Misconceptions about frugality

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!”


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.

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Updated: June 10, 2016 — 11:14 am

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M. Pattabiraman

This article is authored by M. Pattabiraman. He is the co-author of two books: You can be rich too with goal based investing and Gamechanger. He is a patron and co-founder of "Fee-only India" an organisation to promote unbiased, commission-free investment advice “Pattu” as he is popularly known, publishes research, analysis and holistic money management advice at freefincal.com which serves more than one million readers a year. Frefincal.com has more than a 100 free calculators on different aspects of insurance and investment analysis, including a robo advisory template for use by beginners.


  1. Now you have started to sound like Subra Ji. Looks like a rub off effect.

  2. “thank you for contributing to my real return. I value your continued support.”
    This line made my day. 😀

    1. Thanks man. Glad you liked it.

  3. One of your best post till date. Loved every line written there.

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

    Shh… Don’t give away the secrets of us frugal people. Let people consume as much as they like. More returns for us.

  5. found behind an auto

    எறும்புகள் கோடை முழுதும் அலைகின்றன – மழைக்காலத்திற்கு சேர்த்து வைக்க
    அதில் பாதி எறும்புகள் மடிந்து விடுகின்றன – மழைக்கல்திற்கு முன்பே

  6. Cool! strikes a chord with every point 🙂
    And while i totally agree that frugality is an acquired taste but do think that “tools/thoughts on financial literacy at-least be part of school curriculum (optional)” – like any other subject, let the pupil be aware, and then decide and acquire the taste -;)

    1. Thanks. I think kids should go though a spending phase and grow out of it quickly. Such courses should be there when they start earning.

  7. Frugality and enjoyment of life can coexist.If i am frugal am I enjoying life?What is enjoying life? Is it going to a club or a bar and having drinks?

  8. I think it is important to note that frugality is a relative concept and has to do with how little a person spends relative to his income from all sources & net-worth . To a person earning a 1 million dollars with a 10 million portfolio, spending 100k-200k is still being frugal. The secret to growing wealthier with time has always been to constantly underspend income and invest the difference in productive assets that make your money your employee and deliver a real return over time.

    I also think that a feeling of deprivation that people feel is is entirely psychological. “Too many people spend money they earned to buy things they don’t want to impress people that they don’t like”. Those people aren’t going to contribute to any of your life goals. I have always valued having a comfortable, stress-free financial position over unnecessary ego.

    I see frugality to be a virtue wherein you learn to always search to maximize the utility of what you are getting vs what you are paying and spend only on what you will use and will actively contribute to your own happiness and quality of life.

    P.S Loved the last line “If not, thank you for contributing to my real return. I value your continued support”. As an equity investor, I echo the sentiment 🙂

  9. The most important attribute ,one must possess to follow what you advocate is -ZERO PEER PRESSURE.As such nobody,except your parents ,are bothered about you.
    Never think about what others will think.It is really good that all are not like minded,otherwise as you rightly said in these lines.
    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.
    I end up in single line.

  10. Peer Pressure.
    Hey There is PEER PRESSURE from Parents too!.
    You are supposed to make more money/ live as lavishly as your neighbor or relative of your Age.
    other wise you are good for nothing!

  11. Exactly sir. It is a common misconception.

  12. longtime reader. Pattu wanted to share a complimentary article on furtune.http://fortune.com/2015/06/25/jurassic-world-7-reminders-for-investors/

  13. Charlotte Bronte in his book The Professor had written a paragraph like this “… as it had even been abhorrent to my nature to ask for pecuniary assistance, I had early acquired habits of self denying economy; husbanding my monthly allowances with anxious care, in order to obviate the danger of being forced, in some moment of future exigency, to beg additional aid”.. When I had read this paragraph, I have this conception on Frugality.

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