Frugality and Long-Term Financial Success

Discussion in 'Money Management & Banking' started by Simon Hampel, 29th Sep, 2016.

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  1. Simon Hampel

    Simon Hampel Founder Staff Member

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    The Simple Dollar: Frugality and Long-Term Financial Success - The Simple Dollar

    (via Lifehacker)

    I started to find myself disagreeing with the author, but then he summarised it as follows:

    "one of my key principles of personal finance: It doesn’t matter whether you’re making $10,000 or $100,000 or $1 million a year, spending money on something that provides no life value to you or that you don’t really care about is still a waste of money."

    That kind of makes sense I guess. Spending money on meaningless things or on things which cost you more than they should is not going to help you find more money to invest or fund your investment holdings.

    However, I do think in many of these "frugal" blogs, there is a factor of diminishing returns which rarely gets covered. You have to put a dollar value on your time and balance your quest for buying cheaper against the cost of going for the more convenient option.

    It's all well and good saving $5 on cheaper soap if it's just a matter of choosing a different product to put in your shopping basket, but if you have to drive to a different shopping centre just so you can save that money, you're probably not saving anything at all.

    Similarly, if you were to spend your time hunting for your next investment instead of hunting for a few dollars worth of saving, you'll probably end up far better off in the long run.

    I think it all comes down to balance - choosing the frugal option when it makes sense, but focus on an abundance mindset - spend your time seeking to increase your wealth instead of only ever trying to save a dollar.
     
    Simon Hampel, 29th Sep, 2016
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  2. BingoMaster

    BingoMaster Well-Known Member

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    I think anyone doing this is obviously not actually being frugal. I would be surprised if any blog would be seriously recommending things like this. Frugal, early retirement types, usually have a habit of nutting out the details when they're saving money - I'm sure they've taken into account the petrol, time, etc.

    Which brings me to....

    In my experience frugal bloggers put a very high value on time. That's generally their main motivation - "freeing" themselves from work, so they have more time to themselves.

    My main complaint with people trying really hard to be frugal, is when it at the expense of others, in terms of money, time, convenience, whatever. When you're genuinely pulling up your bootstraps, sacrificing something for yourself to save money, I think it's great. However there are "cheap" people out there who do this by protecting their own wallets, at the expense of others somehow. Not necessarily always in terms of money, but just free loading in other ways, when the other party isn't necessarily aware or complicit. That's the sort of cheapness that I can't stand!

    Whoops, gone on a bit of a rant again...
     
    BingoMaster, 30th Sep, 2016
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  3. el caballo

    el caballo Well-Known Member

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    @Simon Hampel

    Excellent post and a very reasonable critique of that school of thought.
     
    el caballo, 30th Sep, 2016
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  4. twisted strategies

    twisted strategies Well-Known Member

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    i am not exactly sure what frugal is , but it is probably in my DNA and definitely in my upbringing ,

    if i don't need it , i don't get one , if 'fancy ' doesn't come with useful additions , basic and robust gets my $$$s , or i will just work around ( or without) it .

    since i started investing ( in 2010 ) i could see 'sitting in the bank ' ( even in term deposits ) wasn't going to tick all the needed boxes , so needed to make that cash work ( hard ).

    i certainly have a reputation of cutting expenses ( like trading platform bells and whistles ) to maximize gains even if it does limit trading style options .
     
    twisted strategies, 30th Sep, 2016
    #4