The Rewards of Frugality and Thrift (or, Why We Scrimp and Save)
Published on - June 29th, 2010 (by J.D. Roth) Over the past couple of weeks, more than a few GRS readers have complained about the site’s tone. These folks are afraid that Get Rich Slowly is turning into a column that’s only about frugality and self-denial, one that is neglecting the “rich” part of the blog’s title. These concerns came to the fore in last week’s article about remembering to appreciate what I already have.
In that discussion, ObjectiveGeek wrote:
I want the best possible life for myself and my family. Maybe that means a dream house, or maybe that means the freedom to travel any and everywhere, but maybe that means both. I’d be proud of my dream home if I had earned the means to own it. I don’t think contentment is much of a virtue — it’s more of a guise for mediocrity.
Alex offered a similar sentiment:
I sometimes cringe when I see these kinds of articles. What is so wrong with wanting 5 bedrooms you may never use? What is sooooo bad about wanting a bigger house? If you have diligently saved, and planned, and you can truly afford those nice-ities in life, why not reach for them? Why not buy them?
Here’s the thing: I agree with both ObjectiveGeek and Alex. If Get Rich Slowly has been frugality-minded lately, that’s simply an accident of scheduling. While I believe that frugality is an important part of personal finance, GRS remains dedicated to the Big Picture, to all aspects of getting rich slowly.
There’s nothing wrong with wanting more, and there’s nothing wrong with reaching for nicer things in life if you’ve diligently planned and saved. I certainly don’t mean to imply that it’s bad to choose to buy things that will make you happier. But it’s important to find the proper balance between what you want and what you can afford.
How I Spent My Money in the Past
It used to be that I bought a lot of little Stuff:
- I spent hundreds of dollars a month on books and magazines.
- I had a lot of recurring expenses, such as my monthly cable bill and magazine subscriptions.
- I bought a lot of limited-use tech gadgets, like voice recorders and expensive digital cameras.
- I bought too many clothes. When Kris and I went through my closet recently, I was saddened to see so many items still with their tags on!
There was plenty more, of course. Basically, I bought what I wanted without thinking. If a friend had a new gazingus pin or thneed, I’d be inclined to buy a new gazingus pin or thneed, too. And when my income went up, my spending always went up. This is how I succumbed to the tyranny of Stuff.
It’s this kind of spending that I encourage you to question. I’m not saying, “Stop! Don’t spend on the things that make you happy.” I’m saying, “Hold on a second. Take some time to think about the money you’re spending — make sure it aligns with your priorities and goals. Don’t just buy a bunch of Stuff.” Buy based on your goals and values, not out of habit.
How I Spend My Money Today
What do I mean by this? Let’s take a look at how I’ve spent my money over the past couple of years. Each of the things I list below were purchased consciously, with money I already had, because I knew they’d make me happy.
Here’s a gallery of my recent major purchases:
My Mini Cooper, which I coveted for years before I was able to save enough to buy it with cash. I bought a five-year-old used car, and have been very happy with it. Meanwhile, I’m slowly saving for an eventual replacement Mini.
My nice furniture, for which Kris and I saved until we could combine a coupon (yes, really) with a colossal sale. We got this stuff at 50% off regular pricing. That has to be the best coupon I’ve ever used.
My comic books. I have a monthly budget for purchasing comic books (and comic strips) in collected editions. Before I dug out of debt, my comic spending was part of the problem; now, it’s part of the solution — it’s part of what makes all these smart choices seem worth it.
My bicycle. It was a tough decision whether I could afford (and justify) $900 on a new bike last summer, but I’m glad I did. I’ve been riding this thing constantly since I returned from Alaska, and it’s helping me drop the weight. Also helping me drop weight is…
My gym. I spend a lot of money to be a part of the local Crossfit gym. But I also derive a lot of value. Since joining in April, I’ve lost fifteen pounds. By the end of the summer, I’ll be fitter (and stronger!) than I’ve been in my adult life. To me, that’s money well spent.
My travel. Most of all, I’ve been spending on travel. Kris and I hope to be able to make one big trip every two years. (Maybe every year, if we’re diligent.) This year is an exception. I used part of my book advance to go to Belize in February, and later in 2010 we’ll travel to France and Italy.
Make no mistake: I live a rich life, for which I am tremendously grateful. But this rich life is largely a result of the choices I’ve made. I worked hard to dig out of debt and get where I am today. I’m fortunate to have found work that I love and am good at, and I’m lucky to be a winner in the “lottery of birth” — and I make sacrifices on the things that don’t matter to me so that I can indulge in the things that do.
I write about thrift and frugality a lot, but it’s only because I recognize their value in helping me obtain my goals.
Conscious Spending
“I should write a post for Get Rich Slowly,” my wife told me the other day. “I could tell your readers all about how you’re not frugal.” She meant that unlike what some of you think, I’m not into self-denial. I do buy nice things for myself.
But here’s the difference between my current spending and my former profligate ways: I can afford everything I’m buying, and when I do buy, it’s a conscious decision. I’m not financing my lifestyle on debt, and I’m not buying things just to “keep up with the Joneses” or out of habit. My spending now reflects my priorities, my goals, my values.
Because I’m spending consciously and living within my means, I’m much happier than I was before. I can’t have everything I want — no $2.3 million home for me, for example — but I can have a few of the things that seem most important.
In a follow-up comment to my post last week, objectiveGeek wrote:
Of course having money for money’s sake is nearly pointless, but having money for what it represents (value, effort, innovation, hard work, success) and for what it provides (freedom, time, safety, opportunity — essentially life!) is the noblest of goals.
I think that’s correct. We’re all striving to get rich — quickly or slowly — because of what we believe money can bring to our lives. I just think it’s important to maintain balance, to remember that money and happiness aren’t always connected, and to acknowledge that the best way to achieve your financial goals is to make active, conscious choices about where and when you spend your money.
Maybe it’s time to officially add a fifteenth tenet to the Get Rich Slowly philosophy. Namely, you can have anything you want, but you can’t have everything you want.
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@q
“Having money because it provides personal opportunity is selfish. Having money because of how you can use it to improve yourself, everyone and everything around you is noble.”
I see a huge contradiction in that comment. Personal opportunity = selfish but improving yourself is…noble?
Taking hold of personal opportunity is one of the best paths to improve yourself, your family and your community. More money = more opportunities and having more influence in your environment.
Can I extrapolate that you might be from an very religious background? Usually the people I meet or read in the comments who say things like this think money as “evil” or “dirty”, like if you work at a crap job 7 days a week for 12-14 hours a day with little pay you are somewhat more virtuous than a millionaire.
Please.
Even if you are a Scrooge and are a multimillionaire most of that money goes back to the government (if they are honest of course and if not it’s get back one way or the other) which, in the best case, would be distributed back to society.
Bill Gates and Warren Buffet just recently are giving a call to arms for other billionaires to contribute a majority of their wealth to the betterment of society. Do you honestly think that if they didn’t become some of the richest people in the world they would be able to effect society like they are now with an example Gates trying to eradicate major disease in Africa? What would happen if they were just flipping burgers? I think that’s pretty damn noble.
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Great article JD…this one was well-written and really hit the nail on the head. This sort of thing is why I love GRS!
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I like to define frugality this way:
You only live for so many years. In those years, you will only make X amount of money. You obtained X amount of “Stuff”. You had X experiences. And you spent all of your life getting to that point. That’s it. That’s all you get. Are you happy with your result?
It’s all about how you divvy all those X’s up. Maybe you deprived yourself too much and didn’t use all the X’s you had. Maybe you were greedy and deprived someone else of their X’s (your wife, children, family, environment, etc). Maybe you didn’t divvy them up correctly. Or maybe you did.
In the end, it’s not a race or competition or “Stuff” grab. It’s making sure you have a smile on your face when your heart takes its last beat.
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The comments that spurred this blog entry are idiotic and I don’t understand why JD felt the need to validate them. Alex defended buying “5 rooms you may never use.” Of course this is a problem. Under his premise, he’ll NEVER USE the rooms. We should question any situation in which culture, lack of self esteem, or some other force makes us pay for 5 rooms we WON’T USE. If you’re spending money on such things, there’s probably something going on that’s worth questioning. That same money could be spent on something you WILL USE. It can be given to charity. It can go to dozens of other uses.
There is no reason to justify gross over-consumption. Having the money is not a reason to over-consume. We still need to share this world with several other billion people and a whole lot of animals and ecosystems that keep losing out to humans.
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I think it’s interesting the push/pull of a typical American psychology when it comes to frugality and luxury.
On one hand is the Puritanical value system and the Protestant Work Ethic while on the other side is wanting the “good life” and materialism being sold through the media and culture for the past century.
It’s a tough balance but personally I would rather be a millionaire and be potentially corrupted by wealth then feel I need to take the Puritanical road which defines wealth as a sort of an “necessary evil” and worrying avoiding the pitfalls associated with it.
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There is nothing wrong with living a frugal live to get to your goals and dreams in the future. Frugality is often confused with cheapness even though they represent two very different meanings.
Someone cheap is only looking for the lowest price on everything, and would probably avoid a purchase at all costs if they could.
A frugal person on the other hand recognises the value of all items before making a purchase. A frugal person makes a conscious decision before giving money away for a purchase.
A frugal person has a plan and purpose, they won’t buy something if they know it won’t give them any value. If however they come across an item they seem very worthwhile (just as you mentioned with your personal desires such as the minicooper, gym, etc.) then there is no reason in avoiding that purchase.
After all, what is the purpose of life if you are not willing to buy the things that you really want? What would be the purpose of saving money if you’re not saving it for something special?
Cheers,
Wahid
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So along with marking things as favorites as was suggested above, can you also figure out how to mark the “holier than thou” comments? To me, that’s the only turn-of to reading comments – those that use this as a forum to tell everyone else how they should be living. Maybe a filter on the word should?
Otherwise, I thouroughly enjoyed todays topic!
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I can’t wait to read all these comments, but I only got as far as #7 or so – J.D., you said your record player seems to be on its last legs. Check out Fred’s Sound of Music on Hawthorne for repair or maybe replacement – but guard your heart and wallet well. One of my friends makes a pilgrimage there every time he visits from Seattle, and he’s left with more than one tube amp! (I imagine the prices are fine, but it’s a bit of a stereo geek heaven)
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@JD and Dink (#2)
After following this blog for about a year and working on my finances, I see that TIME is the most important thing for me. Previously, I had been working 3 jobs and was never at home with my husband. For a variety reasons, I had to choose and par down to one job. Lucky for me my current job allows me to have quality time with my family and also meet my financial commitments. I still have a ways to go for savings/budgeting but am learning as I go.
Had I not been forced to choose, I would still be overworked and unhappy. This year has been eye opening and I see that should I be presented with growth opportunities, I will first consider how this will affect my quality of life…
I may not have all the things I want right now but it’s just not that important any more.
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Most of these comments resonate well with me. Sure, there are some not so good ones, but all in all the post was level-headed, as are the responses.
I’ve recently (finally!) gotten out of debt and am finding my legs in terms of what’s next. I’ve always maintained a pretty good work/life balance, but I’m still learning to assess smart purchases (my stand mixer – used regularly), less-useful ones (food processor – used only a couple of times so far, but will probably earn its keep), and flat-out chances of a lifetime (these last are travel related!). I suppose that’s a lifelong learning process!
I don’t think I’ll ever have quite as much financial wiggle room as many of the commenters seem to, but that’s the life of a single-income city dweller.
I accepted long ago I’ll never be able to do/see/experience/have it all, but I intend to have an interesting time of it, no matter how long or short my life is.
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@heaps! (#106):
“After all, what is the purpose of life if you are not willing to buy the things that you really want?”
That is SO messed up. I am speechless. I am without speech.
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Yep, seemingly plenty of acrimony in some of the comments. In the end, we’re all entitled to our opinions and lives, distressing as it may be to others.
And despite some of the comments seen as hurtful, I think most people who comment here are mindful of their own priorities, and are moving towards more and more of a non-financially-wasteful life. And more power to ‘em (and us all).
If you want something in stark contrast, check out the program “How’d You Get So Rich?” which is available online at TVland.com. Makes me feel positively Gandhi-ish.
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@Naomi (#111)
I suppose my wording was a little off. To give an example of what I meant think of it this way.
In regards to having lunch at work, a frugal person might give herself $5 to spend and will stick to her budget. She gives herself that amount of money so that she will not go over that. She sticks to her budget so that she may achieve her goals in the future.
A cheap person on the other hand won’t have a particular plan of action. They might avoid go into a certain grocery store or purchase the cheapest item solely to not spend more money. They don’t have a reason to not spend money, they just don’t want to spend.
This goes for all levels of income, no matter what you allow yourself for food, clothes, entertainment, etc. it is important that you stick to your budget and allow a little room for savings. A frugal person knows where and why he or she is spending money.
A frugal person gives a value and weighs the cost and benefit for every item before purchasing.
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“We should question any situation in which culture, lack of self esteem, or some other force makes us pay for 5 rooms we WON’T USE. If you’re spending money on such things, there’s probably something going on that’s worth questioning. That same money could be spent on something you WILL USE.”
Just to play devil’s advocate here:), do you use every single device, piece of clothing, eat every morsel of unused food, water and ounce of living space in your life?
Why aren’t you recycling and filtering your waste water immediately for the next meal or wash?
Is every single square foot in your house/apartment occupied by necessities? If it isn’t maybe you house should be a little bigger than a closet?
Do you wear every piece of clothing that you have every week? Actually, maybe that’s too much and you should donate every stitch until you have 1 suit, 2 jeans, and a couple pair of shirts and underwear.
Why do you have kids? There’s an overpopulation boom on the planet.
Sorry, enough of the extremes.
I agree that 5 rooms might be pushing on the excessive side of things when it comes to space but to attack a person as a self-esteem issue? Come on.
Maybe this person is a much higher donator of funds than all of us here put together to a local church or needy organization?
Maybe he’s not planning on having any children and in the end will be way, WAY, ahead in the non-consuming dept. once the person is gone and in so doing help save the planet from overpopulation.
“There is no reason to justify gross over-consumption.”
..as there is no reason to justify a person’s worth in your eyes based off of a blog comment. Unless of course you’re omniscient and have a huge book where you can see their good marks are outweighed by the bad marks in that person’s life.
“Having the money is not a reason to over-consume.”
One person’s perceived over-consumption is another person’s normalcy unless of course you want everyone to be an hermit and live in a cave, but then as the human race goes, we’ll be complaining that the other person has more rocks than others and is ruining the planet.
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I love the frugality stuff articles, and I lvoe the too much stuff articles (since I’m struggling myself) I love the how to save, how to make, money hacks and everything that makes GRS just the way it is. Don’t change a thing!! I’ve never been disapointed by your articles, unless they were a little over my head and I didn’t understand them,e ven then, I wanted to, just couldn’t (mostly the investing stuff, which I’m trying to learn)
I love your blog, and am an avid reader. So glad I found you last year!
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BTW, I think your current house may be my dream house. Maybe I’ll change my tune when I have a house your size but I don’t have a desire to own a house too big for me to clean on my own. I know there are housekeepers to help with this but it seems silly to own something I could keep up without hired help.
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@114 JohnnyLA– Excellent points.
If a person is really worried about his or her carbon footprint (or, I guess, other peoples’ footprints) there are a lot of areas to work on besides just the house. There are a lot of different carbon footprint and environmental impact calculators online to help.
http://www.nature.org/initiatives/climatechange/calculator/ is one of them, but there are others.
And we love our vermipost bin.
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I think this summarizes how I feel perfectly.
The most important financial reward my husband and I enjoy is the ability to live off of one income. I work for the time being (we save everything I make), but I have the freedom to work fewer hours if I should ever wish to do so and I will definitely be staying home full time once we have children.
To us, this is much more important than eating out, designer clothes, and hot cars. We have nothing against these things inherently, they are just not priorities for us. Our “reward” for being frugal is having career flexibility.
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The site’s tone is fine..I scrimp and save for two reasons–one so I can buy more with the money that I have…and two, so I’m not a slave to climbing the corporate ladder so I can make more money to buy the things that I want.
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i scrimp an save because i dont want to go broke,been there before dont like it,i sleep good at nite with $2o000 in my e.f.an building,very,very,good post,mr.jd,even though i would never spend $900 on a bike,those are the exact same things i will be spending my money on.
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Quite frankly, all the folx who want to regulate what my family does with our house, whether we use all four bedrooms or not, or whether we’ve got more than they thing we should?
Y’all can all butt out, thank you very much. You’ve got zero cause to finger-wag at people who have different priorities. Yes, my husband and I live in a 2600 sq. ft. house. We have our reasons, and they’re no one elses business. We pay our bills, take steps we can to reduce our impact on the environment and
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great article.
another vote here for more articles on sustainable living!!
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It’s always a fine line between being “frugal” and being “cheap”. Or “spending like a madman” vs. “just enjoying your hard earned riches”.
At the end of the day, nobody can judge how another person spends their money, you just have to remember that:
a) Saving money can only help you in wealth building in the future. Money begets more money. When Buffett hit his first million he could’ve bought a mansion and a bunch of cars. But he didn’t and look what he did later…
b) Alot of the stuff you want will be completely useless to you after you purchase it and provide you with less enjoyment than the life energy you spent to purchase it.
Personally, I have my own budgeting system where I rigidly define how much money I can spend for enjoyment and how much is for saving. Therefore, I naturally become thrifty because I want to maximise my enjoyment with what I allowed myself. I am also knowing that I am consistently saving the designated amount with every paycheck.
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Yes frugality in its basic form is about delaying your spending and actually a frugal person will probably spend more money over their life time as they will receive interest instead of paying it. That is if you really want more stuff? for my part I limit my spending in order to be able to have more time with family and friends and maybe to retire early. Many frugality tips are really in them selfs quite rewarding like cooking from scrach growing some of your own fruit and vegetabiles etc.
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it all boils down to this…
spend and save what you have… not more than you have.
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No way could I justify $900 for a bike. $150 bike would serve the same purpose.
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Hi, this is the first time I’ve visited this site and I think this is a fantastic post. Since being more frugal I’ve managed for the first time in my life to actually save money for the last couple of months even though I’m earning less than before. Because of this I’ve bought less crap, which is great because I’ve just spent an entire weekend clearing out a load of clutter that I’ve pointlessy accumulated over recent years. Looking at the boxes of stuff I was clearing (books/CDs, etc) I wondered how much I’d originally spent on it all and it was pretty frightening, especially as I’m pretty much giving it all away now! I’ll eventually spend the money I’ve saved on more valuable stuff, particularly travel for my family. Great post anyway, just about to subscribe so I don’t miss out in future…
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No, sorry. A $150 bike doesn’t approach a $900 bike. It just doesn’t. Come bring a $150 bike on a ride with us and you’ll get an idea.
Having said that, I would never buy even a $150 bike if I hadn’t met all my obligations and had a good financial cushion in place. Unless you use it for transportation, a bicycle is a want rather than a need. It’s great exercise, but not the only way you can get great exercise.
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I got a new job in Jan. that doubled my monthly pay. I was already getting by on what I had been getting paid (which was not much) so I had some extra funds. At first I was spending it on crap but then decided to use it for something more productive. My boyfriend and I signed up with a Crossfit trainer in March and, even though it’s a bit pricey, it has been totally worth it. I am leaner, stronger, happier and healthier than I’ve EVER been in my entire life. Definitely money well spent.
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Most people have trouble with spending too much, but I am a compulsive saver. You’d think that would be great for me and I’d be wealthy, but it hasn’t worked out that way.
I save money as I can, then something unexpected comes up (car repairs, unemployment) and I have to spend nearly all that I’ve saved. So I have a good habit in that it’s easy for me to save, but in the end I’m only treading water, just having enough money to cover the next disaster. I feel like my emergency fund is a castle on the sand with the tide rolling in, and who can stop the tides?
I appreciate the reminder that I should spend money on what is important to me. I need to give more thought to finding something important to do with my life. It would be lovely to have big, bold dreams — a house, foreign travel, etc. But those things have never felt like they were achievable for me, and I could never bring myself to dream.
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Well said, JD.
We scrimp and save mostly for flexibility or to have choices. At some point, maybe I won’t want to work every day, or won’t be able to. Maybe I’ll have a terrific idea and want to go into business.
We also realize the once food, shelter and clothing is taken care of, everything else is basically entertainment. Like Tyler said, will we look back and 5 years and even remember buying that stuff?
Example: we just had our second child last week and now I’m really wishing I would have saved more in my early 20s so I could take a few months or a year off to spend with my kids. We are in good shape financially, but taking that long off without pay would hurt us, so I am back to work this week.
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Dear Mehgan #6, Tell me again about oil being a finite resource with that gusher in the Gulf. There is so much oil under the earth in North Dakota (The Bakken) that America could be oil independent for hundreds of years if it weren’t for our refusal to drill on American soil. On land drilling is very safe, cheap and clean. Deep water drilling is harder, more expensive, not so safe. Why are Americans not allowed to drill for oil on American soil, and make us energy independent from the Middle East which is full of terrorists who want to kill us while we are buying their oil?
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Say it. I create my own reality. Say it again. I create my own reality.
Create the reality you want while allowing others to create the reality they want. Once you truly understand and apply this simple statement will your life be what you choose. Allow others to pursue their path – whatever that may be.
Pursue your dreams and create what makes you happy !! The purpose is to realize you always have the ability to create your life.
Say it again. I create my own reality. Have fun.
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#14 @Alexandra: Very hilarious!!I nearly peed in my pants!!! (excuse my language) But it is very true what you wrote. Sometimes when I read some of these sites I feel guilty because we have debts and I don’t think that we are cutting enough costs and controlling our expenses. I am still trying to find a balance. When I found all these advices and hints in GRS I became stingy and a controll freak (about our finances) than I changed and started neglecting our budget because I fehlt frustrated. Now I am back on track trying to find a middle ground. Also because I still have to convince my “better-half” that we must control our expenses.
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My wife and I are both high school teachers. We do not make a lot money. We have always lived well within our means. We have accumulated over a million dollars in our portfolio, savings, and home (paid for). We only work 8 months a year. We are debt free and pay cash for all purchases. How did we do this? We purchased a small home (corner lot, white picket fence, cottage), quickly paid for it quickly (3 years), stayed out of debt, and we have remained child free. Our friends say they like our shaded, garden patio for parties more than their trophy home decks that they never use.
We have traveled to Europe several times, and enjoyed cruises to Alaska an the Greek Islands. Or friends stay home shacked to the expenses of their large homes and their children, some are trying to recover from the expenses of divorce.
We have never worried about money and seldom think very much about it. We just avoid consumerism and make a game out of economizing. After a while it becomes second nature. Just like going to gym every day or flossing your teeth.
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While I haven’t been around here as long as the others what I have read has seemed to be a well-rounded mix of all types of articles covering a large mix of issues. I don’t believe frugality has been over-played and I think it is all part of the big picture.
Unfortunately if you wish to ‘get rich slowly, faster than the speed of light or whatever your means’, you need to be mindful and pay attention to your spending at any level. Frugality does play into that on a daily basis.
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“control” is the key here. I can (and did so) spend 200.00 one friday night – my money, earned – and when it’s giving me the reward of “was worth it” then well done.
Steve
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The problem for a lot of people is that they have no idea where their money goes, so they feel like they are depriving themselves a lot, even though they do buy a lot of things. The problem is just that those things are small, crappy and not what they really want, they are just substitutes for now, so they do not make them happier, or richer.
I’ve learned to buy the things I want, by saving and waiting, instead of buying cheaper substitutes. Then I know exactly where my money goes, and I get exactly what I wanted. Plus, I spend less in the long run!
This post really captures that spirit, even though you phrased it a bit differently. So thanks! I totally agree with all of this!
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