and regretted it, versus invested in quality and didn’t.)

Truth be told, I have a ridiculously long list of bloggers I read, but I guarantee that if you keep an eye on frugality/debt reduction blogs, you’ll see at least two such posts a month.

As for the other stuff, it’s also fodder for many discussions/back-and-forths in the blogosphere. Especially about value of time. I think if you have disposable income, it’s good to realize that sometimes it’s good to pay others for what you don’t like to do. I’d get a personal chef in a minute if we could afford it! On the other hand, if you don’t have anything extra to spend, suck it up and get it done yourself.

Then again, I have issues with debilitating fatigue, so it’s easier for me to draw the line between what I want to do and what I can do — that is, what I should use my limited energies on and what I should just let go of already/ask someone else to help with.

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6 Hope to Prosper

Studenomics,

Pay no attention to the bitter bloger above. If you read a lot of PF blogs (like most of us do) you will see many of the same themes repeated now and then. That’s because there are a lot of bloggers and it’s a pretty limited subject. Also, just because someone is tired and grumpy doesn’t excuse a lack of tact and courtesey. It’s a lot easier to criticize someone else’s effort then it is to actually contribute something useful.

I wrote a similar post a while back and it was one of my favorites. The reason this was such an important post for me is because I spent years trapped in poverty, with frugality as my only option. Then, I realized that it was much more effective to increase my income. And, within a very short time, I had. This simple thought changed my life and the lives of my family. And, I kept thinking that I wish I had of thought of it sooner. I fondly hope someone reads my post (or your post) and saves themselves years of unnecessary struggle, when they could be enjoying their lives.

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7 Abigail

MD,

I’m sorry if my meaning was misconstrued. I wasn’t criticizing your post. To the contrary, I was simply saying that your point (frugality vs buying value) is covered a lot in the PF blogosphere. As I mentioned above, too much.

I don’t mind it as a passing reference, as you did here. I’m simply tired of bloggers devoting whole posts to the subject. Repeatedly. I accept that there’s very little that’s new under the sun. But some things should be left alone — or at least covered from a new angle.

For example, here you went with how frugality can backfire. That’s good. I may not agree with some of the things you think — I don’t think frugality means overlooking the importance of paying for value — I appreciate that you a) approached this from a new angle and b) didn’t belabor any one point in here.

Sorry if you took my previous rant as a personal attack. To the contrary, I was ranting about OTHER bloggers, not you. (And I accept that I, too, have been guilty of doing too many posts on the basics. I’m consciously trying to avoid it now, unless I can put a new(ish) spin on the subject.)

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8 Joanna

I did enjoy your article. I am watching the erosion that is caused by family members who have let there frugality lead them to debilitating behaviors that are not good for themselves or those they love around them. If I allowed my decisions to be solely based on my bank account amount then I am rendering my God to be money instead of the God who created me. I have seem different
family members especially in the generation above me as well as in my own generation lose out on the quality of there life due to there posturing position that there assets were more important than the ability to meet the needs around their loved ones. As a business person and a financial planner I know the rewards of saving money and growing for your retirement
but when your ignore the culture and needs of those around you to accomplish it you have clearly missed the mark and need to step back and
say no to your debilitating frugality disease. We are here to learn how to love one another not see who has the biggest bank account which by the way you can’t take with you when you leave.

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