So I was reading Slate’s Ask the Bills today – their new advice column just for personal finance. Clearly this is a thing that is right up my alley. The second question came from a recent grad who saves 36% of their salary and describes themself as “extremely frugal.” I don’t know what their salary is and that really doesn’t matter in this case. What matters is the advice the “guru” gave them.
You say you’re “extremely frugal.” If you enjoy this, great! But I suspect you’re giving up something or some things you really want to achieve that impressive level of savings. Are there things you want to do—travel, buy new clothes, indulge in a hobby—but can’t give yourself the go-ahead to spend the money? Then think of me as your fairy godmother, at least in this case. I permit you to let go of the purse strings. It’s important to save money for the future, but it’s also important to enjoy your life.
I hate this advice. So. Much.
Now, I definitely agree that it’s important to enjoy your life. I spend money on “life enjoyment” things all the time (restaurants, hobbies, vacations, etc.) and I would never encourage anyone to cut out absolutely all fun and focus on nothing but work and maximum savings.
The thing is, there’s this oddly ingrained cultural sentiment that if you’re saving more than about 20% you must be depriving yourself. (See a post I wrote before I started this blog: But Are You Having Any Fun?)
First, the math (I do always love the math): We don’t know this person’s career. Let’s say they’re in a highly paid field and they earn $100k per year. They pay about 20% in taxes, that leaves $80k. They save 36% of that – that leaves $51,200 to spend. That’s more than my gross salary. I doubt a single person spending over $50k a year is majorly depriving themselves.
Of course, maybe their salary isn’t that high. Maybe it’s closer to mine, and after saving they spend around $20k per year. Maybe they spend even less than that, because they have found tons and tons of ways to have an enjoyable life without spending much money.
When I’m bored, am I depriving myself by going for a walk instead of going shopping? When I want to travel, am I depriving myself by taking a frugal road trip instead of flying somewhere? When I want to pick up a new hobby, am I depriving myself by finding free guitar lessons online instead of paying for a teacher? When I need new clothes or shoes, am I depriving myself by checking secondhand stores first?
Why do we always assume that the more expensive option is the better option?
Yes, it is definitely important to enjoy your life. But why not try to do that cheaply?
The best frugal habit I’ve created is thinking of my most affordable option first. Instead of thinking “I’d really like a tea kettle” and hopping on Amazon, I find time to poke around in thrift stores and see if I can find one there first.
It’s not depriving yourself to find ways to get the same enjoyment for less money. It’s just being smart.
Do you have any favorite “frugal hacks” – where you’re just as happy for a fraction of the cost?