Stop saving so much: Why frugality might be doing you more harm than good
Frugality is often hailed as the best habit you could have when aiming for economic stability and learning to be responsible with your money.
That’s quite true. I myself, in this very blog, have often stressed the importance of being frugal and conscious about your spending as a way to attain financial stability. In fact, you won’t find anyone who’ll tell you not to be frugal.
However, there are details and small prints in these things. Depending on your specific economic situation you might or not need to be so strict on frugality. More importantly, while you should strive to recognize and excise any vampires from your budget that are just eating up your funds while providing little or nothing, tagging every single non-vital expense as a vampire can cause problems. Because, you see, being unable to spend money at all does come at a cost.
Stress and how we manage it
Many of the small expenses we have during our daily lives are related to stress management. While grabbing a piece of cake or going to the cinema occasionally are definitely not things you absolutely need to live, said activities can make life much easier for you by allowing you to unwind or reward yourself.
Sure, you won’t die without a trip to the cinema. But your own enjoyment of your daily life will suffer, and the added stress of doing nothing but working, with little or no leisure in your life because “It costs money” will come at its own cost down the road.
First, your own mood will suffer. It’s easy to think working as much as you can, making as much money as you can, and spending as little as you can is the path towards financial success. It makes sense, after all. But our brains don’t really work on sense, and after a while the lack of any enjoyment will hit you – you might then find yourself fighting apathy or depression in your daily life.
In turn, these problems will affect your work, potentially making you less productive or perhaps even costing you your employment – and this I write as someone who has been there and whose drive to go “all work, no play” ended up costing him a $2,000/month contract.
To say the strategy backfired might be an understatement.
Finding a middle road
The ideal, then, is to find a middle point where you’re saving money by excising your vampires but still doing things you find fun and engaging. Try to get rid of your vices, but go out for dinner with friends once in a while. Don’t buy the latest, newest devices every year, but allow yourself to upgrade or get new things as long as you do it responsibly – that is, budget for it and stick with your budget.
Entertainment is a very easy factor to consider a vampire, but it is important. Don’t feel bad about spending on it, just feel bad about overspending on it. Plus, the truth is, your twice a month trip to the cinema might not be making that huge a hole in your pocket. Because in the end…
The real vampires can be hard to spot
They wouldn’t be good vampires if they were just standing out there in the sunlight, or would they? No, budget vampires enjoy hiding and masking themselves as something else. So while you might be glad you’re saving $20 a month in cinema trips (it adds up to $240 a year!) you might be thinking the $2000/month you’re paying for your apartment is absolutely necessary. Or the gas bill for your car, nevermind the car itself.
But they might not be. What if you could look for another place? Maybe smaller, or a few blocks away. Maybe in a cheaper zone that still isn’t too far from where you work. While cutting off on a couple small expenses might save you $50/month, downsizing your apartment can save you five times that.
Cutting off on car usage or the car itself will help a lot, too, although doing this will highly depend on your work, where you work, and where you live – as many areas in the US have terrible or nonexistent public transportation. But if you do happen to live close to where you work or have decent public transportation, give it a try! Going to work on a bicycle or walking will save you money while also helping you get in shape (which will also save you money long term.)
Other, not so large, but certainly larger expenses than a night out can be easily replaced. Replace your gym membership with out
When in doubt, look deeper for the big vampires
Here’s the takeaway. When needing to save money urgently, sometimes it’s better to look at the large expenses and wonder if they’re really necessary. It’s very difficult to save $500/month just from eliminating small expenses, and the process can be extremely stressing. Meanwhile, figuring out if you can cut off something larger can bring you closer to the goal much more easily, and often without major sacrifices on your part.