This week, The Simple Dollar attempts to address challenging questions in personal finance by looking at both sides of the story and figuring out some of the factors you need to look at to make a decision.
Every time I write a post about frugality, I usually get a comment or two complaining that it’s a waste of time and that you should be spending that time furthering your career. On the flip side, when I discuss entrepreneurship, others point out the numerous challenges with entrepreneurship options and state flatly that you’re better off just spending less.
Which side is right? Clearly, both sides seek the same goal: a bigger gap between your required expenses and your income, which is really the one true way to financial freedom. However, the paths to get there are so widely different that people who are adamant career builders often don’t see the value in frugality, and frugal folks are often not burning with desire to build up their careers. Let’s look at both arguments.
Every time you spend a dollar less, you have a dollar more with which to invest and build towards your future. That old Ben Franklin adage, “A penny saved is a penny earned,” is spot on.
It’s not that hard to come up with extra money for debt repayment or investing. Every day, just actively make choices that don’t involve spending money needlessly. If you find opportunities to spend less, take them. If you can make choices that save money over the long run (like installing energy efficient stuff at home), do it.
There’s a difference between being frugal and being a cheapskate, though. Spending less doesn’t mean spending nothing at all – it just means maximizing the value of every dollar that you do spend. It’s the difference between buying a $1,200 washing machine that uses very little energy and water and will last twenty years and a $200 washing machine that eats electricity like it’s going out of style, gobbles down water, and breaks down in six years. Which one is cheaper over the long run, thus saving you some serious scratch over time?
The best part is that anyone can practice frugality – it doesn’t require any special skill at all to install energy efficient devices, select expensive purchases based on total cost of ownership, clip coupons, make simple food at home, reuse things, cut down on entertainment spending, and so on. Anyone can do these things – it does not require an entrepreneur’s skill, a socialite’s networking, or a devotee’s attention.
You can spend time being frugal and all, but no amount of frugality is going to compare to doubling your salary. Focus on your career and not on clipping coupons, and you’ll be just fine. No amount of frugality can compare to the dynamic changes in a person’s financial situation that can occur due to strong career choices.
Career and entrepreneurial success requires commitment and significant work over a long period of time, as well as at least some skills in communication with others. Channeling your passions, however, can make this possible – and open up incredible financial doors for you.
You don’t grow into a role of prominence and wealth by clipping coupons from the Sunday paper, you do it through hard work, diligence, and passion to make something of yourself. Frugality can save you a bit of money, but strong career choices can transform your life.
I’m a big advocate of frugality, and I think that maximizing every dollar you spend to get the most enjoyment possible out of it is truly a great way to live. That’s why I talk about frugality a lot on The Simple Dollar.
I agree that diligence with your career is one very strong road to financial success, but it also requires an intense focus that requires sacrifices, sacrifices that many people aren’t willing to make. I would not sacrifice spending almost every evening with my children for any sort of career, for example.
It’s great to work hard and find entrepreneurial opportunities, and those are usually the surest roads to wealth. But great financial wealth isn’t necessarily a goal everyone has. For me, the wealth of my family is what I treasure the most.
That doesn’t mean I don’t work hard and look for opportunities to build a better career, I just know that it’s merely a means to an end for me. Frugality, on the other hand, is something that I can do as a complement, and it will still be with me even if my career choices don’t quite turn out like I hope.
In other words, it comes down to goals and what you want out of life. If you seek wealth and prestige, career building is a much better use of your time than frugal tactics. However, if you have other goals and values in life, frugality is something that anyone can apply no matter how their life is.