Misconceptions about frugality

Published: June 10, 2016 at 6:24 am

Last Updated on

Here are some common misconceptions about frugality and frugal folk.

What is frugality?

Wikipedia makes a wonderful reference to a behavioural science research paper titled, “Lifestyle of the Tight and Frugal: Theory and Measurement”

The authors state,

“Frugality is conceptualised as a lifestyle trait reflecting disciplined acquisition and resourcefulness in product and service use. Frugality is sacrifice in denying a series of short-term purchasing whims and industriousness by resourcefully using what is already owned or available for use; all of this is in service of achieving longer term goals.”

Boy, those words stuck a chord with me!

At an earlier time in my learning curve, I had referred to Frugality as the Cornerstone of Personal Finance

I still attribute it to my transformation from saver to MDBSC investor to someone who has learnt to think in terms of net worth.  Along the way, I have learnt a thing or two about how people think about frugality.

Misconception (1): Frugality = Deprivation!

That is just plain stupid. Many think frugal people forget to ‘live now’ and ‘enjoy the present’.

The definition of frugality in the above paper describes me to a tee.

I have never owned a car, do not have a smartphone, do not remember the last time I got myself clothes* etc.

(*) I am an academic and could go to class dressed as an urchin, I will still not be able to top the way the kids look!

That does not mean I have deprived myself of anything.

Frugality is a test, a way by which we need to justify a purchase to ourselves with zero peer pressure.

All of the above-mentioned items could not pass this test in my case.

Does not mean, I do not travel in cars or do not appear well groomed (hopefully!). I have never denied myself any comfort, any luxury or yearning.

There is a common misconception that frugal people deprive themselves of pleasure. Hey, you don’t need to own a car to travel in one.

Perhaps if I loved driving and choose not to buy a car, that is deprivation. It is however, not frugality (if I love driving or if daily car travel is necessary, the purchase would pass the test).

Misconception (2): Frugality = Simplicity!

Many (probably most of them frugal folk) tend to associate simplicity with frugality.

If a person appears to use only public transport, wears clothes that do not attraction etc.,  they are thought of as ‘simple’.

In my opinion, simplicity has nothing to do with lifestyle or appearance. It is an attitude.

A simple person

  • has a clear understanding of what he knows and does not know,
  • is quick to acknowledge intelligence/talent in others,
  • does not hesitate to give credit or apologize when necessary.

If we must write down an equation, then

simplicity = generosity 

might work better. Frugality has nothing to do with it.

I can be frugal and still misuse my intrinsic ego, preventing me to be generous.

Perhaps it is not a bad idea to write, Frugality = Minimalism

Joshua Fields Millburn & Ryan Nicodemus state,

Minimalism is a tool used to rid yourself of life’s excess in favour of focusing on what’s important so you can find happiness, fulfillment, and freedom.

That does not sound too different from frugality to me.

Misconception (3): Everyone can or should be frugal!

The frugal gang is guilty of this.  This is as bad as saying, ‘enjoying life’ means spending money or “financial literacy should be thought in schools!”

frugality-2
Village of Frugality, Cambria County, Pennsylvania. Photo credit: Matthew Hunt (flickr)

Frugality is not for everyone. It cannot be taught. Like financial literacy, frugality is an acquired taste which can be triggered by personal events (as in my case) or by a recession (2008 for instance!)

For many frugality is seasonal, like when cash is tight. Only a few can effectively use frugality to enrich their lives.

We can benefit from a frugal existence and/or  financial literacy only if the people around us splurge, do not take informed decisions, buy bad products, pay minimum balance in their credit cards etc.

Only then can we earn a real return!

Misconception (4): I  can be frugal

This is a common problem with fans of Money Mustache, Simple Dollar and Early Retirement Extreme. They believe that a ‘large corpus’ is not necessary for retirement because they are frugal!

We are frugal because life lets us be frugal. One recurring expenditure which is beyond our control is all that it takes to screw up a well laid plan.

Like I always say, if you want to make God laugh, tell him your plans.

Is frugality necessary?

Not if you earning enough and/or investing enough, that you do not care how you spend your money.

I am obviously biased, so let me ask you.

Do you consider financial freedom in later life at least important as the freedom to use the money you earn today as you like?

If yes, you will recognise the importance of investing productively and evaluating your big ticket purchases before you make them.

If not, thank you for contributing to my real return. I value your continued support.

Do share if you found this useful
Share your thoughts on this topic at the  Reddit freefincal_user_forum

Reach your financial goals like a pro! Join our 1600+ Facebook Group on Portfolio Management! You can now reduce fear, doubt and uncertainty while investing for your financial goals! Sign up for our lectures on goal-based portfolio management and join our exclusive Facebook Community. The 1st lecture is free!
Want to check if the market is overvalued or undervalued? Use our market valuation tool (will work with any index!) or you buy the new Tactical Buy/Sell timing tool!
About the Author Pattabiraman editor freefincalM. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. since Aug 2006. Connect with him via Twitter or Linkedin Pattabiraman has co-authored two print-books, You can be rich too with goal-based investing (CNBC TV18) and Gamechanger and seven other free e-books on various topics of money management. He is a patron and co-founder of “Fee-only India” an organisation to promote unbiased, commission-free investment advice. He conducts free money management sessions for corporates and associations on the basis of money management. Previous engagements include World Bank, RBI, BHEL, Asian Paints, Cognizant, Madras Atomic Power Station, Honeywell, Tamil Nadu Investors Association. For speaking engagements write to pattu [at] freefincal [dot] com
About freefincal & its content policy Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on developments in mutual funds, stocks, investing, retirement and personal finance. We do so without conflict of interest and bias. We operate in a non-profit manner. All revenue is used only for expenses and for the future growth of the site. Follow us on Google News Freefincal serves more than one million readers a year (2.5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified from credible and knowledgeable sources before publication. Freefincal does not publish any kind of paid articles, promotions or PR, satire or opinions without data. All opinions presented will only be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)
Connect with us on social media
Our publications

You Can Be Rich Too with Goal-Based Investing

You can be rich too with goal based investingPublished by CNBC TV18, this book is meant to help you ask the right questions, seek the right answers and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now. It is also available in Kindle format.
Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want Gamechanger: Forget Start-ups, Join Corporate and Still Live the Rich Life you wantThis book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at low cost! Get it or gift it to a young earner

Your Ultimate Guide to Travel

Travel-Training-Kit-Cover-new This is a deep dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, how travelling slowly is better financially and psychologically with links to the web pages and hand-holding at every step. Get the pdf for Rs 199 (instant download)
Free android apps