Last Updated on June 10, 2016 at 11:14 am
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.”
Join over 32,000 readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email! 🔥Enjoy massive discounts on our robo-advisory tool & courses! 🔥
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 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.
🔥Enjoy massive discounts on our courses, robo-advisory tool and exclusive investor circle! 🔥& join our community of 5000+ users!
Use our Robo-advisory Tool for a start-to-finish financial plan! ⇐ More than 1,000 investors and advisors use this!
New Tool! => Track your mutual funds and stock investments with this Google Sheet!
- Do you have a comment about the above article? Reach out to us on Twitter: @freefincal or @pattufreefincal
- Have a question? Subscribe to our newsletter with the form below.
- Hit 'reply' to any email from us! We do not offer personalized investment advice. We can write a detailed article without mentioning your name if you have a generic question.
Join over 32,000 readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email!
Explore the site! Search among our 2000+ articles for information and insight!
About The Author
Dr. M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over ten years of experience publishing news analysis, research and financial product development. Connect with him via Twitter, Linkedin, or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation promoting unbiased, commission-free investment advice.Our flagship course! Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! ⇐ More than 3,000 investors and advisors are part of our exclusive community! Get clarity on how to plan for your goals and achieve the necessary corpus no matter what the market condition is!! Watch the first lecture for free! One-time payment! No recurring fees! Life-long access to videos! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.
Our new course! Increase your income by getting people to pay for your skills! ⇐ More than 700 salaried employees, entrepreneurs and financial advisors are part of our exclusive community! Learn how to get people to pay for your skills! Whether you are a professional or small business owner who wants more clients via online visibility or a salaried person wanting a side income or passive income, we will show you how to achieve this by showcasing your skills and building a community that trusts you and pays you! (watch 1st lecture for free). One-time payment! No recurring fees! Life-long access to videos!
Our new book for kids: “Chinchu gets a superpower!” is now available!
Must-read book even for adults! This is something that every parent should teach their kids right from their young age. The importance of money management and decision making based on their wants and needs. Very nicely written in simple terms. - Arun.Buy the book: Chinchu gets a superpower for your child!
How to profit from content writing: Our new ebook is for those interested in getting side income via content writing. It is available at a 50% discount for Rs. 500 only!
Want to check if the market is overvalued or undervalued? Use our market valuation tool (it will work with any index!), or get the Tactical Buy/Sell timing tool!
We publish monthly mutual fund screeners and momentum, low-volatility stock screeners.
About freefincal & it's content policy. Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on mutual funds, stocks, investing, retirement and personal finance developments. We do so without conflict of interest and bias. Follow us on Google News. Freefincal serves more than three million readers a year (5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified with credible and knowledgeable sources before publication. Freefincal does not publish paid articles, promotions, PR, satire or opinions without data. All opinions will 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
- Twitter @freefincal
- Subscribe to our YouTube Videos
- Posts feed via Feedburner.
Our publications
You Can Be Rich Too with Goal-Based Investing
Published by CNBC TV18, this book is meant to help you ask the right questions and seek the correct answers, and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now.Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want
This book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at a low cost! Get it or gift it to a young earner.Your Ultimate Guide to Travel
This is an in-depth dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, and 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 300 (instant download)