In Monday’s reader mailbag, Eric asked a great question:
I find it interesting that you write about things like time management and philosophy on a personal finance site. The connection seems thin at best to me. I’d love to see a post talking about it.
My first line in response was “I don’t think there’s a full post in this subject, but there are certainly a few paragraphs.”
After the article posted, however, Eric and a couple of other readers asked enough follow-up questions that I changed my mind and decided that, indeed, this topic deserved a full article on its own.
So, let me answer Eric’s question from the top.
Frugality Is Resource Management
The idea of frugality is almost always tied to money and maximizing the effectiveness of it. However, I tend to use a somewhat broader definition of frugality. To me, frugality is about maximizing the effectiveness of all of one’s resources. Money is obviously a big one, but those resources also include time, energy, focus, relationships, skills, health, and other things.
The reasoning here is that if you find a way to be efficient with any one resource, it eventually can translate itself into money. For example, if I am efficient with my time and focus when I’m working, I get done with my work earlier than expected. This gives me some extra time to do some meal prepping (saving money directly) or doing something that builds professional skills (helping me earn money later) or exercise (improving my health, reducing health care costs later) and so on.
This works because most of life’s resources can be converted into money, and vice versa.
Time can definitely be converted into money, as you have more time to work or build skills or build a side business or do frugal projects.
Energy can be converted into money because you feel energetic enough to do more in a given day, like do a meal prepping project or finish off a work project.
Health can be converted into money because you’re avoiding health care costs and side effects that can sap your energy and time (which converts into money, as noted above).
Focus can be converted into money because it means more efficient work and usually higher quality work. You get things done faster (giving you more time) and you get things done better, usually increasing the value of whatever it is you’re doing.
Relationships can be converted into money by reducing the expense of help when you need it and increasing your professional and personal opportunities.
Skills can be converted into money by doing things yourself (saving money) and selling those skills and earning money.
Thus, frugality isn’t just about efficient use of money, it’s really about the efficient use of all of those resources (and others).
Best Techniques for Each Resource
Because of that, I think there’s a lot of frugal value in seeking out and finding best practices in each of those areas.
For example, when we’re looking at time management, I use a number of techniques that really help. I constantly have a task list going (I use the program Omnifocus to manage mine). I always have a pocket notebook and pen in my pocket to jot down thoughts and information as they come to me so I don’t lose them. I use time blocking as a way of effectively budgeting my time, and I even use time tracking as a way to more deeply understand my time use. All of this is intended to get maximum value out of my time.
Another great example comes from focusing. I do a lot of things to aid my focus, from mindfulness meditation and writing in a journal each day to listening to ambient noise and alternating between drinking coffee and green tea while I work. These tactics really help me focus in on my work, which means I produce better work in significantly less time than I would if I didn’t use these tactics. They also help me to naturally focus in the moment on things like my family or my friends or on a task I’m taking on at the moment.
I could go through most of these categories and point out strategies I use that I consider to be the best practices for making those categories more efficient. For example, I use a lot of checklists for tasks just so I don’t have to think about them or think about what’s next. The key is that I’m sharing what actually works for me in terms of getting more efficient value out of one of the resources in my life, and that resource can usually be converted to money (or into leisure time, which is as good as money).
People Do Focus on Money
The issue, of course, is that people who come to The Simple Dollar almost always have a heavy money focus. Usually, they’re drawn to The Simple Dollar because they’re experiencing a financial challenge in their life and they need some down-to-earth advice on how to fix it.
This isn’t surprising. Just shy of 4 out of 5 Americans live paycheck to paycheck. Inevitably, some of those people start feeling nervous about their situation, and others are hit by an unexpected event and suddenly find themselves in a really stressful financial state. Money is the resource that they need to get a grip on in that moment, more than any other.
That’s why, when I do focus on those other areas, I try really hard to make the connections to money as clear as possible. Often, the main reasons I use for those tactics aren’t directly related to money. Usually, I do them because they make some other resource in my life more efficient and then, over time and as needed, that resource saves me money. However, understanding that isn’t really all that helpful to someone seeking immediate financial help. Money is the resource that people are often concerned with, and thus I try to make the connections to money as directly clear as I can.
On the whole, though, The Simple Dollar is really about having a balanced, low stress, financially successful life where you’re achieving the dreams you have for yourself.
What does that really mean, though?
A Philosophical Approach to Life
Sometimes, articles on The Simple Dollar trend in a very philosophical direction, asking questions about what our purpose in life is and what we want out of it. Those questions aren’t easy to answer and they’ve been the core of philosophical works since the dawn of time. You can literally go back to the earliest philosophers and you find that they’re thinking about those questions and philosophers today are still thinking about it.
In my own life, getting a grip on the purpose of my life has been infinitely valuable in terms of figuring out what I should be doing with my money, time, and energy. It was essential in setting meaningful lifelong and long term goals, and those inherently lead what I choose to do with my resources. I use frugality tactics to help me move toward those goals efficiently.
Everyone has a different understanding of their purpose in life. I think that anyone can benefit a whole lot by reading some of the better works on life philosophy out there and figuring out what really clicks with them, because it won’t be the same thing for any two people. I’ve written about stoicism and Epicurean principles and Aristotle’s principles and secular Buddhism and books like “Walden” and Voluntary Simplicity and Self-Reliance (in three parts).
(If you’re interested, my own belief is that the purpose of life is to find out what you’re good at and practice it with enough skill and focus that you lose track of time and space and achieve a “flow state.” This flow state feels tremendously good, produces really high quality results, and can be used in both professional and all manner of personal contexts. I can dig into that idea in a bunch of ways, theologically and psychologically and philosophically, but I basically think that the best life I can lead is one where I regularly get into a flow state and the things I produce while in that state make the world a better place. I think this approach helps greatly with my writing, but also makes me a better parent and a better husband and a better friend and some of the things I do in that state help many, many people. Having said that, however, I think that everyone has a different view of what their own purpose in life is and you should seek your own and not expect it to match mine.)
When I write about such subjects here, I try to center it around things that I’ve learned that resonate with me, but also with ideas that I can at least appreciate that I know resonate really well with others. I want everyone to be able to figure out at least some idea of what their own purpose is, so that they can set more meaningful life goals and put their finances to work in service of it. Not only does this provide a ton of motivation for good financial behavior, it also translates your financial success into something that’s deeply personally meaningful for you.
Whenever you read an article on here that delves into time management or into checklists or into meditation or into something philosophical, there are really two key things to remember.
One, frugality is about getting maximum value out of all of life’s resources and those resources are generally transferable to one another. If you’re efficient with time, it’s easy to convert that time savings into money. The same is true with energy, health, relationships, focus, and so on.
Two, having a purpose in life makes it much easier to set long term goals that really resonate, and putting your finances to work in line with those goals makes financial progress much more powerful and meaningful. When you really figure out what you want out of life and start setting goals to maximize your ability to do whatever that is, the financial moves you make in service of that goal seem incredibly joyful and purposeful because you’re building a life that really means something to you.
Those things are big cornerstones of personal finance, in my opinion. Know why you’re doing this. Get maximum value out of all of life’s resources. That’s the path to not just financial success, but success in life.