When Your Finances Improve, Is Frugality Necessary?

Frugal Joe's Ordinary Beer by MontageMan on Flickr!When I first started writing The Simple Dollar, I was working at a very stable 9-to-5 job that paid quite well. My wife and I lived in a very small apartment with our one child, a boy who wasn’t even a year old yet. Neither of our vehicles were paid off, but they were both still in fairly good shape. We had very little savings and still had a pretty big pile of debt in front of us – in fact, that’s why I started The Simple Dollar, to talk about money and learn along the way.

Roll forward to today. I’m now a full time writer, which basically means I set my own schedule when I work. My wife and I now own a four bedroom house (of which one of the bedrooms has been converted into an office). We now have two children – that boy is now three and a girl who is over a year old. Both of our vehicles are paid off, but they’re getting quite old and one of them is on the fast track to being replaced. We have very few debts now – just one student loan and a mortgage, no credit cards – and our savings are quite healthy.

In short, we’re in a completely different financial situation now than we were two years ago when I started The Simple Dollar.

When I go back and read some of the earliest posts on The Simple Dollar and consider them in light of those changes, it’s easy to see how much my own standards of frugality have changed and evolved. Here are some examples.

My earliest coupon strategy involved a lot of work and it was also fairly naive. Today, I spend much less time hunting for coupons, mostly just identifying great deals from the Sunday paper (ones that obviously beat warehouse prices and generics on products we already buy) and occasionally order more of those coupons from brokers.

I used to think saving money in my pocket change jar was a great way to save, but I came to eventually realize that having a lot of pocket cash was actually hurting me because it made spending money very, very easy.

When I was first divesting myself of a lot of my material goods, I spent way too much time trying to game eBay. Now, I only eBay items if it’s clear it will be worth the time – otherwise, I’m content to pass items on to people who will use them or else donate the items to Goodwill.

I used to worry a lot about slight differences in interest rates between banks. Now I realize that most of that worrying and sweating only amounts to a few dollars a year – and good customer service is worth quite a bit more than that if you need it.

In short, things have changed. As my financial situation has become more secure in many ways (and less secure in at least one key way, my “freelancing” job), my priorities for frugality have changed as well.

The biggest change has been a sharp reduction in my free time. With a large house to maintain and a second child that needs and deserves a lot of attention (in addition to the continuing love and attention for the first child), I simply don’t have as many free hours as I once had to chase down savings.

This means that my frugality has to focus more intently on the bigger items. What actions provide the biggest bang for the buck, particularly over the long haul? Spending an hour tracking down coupons to save $4 on my grocery bill? Or spending fifteen minutes making a bucket of homemade laundry detergent that will save $6 over the time we use it followed by making a homemade supper? In the past, I would have done all of these things – today, it’s a choice between the two.

A bigger question lurks behind all of this, though. Given that I’m in a better financial situation than I was two years ago, am I now behaving in a less frugal fashion? In other words, since I’m not as financially pressured as I once was, am I skipping over some of the frugal choices I could be making?

I believe the answer is yes.

That’s not to say I don’t spend my spare time working on projects that will save money. We make laundry detergent, cook lots of meals at home, and so on, and I thoroughly enjoy trying out new tactics that I discover.

Given that, we’ve reached a point of financial security where it makes sense for both of us to focus on other areas of growth. For example, if I have a spare hour today, I might spend it trying to build a new skill or read something that I can apply in my work, whereas two years ago I might have hunted down some coupons or tried to figure out a clever way to save some additional cash.

Yet, in the end, these different choices are just variations on the same theme. In both cases, we’re seeking to increase the gap between our income and our spending.

With frugality, the goal is to reduce your spending. With less money going out, you have more money you can save and apply to your debts and personal savings goals.

With other areas of personal and career growth, the goal is to increase your income. Again, with more money coming in without an increase in spending, you have more money you can save.

What’s the real key in both stories? Control your spending and keep it much lower than your income. If you do that, then frugality and career development go hand in hand – they both serve to increase the amount of money you can keep.

Another question: when is it better to be frugal than it is to focus on career growth? Frugality is something that tends to pay off pretty quickly. If you shave spending immediately, you’ll see the benefits very quickly in your checking account balance and you can immediately use it to keep your head above water.

Career growth and personal development pay off much more slowly. It may take years, in fact, before you see a dime’s worth of return on that investment.

Many people are in financial situations where they simply don’t have the time necessary to invest in career growth and personal development. They need to make changes now in order to keep their head above water. For them, cutting spending is the best choice as it provides immediate results.

Later on, though, when you’ve mastered a lot of great techniques for trimming your spending, you may want to look at other avenues for increasing the gap between your spending and your income, and working on your career is a great way to do just that. You can work on skills that improve your current career, or focus on laying the groundwork for something completely different. These investments of time won’t pay off immediately, but if you have your spending under control and spend far less than you earn, you have the time and breathing room to make it happen.

Times change, but spending less than you earn always works.

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