@Donald- Perhaps but also it depends on how well you do financially in life and your personal tastes and utility function. Are these set in childhood or develop as one attains more wealth. I don't know. We can probably dredge up a lot of anecdotal evidence either way.

 

@square root-I'm not sure either,i would think there is a threshold when being frugal might leave someone*in there personal dealings*(i don't think imo it would leave a business man thou in his dealings in a professional setting)I think being frugal is a skill-set and some just have "it" and others(rich or poor)don't,almost in the same sense some people are natural athletes(genes).I also think some frugal people almost view it as a game-It's like it stimulates there mind to search and excute ways of being frugal.

 

I've found Indian food to be some of the best value for the money. I've been to several different Indian all you can eat buffets in Toronto and it's usually around $10. The food is both tasty and healthy and not something I'd know how to make at home.

 

It is all relative. Maybe a millionaire buys a 5-series instead of a 7-series. For them, that is frugal, saving $30k-$50k, for lower income earners, either purchase is outrageously expensive.

Keep in mind lifestyle creep/inflation is a serious risk for people. If you suddenly open the purse strings, you can get in trouble quick.

 

It is all relative. Maybe a millionaire buys a 5-series instead of a 7-series.

When I was in my early 20s I spent a year working for a multi-millionaire in Westchester County, New York; his neighbours included the actor Frank Langella and Lila Acheson Wallace, the founder of Readers Digest. He drove a 15-year-old Volkswagen Beetle; it was his only car. But he had a part-time butler who served food and greeted visitors at the door.

As Berubeland says, it's about choices: what he drove wasn't important to him, so he didn't spend money there. He was a very busy guy and his wife had passed away some years earlier, so the butler was useful.

 

I think that frugality is more about choices.

You can't have everything, but you can give up crap you don't care about to purchase stuff that you do care about.

For instance I drive an old crappy car but my son has ballet class and music lessons and swimming lessons. We eat out lots. I work a lot. It isn't unusual for me to work 12-14 hour days 6-7 days per week. I'm not cooking when I get home and my hubby makes great chicken strips and Kraft Dinner if you get my drift.

Even when you don't spend money today to save it, you're saving on unnecessary "crap" you don't need to be able to buy stuff you do need in the future.

I practice the art of not wanting crap.:biggrin:

 

I think we should draw the distinction between frugal and cheap. Frugality should be something that ultimately enhances your life and that of your family in a measurable way.

 

Frugality should be something that ultimately enhances your life and that of your family in a measurable way.

Maybe, but if I'm a millionaire who likes my 15-year-old Volkswagen and sees no need to upgrade to something fancier, is that frugality or cheapness?

I think frugality can involve spending money on what matters to you and not wasting money on things that don't.

As I said upthread for me it's all about avoiding waste. I can afford to buy a much nicer car than my rather beat-up 2005 Toyota Matrix, but it would be a waste because I don't drive much and all I want is reliable transportation and enough room for my gear. I can afford to buy a nice new suit but since I only wear a suit two or three times per year it would be a waste...therefore I still wear the suit I bought in 1992. It hasn't started to look threadbare yet, but when it does I'll get something that's well-made enough to last me the next 25 years. It doesn't have to be fancy. I can afford to buy a big TV but it would be a waste because we don't watch TV; instead we rent movies and watch them on my 15" laptop, which turns out to be perfectly adequate for our purposes (as long as we plug in external speakers: big sound compensates for small screen).

 

@brad: +1 We are almost clones.

 

It is my intention to enter an ultra-frugal mode in the first few years of my early retirement - a grow/catch your own food (I might go hungry when the fishing is poor), walk/bike everywhere, type of lifestyle. Part of the decision is based on not wanting to draw down my nest egg in its early stages - but the idea of living on as little $ as possible (at least for a few years) very appealing to me. A test of character of sorts.

 

Spidey - I agree totally. I think in this particular case, my millionaire employer was a widower in his early 70s, didn't drive very much, and loved his old Bug. So it made sense for him to keep it.

Whenever I think of cheap vs. frugal I think of an acquaintance of mine whose car would sometimes run out of gas while he was driving around shopping for the cheapest gas station. He almost certainly spent more in gas driving around in his search than he saved by getting the lowest price, plus there's the inconvenience and time hassle of running out of gas. That for me is the very definition of cheap.

 

Whenever I think of cheap vs. frugal I think of an acquaintance of mine whose car would sometimes run out of gas while he was driving around shopping for the cheapest gas station. He almost certainly spent more in gas driving around in his search than he saved by getting the lowest price, plus there's the inconvenience and time hassle of running out of gas. That for me is the very definition of cheap.

In my opinion, that is the definition of stupid.

 

Ha! Exactly what I was going to say. each: (I have no idea why we have a "peach" smilie.)

 

This debate usually comes back to tastes and personal utility. Not really worth trying to convince others in these matters. The meaning of the word frugal is open to interpretation. We can all agree however that waste is to be avoided.
I just don't agree that frugality ( defined as restricted spending under one's means) is virtuous in it's own right.

 

I just don't agree that frugality ( defined as restricted spending under one's means) is virtuous in it's own right.

I don't know if we've been saying it's virtuous or even something to aspire to. It's kind of a personal ethic, like the hiker's ethic of "take only photographs, leave only footprints." If that appeals to you, you follow it; if it doesn't appeal, you don't. But I don't think frugality is only "important" for poor people. A wealthy person who wants to leave behind a legacy, or wants to donate a large portion of his or her income to charity, may find it very important to be frugal. That's one of my motivations for being frugal, although in truth I'm mainly frugal by accident--I'm just not interested in spending money for the sake of spending money, nor am I attracted by the things that many people with money to burn spend their money on. I want to keep my life simple and my home uncluttered, which translates to not spending nearly as much as I could. That doesn't make me virtuous or smart.

 

I agree many people are frugal for many reasons. Those you list are valid. I would say though that giving money away is just another form of expenditure. In any event I think the decision to be frugal is one of taste or disposition. I do think the more important question is "living within your means" however big or small that may be. This of course is generally a simpler question for someone in the decumulation phase, such as I.

 

There are so many 'human' variables here. I'm sure many people here enjoy getting more for their money.
, whether it be food, cars, or butlers. For me, an important variable is value. You could have the same amount of money, give it to two different people, and the amount of joy, material goods, or whatever they are buying will be different. The frugal person presumably gets 'more' for their money.

Another issue here is whether a person is a spender or saver. We've had this discussion in other threads and it seems this factor never changes in some regardless of personal income.

 

I think the point is that, if you are in the habit of spending all your income, you will probably continue to do that even as your income rises and you won't end up really improving your situation as much through the added income. I found this to be true for myself in my 20s-- a raise or a big commission cheque was a reason to go buy stuff I didn't really need but wanted and hadn't had enough cash to buy before. Now that I view those events instead as opportunities to increase my savings and investments because I have trained myself to live within my means, a windfall is not just a short term one off event. It is leveraged for greater security and in fact increased in value by the time the money needs to be used. That is the rub-- if your whole plan for getting ahead is to constantly increase your income so you can increase your lifestyle, you are in fact on a treadmill and how ARE you going to get off of it? No matter how much money you make, it is beneficial to slow down and realize, you won't get ahead if all of this month's money is spent before the next paycheque comes. This is why I think frugality is important for everyone, it sets you up to really benefit from the increase in income that is sure to come as you age, get wiser, and advance in your career.

 

@ cashmoney. What you describe is not so much a lack of frugality but a lack of saving towards financial independence or retirement. Living below your means during your working life is how you save for retirement. This probably involves frugality but not necessarily. Towards the end of my working life I made a very high salary, saved a lot of it but also spent a lot of money. I would not view myself during these years as frugal but I sure saved a lot. I realize I may not be representative. To be " frugal" during this time would not have made much sense in my view. Also, now that I am retired the important thing s living within my means. In general this may or may not require frugality. In my case it does not and I therefore see no virtue in frugality for its own sake. Maybe I should let this topic go though.

 

I think that what is considered frugal can vary depending upon your income. As buying your lunch at subway might be considered frugal to some, as they did not have fine dining. Yet for others, eating out in any form could be considered splurging with their money.

Also, I don't believe frugality is always about the money. In some ways, phsycologically it can be almost like a game.

 

I'm pretty frugal - no cell phone, driving 2003 vehicle, rarely eat out, most minimum cable and phone plane, etc. So I definitely can relate to the frugal people better than I can with the spenders. However, if your lifestyle and that of the people you care about does not improve at least somewhat with you wealth, then what is the point? Why not just stay poor?

 

Increased consumption does not necessarily equate to increased happiness. If you already have all that you need, why waste money on something you don't?

I would much rather have the ability to call it quits than to be stuck on the hamster wheel of consumption. My wealthiness has no impact on my needs. I do not increase my lifestyle with increases in pay. Instead, I save an extra portion so that I may take control of my life earlier.

Instead of buying stuff, I buy time.

I do not live like a pauper, I have everything that I need and some of what I want.

If I was financially independent, I would likely adjust my lifestyle so that it matches my income (i.e., live within my means and possibly allow some inflation with rising income).

 

Last few posts are insightful. I read: Don't waste money, spending money doesn't always increase happiness, as you get wealthier you might want to spend a little more. I certainly agree with these statements. My favourite comes from guigz: if you are financially independent maybe you should set your spending to your income. Bingo!! this has been my point all along. As a financially independant retiree that's what I do. i spend on things/experiences that I value the most up to my income. Quite a bit is spent on getting people to do things I don't like to do or don't know how to do. This effectively buys me time . The fact that my income is very high does not qualify me as frugal but I don't think I'm wasting money or being a spendthrift either. Each person will spend according to their tastes and utility function. Cheers.

 

It is quite the opposite. Frugality is for the rich, not for the poor.

If you are poor it it is pointless to try and save money. Some unexpected expense always eats up anything you save. It is a much better plan to live as well as you can on what you have, and if you get an unexpected windfall, spend it fast before it gets eaten away in dribs and drabs with nothing to show for it.

This is so obvious to anyone who has been poor that it doesn't need to be explained .

On the other hand, if you are well off even to the point of owning your own home and having a decent job, you have something to lose and something to gain. Good money management pays dividends . Read The Millionaire Next Door for examples of people who live well but are careful with their money and will never be poor or without resources.

Carelessness can ruin even a multi millionaire. There are many examples of people who have earned or inherited a fortune sufficient for them to live in luxury all their lives who blew it.

For example, look up the story of Mike Tyson . He went from the housing projects, to living in a mansion, to sleeping in homeless shelters and taking handouts from street people.He made millions the hard way but blew it using the money philosophy he learned in the slums.

Mike Tyson: spending fool

http://www.earlytorise.com/the-sad-story-of-mike-tyson-a-spending-fool/

 

This is so obvious to anyone who has been poor that it doesn't need to be explained .

As someone that was able to put themselves through college while being poor, I disagree. Being frugal and using what little you have as an investment to improve your situation is always a good idea.

 

Another example of the frugal rich vs the spendthrift poor. Notice the shoppers in the grocery store, the obviously well off carefully weighing and examining everything in the produce section looking for the best, or least carcinogenic food. Then notice the obviously poor with their carts loaded with colorful packages of junk food guaranteed to have the least food value at the highest cost.

Or look at the post above re: making the best and tastiest Japanese food at the lowest cost. Does that strike you as the way a poor person thinks or behaves? Would you ever mistake CjOttawa for a poor person? Never in a million years would a poor person think that way, or make sushi that way.

Now that I have introduced this idea you will see examples every day. Remember, frugality is for the well off not for the poor.

 

I also disagree. Frugality is key when you're poor. When in university I kept a budget book, and I found it a couple of years ago. I was amazed to see I only spent ~$350/mo on everything (excluding rent, which was another $400). Well, and obviously excluding tuition/books. This allowed me to come out of university without any debt, by working full time every summer and living off the proceeds throughout the school year.

 

if you doing well I don't see why you shouldn't reward yourself and get something nice/expensive... sure you can save all your life and die with a ton of money, i rather enjoy life and die with not much money left... obviously there must be a balance

 

CJ! Great how-to for sushi. There is a "recipes to trade by" thread somewhere on this forum, may I suggest you post it in there? I must try this... but I think I would be the only one adventurous enough to eat it at my house. Any thoughts on how long this would keep in a fridge? It's not really something you could freeze, eh.

/end off-topic

 

Take care of the nickels and the dollars will take care of themselves.

Not certain if we are frugal, but we are careful. Value is important to us.

 

Well said. I think frugality is about always considering whether a product or service has value. Will it enhance your life, or not? If not, why are you buying it? For example, I recently cancelled my cable TV package when the introductory deal ended. I rarely watch TV any more, and I don't miss it one little bit. Instead of waste, I have an extra $60 a month to use in ways that matter to me.

Another concept is the life cycle cost of a product. You can buy something "cheap" but if it falls apart within a couple of weeks, you have wasted money. Better to buy a quality product that will last for years.