Adina J. of Timeless Finance had a post out some weeks ago on frugality vs earning more. It made me think about my attitudes towards the two then, but as usual, it took me some time to put it all down on paper.
Firstly, I need confess that I don’t know why there should be a conflict between frugality and earning more at all. It is not like one cannot do both at any given point in time, albeit to differing degrees. Having said that, if I had to choose sides, I guess I would be in the frugality camp.
I like frugality because it is mostly low lying fruit. This makes it accessible to almost everyone who wishes to improve their finances. You don’t need a college degree to be frugal; one can almost always find something to cut back on without too much effort.
I will always advocate frugality as the first step in any financial makeover, because it changes one’s relationship with money and consumerism like little else can. In trying to meet enforced budget constraints (whether willingly or unwillingly), it forces one to really examine one’s spending habits, spending motivation and finally, we get to the point where, even if we have not succeeded in meeting our budget, we are at least aware of what we are spending on, and the value that our spending provides to us in return. Without this understanding, it doesn’t matter even if one is making a million a year; you’ll never know what enough is.
This awareness also reduces waste, because one learns to spend only on what is important to one. I have no problem with people who like stuff (hey, I enjoy them as well!), as long as they really like it, and use it well and often. Frugality is not about not having things; it is about spending on only things which are important to you. It also means thinking about stuff on a long term basis, not just based on how you feel on the here and now.
And in actuality, it is pretty superfluous when PF bloggers argue for one camp or another, because I don’t know anyone who professes an interest for personal finance who has not already practiced or are in the process of practicing frugality, and living within their means, to a certain extent. It therefore seems like earning more may bestow more benefits, but only because these people have already reaped whatever benefits from reasonable frugality in their lives. More frugality, then, is a matter of marginal utility. And in this case, one can argue the same for a person both earning, and spending a million a year, that frugality beats earning more. It all depends on your starting point.
The argument of frugality vs earning more is also pretty reflective of a first world attitude to personal finance, because it assumes an almost unconstraint access to earning opportunities. That is not always true in many places in the world. In places where access to education, the internet, the global market, easy credit etc is restricted, sometimes frugality is about the only thing that will allow a person to have a measure of financial security and a chance at improvement.
Lastly, Adina mentions the apparent moral righteousness that is associated with the frugality camp, but…I don’t know. I only know that I sometimes feel constrained in professing my lack of aspiration to a higher income bracket than I am at, because I am worried about being perceived as being lazy, stupid, unambitious, and did I mention lazy? So perhaps the moral righteousness goes both ways? Or perhaps it is not possible to discuss PF without moral righteousness, hey?