Yes, There I Said It! The internet is filled with frugal tips and a good chunk of the personal finance community that we are part of is very big on frugality. I should know because I run a personal finance blog myself and have written my share of frugal tips. Yes, adopting a frugal lifestyle is a great way to live and something that everyone should aspire for irrespective of whether they are rich or burdened with loads of debt. The reason can be derived from the fundamental meaning of the word “Frugal”
“Frugality is the quality of being frugal, sparing, thrifty, prudent or economical in the use of consumable resources such as food, time or money, and avoiding waste, lavishness or extravagance”
In essence, frugality is not only about saving money but also about being a good citizen and making the best of the resources available. But then why do I say that an extremely frugal mindset could be an hindrance in making us rich? Well, here’s why!
“As you think, so shall you become.”- Bruce Lee
This one quote sums up why adopting an extreme frugal mindset can be detrimental to your financial plans. I have heard of great stories of how people have gotten rid of their debt by adopting frugal measures, kudos to them! However, a common undesirable but overarching theme of frugality is to have fewer wants & desires which eventually helps you manage your finances better. Nothing wrong with that but then again don’t we all want to aspire to push ourselves to make our efforts more rewarding. Aspirations are what keep us going and make us want to put in that extra effort in whatever we do. And while it might be difficult to think of becoming richer when we have credit card bills to pay, the fact of the matter is that until we think about a better tomorrow, we won’t be able to put in the necessary effort to make the thought of a better tomorrow a reality.
Frugality pushed to its extreme can change our mindsets
The simplest formula for getting rich is “Spend Less Than You Earn” and I am no one to challenge that. But think of an alternative philosophy to get rich – “Earn More”. Yes, the latter is not one bit easy but then it’s about the mindset.
Practicing frugality is a great virtue but don’t ever let it become a reason to be content with what you earn and only focus on spending less and less. Yes, spending less eventually helps you save more money towards the future but consider this simple equation.
Spend=100 Earn=120 Money Saved=20
Frugal All The Way
Spend=90 Earn=120 Money Saved=30
Whoa! Additional savings of 10 and the retirement fund starts looking pretty good already. However, consider another scenario modeled on the “Earn More” philosphy.
Spend=100 Earn=120 Money Saved=20
Let’s Earn A Little More Money While Being Frugal Where We Can Be
Spend=95 Earn=120+20 Saved=45
Now we are talking! Now we have an additional savings of 45 without sacrificing a few of the luxuries/guilty pleasures that we rid ourselves of in our quest for extreme frugality.
It’s Easier Said Than Done
Yes, earning extra income is not an easy task. If it was that easy, everyone would do it. But then again, it all starts with the mindset. Train your mind to creatively think about ideas to make extra money instead of focusing all the thought on finding new ways to save money.
To give a very simple example, let’s take the example of Joshua himself. Joshua recently shared his story about a personal health issue and more importantly the starting of JRod Writes. He already has a full-time job so he could afford to get away from his blogs for a little while. But that didn’t stop him from thinking about using his talent to make some additional money. Making money is never easy but you have to start by training your mind to do it.
In my case, there was a time when I was religiously packing my lunch to office (I love eating out) and even avoided eating out of weekends. I did the same with coffee, shopping and gradually it hit me that all I was thinking about most of the time was to find areas where I could reduce my spending. Now I am consciously making an effort to devote sometime to think about how I could best leverage my time to make some more money. This forced change in my mindset has helped me develop a much more positive outlook and I am now devoting more time on my blog and also helping a few close friends with marketing their businesses.
The parting thought I want to leave you with is “Don’t Let Frugality Push You Into Contentment”!
What are your thoughts on extreme frugality? Have you ever felt that the pursuit of saving every dime has gotten into your way of making more money. Share your thoughts.