Frugal & Fabulous in the City?

By Dr. Yakini

These days being "frugal" gets a bad rap, doesn't it ladies?  This is because it is often confused with being "cheap."  However, there is a monumental difference between being frugal and being cheap.  In general, frugal actions are those that save money and/or resources, while not harming anyone else.  In fact, frugality usually benefits everyone involved in some manner.  Frugal people try to get the lowest price on most things, but spend a lot on items they really care about.  Cheap actions, on the other hand, usually occur at the expense of others. (Example: When dining out, skipping out on the tip is not frugal.  It's cheap).  Cheap actions are usually inconsiderate, unreasonable, and may result in damaged relationships.   

In the past, when we thought about frugality, a vision of our great Aunt Pearl came to mind--sitting at home clipping coupons on her plastic-covered sofa draped with antimacassars, in her dimly-lit parlor cluttered with picture frames, ceramic figurines, and plants.  Oh yes, and she is in her favorite flowered housedress that she has owned since 1973.  Not the most appealing thought, is it?  But that's not all being frugal is.  In the economic slowdown of 2007-2008, the newest trend isn't toward upscale living--it's toward simple and frugal living!  The minimalist lifestyle is what's in!  Personally, I'm all for the new trend.  I'm not excited about the gloomy economic climate of late, as I revel in upscale living more than anyone.  However, I think it's fine time we realized that spending more than we earn is a potentially dangerous habit. 

The January issue of Accumulating Money had an interesting article on the Top 10 Reasons People Spend More Than They Earn.  These ten reasons were listed:   

10.  Keeping up with the Jones’ - Psychology plays a big role in our spending habits. We want to feel as successful or more successful than those around us. We spend a lot of money to keep up that image. The reality is, the neighbors probably can’t afford that new boat either.

9.  Avoiding the truth - It’s easy to overspend when you don’t keep tabs on how much you have. People will go for years unaware of their true financial situation because they’re afraid to look at what kind of mess they are in. It’s easier (temporarily) to just avoid it. They’ll pay their minimums and add new credit cards as necessary ignoring the growing debt total.

8.  Counting the chickens before they hatch - In National Lampoon’s Christmas Vacation, Clark Griswold made a large down-payment on his swimming pool expecting that his upcoming Christmas bonus would cover it. Instead, he was enrolled in a Jelly of the Month club. We are often similarly optimistic about incoming money. It’s spent before it’s received, and it’s often not as much as was expected nor received when expected.

7.  Plastic doesn’t feel like real money - It’s common to spend more when using credit cards than cash. The experience of handing over a card that you get back is just not the same as handing over some cold hard cash and seeing it disappear.

6.  Immediate gratification - It’s all around us. We’re bombarded with the immediate gratification mentality. “Instant pain relief,” “fast food,” “on demand video,” and the big financial one: “Buy now, pay later.” We’re too used to getting what we want now even if we don’t know how we’ll pay later.

5.  Lifestyle maintenance - Most people increase their expenses as quickly as they increase their income. The same cannot be said for decreases in income. Once we become accustomed to a certain lifestyle, it’s pretty difficult to cut back, even if our financial situation changes for the worse.

4.  Poor as a child - Whether they’re trying to make up for their deprivation as a child, a fear of money being taken away that isn’t spent immediately, or a lack of financial understanding, being poor as a child is an often used excuse of overspending adults.

3.  Sense of power - Spending money actually makes some people feel powerful. The more they spend, the more powerful they feel, and the only way to get that rush is to spend more money.

2.  Prove self worth - Buying that fancy new car proves you  are somebody, right? For some people spending makes them feel like they are worth something to the world.

1.  Can’t say no - Some people feel like a failure when they  can’t meet the wants of others. Whether it’s new toys for the kids, new outfit for the spouse, or a night out with the friends, some people just can’t say no, even when they can’t afford to say yes.

I know many who scoff at frugality, as they feel it's not worth compromising their "quality of life."  And I agree with them!  But frugality is more than just saving a few pennies by carrying the same bagged lunch in to work everyday, driving your Honda accord for 17 years, and unfashionable thrift shop clothing!  When frugality is done "right" you are mindful of the money that you spend, while continuing to enjoy life to it's very fullest!  It's about doing what feels right for YOUR financial circumstances.  Frugality can even be fun!  And it can also help you sleep more peacefully at night, knowing that you are not in debt over that second pair of Jimmy Choos  you charged to your Visa because you just HAD to have to have them in egglant purple and salmon.

Ladies, I think it's very possible to be frugal AND fabulous!  And you don't have to wear Aunt Pearl's housedress from 1973 to do so!

What do you think?

Segments of this article courtesy of Accumulating Money.  Clint is a young professional trying to increase his networth to one million dollars.  Accumulating Money documents what he has learned about personal finance and chronicles his financial progress toward his million dollar goal. 

Dr. Yakini is a clinical psychologist and freelance lifestyle writer living in Brooklyn, NY.  She owns and edits Girly Home Webzine®, the online magazine for ladies living siddity in the city.

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Comments

[Ginger]

Great article! ;-)

Did you get the TB checked out by Typepad? I changed the link.

[Tracey Brooks]

I appreciate this article. I believe that "fabulous and frugal" are how my huband and I live we enjoy going to 4 and 5 star resturants, plays and buying what I/ we want, but we ask ourselves questions like: how will this thing truely benefit me and my family or is this a need or a want? These type of questions help us to be aware of what we are doing with the money, so that we are not constantly spending on the fly and being always aware that we enjoy having our savings and investments grow. We have named 2008, to be the year of the "Balanced Life," mind, body, spirit.

[juicefairy]

Great post! Most of these I think people realize but ignore the problem... except #5. Everyone thinks that once they make a little more that it is OK to spend a little more. That is what keeps people living paycheck to paycheck. Be realistic about what you can afford.