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Being Frugal is Foolish

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This is a Devil's Advocate post.

I bet this Devil’s Advocate is going to ruffle a lot of feathers! Frugality is a pretty big topic in the personal finance blog community because there are so many things you can do to trim a few cents or dollars off here or there. You can buy gadgets like a Kill-A-Watt to find out how much energy your appliances are using and disconnect them when they’re not in use. You can make your own detergent for your washing machine or buy a rack to line dry your clothes. There have been books filled to the brim with thousands upon thousands of ways to save a few dollars and cents here or there… however they never get to the heart of the issue – being frugal should be the very last thing you try to be when all other options have been exhausted.

If you think of yourself as a business, you have two ways of generating a profit. You can increase your income or you can decrease your expenses. When you focus entirely on being frugal, you only look at half of the equation. That’s foolish.

Know The Value of Your Time

It’s very important that you know how much an hour of your time is worth because all of your decisions should start with that number. The point of knowing has less to do with actual dollar amounts and more to put those decisions into context.

Consider this – let’s say you’ve estimated that one of your hours is worth $100. Would you spent an hour making laundry detergent that you can buy for $10 or would you instead be focusing on finding more ways to earn money? Now what if your hour was worth $50… would you rather be spending that hour making detergent or finding more hours to work? While you might not be able to add more hours, I argue that your hour is better spent trying to find more worth instead of making detergent.

The point of my example wasn’t to pick on making detergent, or any household supplies, but the main reason for doing it shouldn’t be financial. We line dry clothes because it’s more environmentally friendly. We also save money on electricity but the main reason is environmental.

Frugality Offers Diminishing Returns

The second biggest reason why focusing on frugality is foolish has to do with limitations. There is no limit to how much income you can earn in your lifetime. You may impose limits on yourself, based on your environment and your decisions, but there is no immutable law that says you can only earn a certain amount. There is, however, a limit to how much you can save. If you spend $500 a month on groceries, the most you could ever save per month on groceries, with all the tricks in the world, is $500.

Not only is there a limit with frugality, but the biggest gains are usually discovered in the beginning. When you start making laundry detergent for yourself, the biggest savings will be in making it yourself. As you find cheaper ingredients or buy in bulk, you will continue to increase your savings over the store bought detergent but each step will be smaller.

The opposite is true when you focus on increasing your income. As you develop your skills, add to your list of certifications or education, you become a more valuable asset and income increases will become larger with each step.

The bottom line is that while frugality can be an excellent exercise in creativity, it’s usually never worth your time.

{ 47 comments, please add your thoughts now! }

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47 Responses to “Being Frugal is Foolish”

  1. Shirley says:

    “It’s very important that you know how much an hour of your time is worth because all of your decisions should start with that number. The point of knowing has less to do with actual dollar amounts and more to put those decisions into context.”

    But… Many of my small money saving efforts also save me future time and effort, plus more money. And then if you count in the feeling of self-satisfaction, it’s nearly priceless. (No, I’m not about to make my own laundry detergent. LOL) I think that the feeling you get from the action has to have a lot to do with deciding whether or not it is worth your time. Life can’t ALL be about numbers.

  2. Beth says:

    I think we have to look at quality of time versus quantity. If you’re robbing yourself of time with family and friends or working to be frugal, that’s one thing. However, if you were going to spend that time parked in front of the TV, then why not take the time to do something to save money?

    One frugal measure I hate is shopping at thrift stores for clothing. I have nothing against used clothing, but I seldom find anything decent that fits me. I usually buy when there are decent sales on and I need a specific item, so it’s not worth the time driving all over town and sorting through racks of used clothing when I have my choice of styles and fits at retail.

    • lostAnnfound says:

      I also think if you’re working 80+ hours per week to increase your income, but you have no time to enjoy being with family & friends, you are also robbing yourself of time.

  3. “Frugality is a pretty big topic in the personal finance blog community ”

    It’s the only topic on some blogs.

  4. BrianC says:

    It’s definitely not worth it to me to be frugal if that activity takes up a lot of effort and time compared to a moderately-priced alternative (e.g., washing my own clothes in the bathtub vs. paying $1 a load at the laundromat).

  5. Gabriel says:

    Adding another turn to the screw… if you make your own detergent, try to make enough so you can sell some of it.

    I always add my time in almost every decision, like a movie, for the money I spend and the 2 hours, I hope that the movie gives me something in return, and not the feeling like I wasted my time and money.

  6. The first thing I thought of when I read the title involved the time it sometimes takes to be frugal. A major example of this is cutting coupons. If it takes longer to cut the actual coupons than it is worth in savings, it just doesn’t make a whole lot of sense.

    The biggest place I see where frugal gets taken too far is on slickdeals. I use the site, but I only use it sparingly. The site is great to find a product you are really looking for, but some people on that site take it way too far. They either spend all their time trying to find deals that they don’t need or try to make a living off of the deals. They buy up all the inventory on a great deal and try to resell it at only at a minimal profit per unit.

  7. Olivia says:

    I think this post largely misses the whole point of frugality. The point of frugality is to find practical ways to save as much money as possible. The key word here is practical. MOST frugal activities are actually very simple and do not take much time at all. The ones that take a little bit more time usually offer bigger savings. For example, buying generic is a simple way to be frugal. Couponing can potentially have even bigger money-saving potential, but takes a little bit more time. For those who do not have the time to coupon on their own, they can purchase pre-clipped coupons for just a few cents each–still a money-saving endeavor. Overall, the vast majority of frugal activities are simple changes of habit that can save money.

    I also disagree with the idea of determining how much an hour of your time is worth. First of all, not every hour of your time is equal. Sure, you shouldn’t take an hour off of work to make homemade laundry detergent. But giving up an hour of TV time might just be worth it. Also, one needs to consider their own happiness. Sure, one can work at all hours of the day and make more money, but will that person be happy?

    Overall, while I think this article may apply to a very few time-consuming frugal activities, the vast majority of frugal activities do not take much time or effort and most people would benefit from trying them.

    • echidnina says:

      Agree: It is a tradeoff. Simply devoting your life to frugality isn’t the way to do it, nor is it to ignore it completely. There are many simple ways to become frugal that don’t take a lot of time, and for the ones that do, it’s a matter of judging what is personally worth it to you.

      Frugality is something that each person does in their own way – there is no “Here’s a list of things you do, and then you will be frugal”. :P

    • Fred says:

      All “devil’s advocate” posts miss at least half of the points one could make… After all, the devil doesn’t tell us the good side of things :-)

      A more moderate version of this post might have argued that you maximize the use of every hour of your life… frugality makes sense to a point, then it doesn’t anymore.

      The major problem is that most people haven’t thought of a lot of ways outside of their regular 40-45 hour a week job to make money, which makes frugality the *only* choice for creating bigger savings.

      In other words, some of the time focused on being frugal would be better spent finding ways to increase income with the time spent, which would have a greater net savings effect.

      • jsbrendog says:

        yup. i just, on a whim, put up old xbox games on half.com to clear out my closet. within 3 days i sold two of them for a net profit of 15 bucks. craziness. and it took me all of 3 minutes to list them. Does this mean I can buy brand name peanut butter now?!

  8. Like any business I think both sides should be monitored closely to achieve maximum profit margins ;)

  9. Kate says:

    I think this is a great post. It is nice to hear a voice speaking about why frugality might not be the right decision for everyone. However, I have found a lot of good money saving techniques on the blogs that discuss frugal living.

    • jsbrendog says:

      agreed. I have found tons of helpful things to create my own framework of frugality but at the same time I am not going crazy because that in itself is…crazy.

      I have tried things that either were not worth the time/reward and I have tried others where I realized I wasn’t willing to give up the necessary parts required, etc. It is all about finding a balance. The blogs, tips, and whole idea of frugality is only a framework you should use to create your own saving and living manifesto

  10. Yo Prinzel says:

    You bring up some great points, but I will say that frugality doesn’t have to involve homemade soap and cheap canned veggies. Being frugal could mean buying a $10 pair of sunglasses instead of a $150 pair. Making smart decisions with your money makes you need less of it–so you can save more.

    Outsourcing time consuming tasks like housekeeping to someone who makes less hourly than you do does offer a great way for you to spend more time earning, but being frugal and curbing wasteful spending can also work to help you spend less time working and more time living.

  11. Evan says:

    Great Article! My head spins sometimes when I read hardcore frugal blogs. I just recently read an article about giving up shaving to save some money! I get that these things add up, but some of the blogs out there make me so mad.

    Its time to look for a different job that pays more if you are going ape sh!t over $2.50 a month

    • jsbrendog says:

      as a guy with a beard this made me laugh. Seriously the cost of aa batteries for my trimmer, the accessories for my shaver and clippers and the time it takes to oil them and make sure they continue to function properly coupled with the time it takes to shape it (a lot longer than just lathering up and going to town) basically evens out with the high cost of razors. Plus you use more shampoo to keep it nice and fluffy and your shower time increases by a minute or so meaning more water used etc. I find it absolutely mind boggling that someone came up with a tip like that haha.

  12. Marx_ says:

    This was a good post, however, one point I must dispute; frugality has limits. For the general population I agree, you can only save so much until you can save any more as you illustrated in your grocery example. However, with coupons and some upfront leg work, you can actually make money beyond the frugalities limits. For example, say there is shampoo on sale that has an in-store rebate making it free. (Limit hit.) But you have a coupon for the shampoo, thus you make money on the purchase. Combine this with other promotions and you start really making money. Consequently, you are augmenting your earnings by being frugal. Again, the general population might not do this, but the opportunity is there for anyone to seize.

    • Fred says:

      While this is true, I think the time spent to collect, clip, organize, and sequence & combine coupons beyond the basics is one of those areas that will cost more time than its worth.

      • ziglet19 says:

        When I started doing some of the drugstore rebates and coupon deals, I was surprised how little time it actually takes me. I found a few good websites where someone else does all the legwork (lists all the coupon match-ups, sale prices, etc.), all I do is open up my coupon file drawer, where each coupon pamplet is filed by date, pull out what I am looking for, print a list from the website, and head to the store.

      • Shirley says:

        If you are reading the newspaper or magazine anyway and clip only the coupons for things that you regularly use or already intend to buy, then it is worth your time.

  13. hoht says:

    Good article, I’ve adapted a form of this concept to my study habits. Instead of marathoning it for hours, I study, kill zombies, then study again. Keeps me studious.

    • jsbrendog says:

      I envy you. i could never do that. If i stopped i was DONE. so it was push on til the day

  14. Yana says:

    Is this for real? Haha. Frugality is seeking value, getting the most (especially quality, however you define that) for the least output. It is the antithesis of waste. I prefer this method as a means of gaining wealth and holistic fulfillment. I prefer maximizing resources and minimizing output to actively pursuing the most dollars. I don’t want to spend/waste my life chasing dollars – even though I don’t have a terribly exciting life, I definitely have better things to do than that. Instead of chasing dollars, I’d rather work with the ones I have and grow them.

  15. Kate says:

    What about the aspect of being less wasteful. This is also a part of being frugal and if you care one ounce for the planet then living less wastefully should definitely be a part of your every day living.

    Being frugal doesn’t have to mean going back hundreds of years and making absolutely everything from scratch, its more to do with looking at your lifestyle and living it wisely both for financial reasons but also ethically too.

  16. If you make $100 an hour you’d be making $200,000 a year on a normal schedule. A more reasonable number would be $20/hour.

    That said, salaried people have very few options of taking on more work that pays even close to that. Most likely, outside of work, they’ll be making $0/hour which is then the figure to compare to. Even moderately successful blogs only make a few thousand a year.

    Frugality, thus is the best option unless you’re making 200k a year or 2k a year. If better options existed, there likely would not be as many foolish pf blogs promoting it ;-)

  17. I would like to know if this person is debt free and building wealth, or if they are like so many other “financial advisor’s” …. b r o k e ?

    The premise is catchy but flawed. I’m “worth” $50 an hour, or i’m “worth” $100 per hour so saving’s is not important makes the individual think that savings is a bit beneath them.

    The truth… It doesn’t matter how much you make, if you don’t learn to control how much you spend you will always be broke, or worse in debt.

    • Jim says:

      Is “this person” me? If so, I’m debt free and building wealth but I wouldn’t consider myself a financial advisor.

    • I didn’t realize that most financial advisors were b r o k e… Isn’t being a financial advisor (or financial planner) at the top of the career charts for one of the most satisfying jobs? Thought I heard that somewhere…

      Saying “I’m worth X / hour” won’t necessarily lead someone to think savings is beneath them.

      It could be an honest assessment of what they can earn with 1 hour of their time.

      If I can make $50 with an hour of effort, should I instead spend that hour to save $25?

      Probably not.

      Problem is, as I wrote in a comment above, that most people haven’t figured out how to make hours outside of their 40 hour/week job make money for them. This essentially makes hours outside of their job worth $0.

  18. eric says:

    It’s good up to a point. Then you should find ways to earn more.

  19. Brandon says:

    Real world example: I can make $20/hour contracting on the side. We needed to find my wife’s high school diploma (or get a transcript) for a state tax credit audit. It cost $3. Is it worth looking for the diploma?

    The eventual answer was no, yes, no. No it wasn’t until the deadline approached and the transcript still had not come back switching to ‘yes’ because I was afraid I’d miss out on the credit if I didn’t find it back to ‘no’ when I got an extension on the taxes.

    • SteveR says:

      Other real world example: My job offers (for the most part) unlimited overtime opportunity. About once/week I have to do some yard work (in summer) that normally takes me about 2 hours (more if I need more oil/gas, etc…). Instead I pay the neighbor kid and I’ll go into work for 2 hours on a Saturday. Everyone wins. I get more work done, I come out of the situation with much more money, and the neighbor kid makes good coin for his age. People I work with just can’t seem to grasp this concept and think I’m a money waster for paying someone to do a job I could do myself — I think if anything, I’m the one being frugal.

  20. Christina says:

    I don’t think it’s foolish to be frugal as long as you don’t overdo it…I mean, you just have to be practical. There are times that you spend more trying to save…plus being frugal doesn’t also mean you have to deprive yourself, maybe what makes it foolish is how someone really defines it.

  21. Debbie says:

    For some people being frugal is more of a hobby then a requirement. I agree making more money to offset the need to be extremely frugal is always better but everyone needs to own some time of frugal behaviour or they would be perpetually broke.

    Being frugal can mean anything from clipping coupons to questioning the purchase of a brand new expensive car vs a used serviceable car.

    I think the frugal push has come from a lot of people living by their wants instead of their needs all their life. They don’t know how to change so the frugal blogs, etc., out there have risen to fill the need for those people wanting to change but not knowing how.

    For a lot people this is common sense but some people just don’t have a clue.

    I like to read frugal ideas regularly so that I don’t fall off the “think before I spend” treadmill. Giving in to one want can lead to giving in to many wants very easily and then you are left wondering where all you money went at the end of the year when you do your taxes.

  22. Mary says:

    Have you read the book “your money or your life” it is all about considering the value of your life energy AND about your values and what is important to you. I personally believe that it is not only important to be frugal to save money but to lead by example and keep our use of resources to a minimum. For example; I choose to dry all my clothes on clothes drying racks yet I continue to by 3,000 mile fruit in the winter. Both of those are conscious decisions. I think it is not so much that we are frugal or not but that we are making conscious decisions.

  23. Soccer9040 says:

    Not every one of your “hours” is worth what you think it is. You can’t work 24 hours a day. Every hour just isnt going to be profitable. With that said, there are frugal things you can do that just don’t take time. Cutting a few coupons does take a little time, but are you really missing that 5 mins on Sunday morning when you lay the paper out on your counter and begin to look through it. I’m not saying I sit and make a big deal about it, but if I see a coupon for something we normally buy, I’ll cut it out and throw it in the coupon thing.

  24. Yana says:

    Joe Bassett should surely be deleted. That kind of thing should not be seen here.

    • Jim says:

      I agree, I’m really sorry for not catching the antisemitism earlier. The spam filters are capable of detecting and stopping spam but not racism. My apologies to everyone and especially to those offended.

  25. The Frugalist says:

    Back in grandma’s day, my grandfather was lucky to have a job during the depression. Grandma learned to be very frugal and to save for a rainy day. i am torn between giving the right impression and being frugal– which to me is the better route. If you are working the ‘any job” that people were yelling at you to take, and you have two of them but you are miserable and so is your family, who also works. Perhaps you are too caught up in the system. i heard one talk show host even say being frugal hurts the economy! That’s the time to re-evaluate. Money isn’t everything. Grandma taught me things that got me through some really tough times. For that i am greatful.


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