In our society, most often yes.
We judge our fellow man by; the car he drives, the clothes he wears, the size and location of his house, where his children go to school and so on.
Our friend arrives in his brand new car. “Wow nice car” we exclaim, tinged with envy.
Do we judge people on how much money they perceive to have?
We visit our sister’s house. She’s had the kitchen remodeled and it looks great. We exude congratulatory statements like; “you’re so lucky”, “I would love a kitchen like this”. Your sister is clearly proud of her achievement, whilst you’re left cold at the thought of your 90’s kitchen with it’s peeling veneer and broken hinges.
Do we judge people on how much money they perceive to have? Yes.
Knowing what some people were sacrificing to have nice stuff, we may think they were more foolish than successful. Behind the glamorous exterior there can be; hefty mortgages, credit card and finance debt. The sort of liability that hamstrings people, leaving them spending their entire working life paying off.
Of course there are exceptions. Not every outwardly wealthy person is saddled with debt.
Nobody likes a Penny Pincher
So where does that leave the frugal people; the penny pinchers and miserly ones.
Some people are frugal out of necessity. Whilst others possess wealth that’s not obvious. From the outside they’re like any normal person and can appear to lack money, given they’re conscious of everything they spend.
In contrast the Overspenders will be wearing the latest fashionable clothing, ordering the best wines, throwing parties and dining at expensive restaurants. They’re seen to possess all the money they could ever need.
But is wealth all a facade?
Yes it can be.
The well known book The Millionaire Next Door shows the majority of wealthy people live either below or well within their means. They’re careful shoppers, drive common brand cars and live in relatively modest homes. They’re aggressive savers compared to the high-income, Overspenders who consume the most.
The Overspender may also lack the freedom that can come from being a Penny Pincher.
Freedom = No Debt
People accept debt as a normal part of life. And yes, if we want to advance we may need to take on debt at some time. It’s more about the size of the debt and the reason for it that matters. Problems arise when we use debt to acquire things we don’t need.
Personally I don’t agree with using debt to purchase anything except a house (with affordable repayments) or for investment purposes; such as a rental property or business. For everything else, if you haven’t got money in the bank, start saving. Borrow items if you need them or don’t buy them at all.
“But the car dealers offering a no interest term”. That’s great, but make sure you still have the cash available when the hefty repayments roll around. Otherwise you maybe tempted to throw it on the credit card.
Watch out for these sorts of marketing traps; designed to have you overspending (via debt), on something beyond your affordability.
But saving is boring and spending is fun
That’s true for many people. But not if we make saving a challenge and start questioning where our hard earned money is actually going.
Everyday, money is extracted from hard-working people (living hand to mouth), to multi billion dollar companies. They have one main objective – to make money. They’re not interested in the lives and well-being of their customers. And they will lure them with targeted advertising campaigns, promising to make our lives better if we buy their products.
So why not make it a challenge to hold onto our money and consider more carefully what we spend it on. Therein lies freedom and liberation.
Frugal = Freedom
I’ve always been fairly frugal. Perhaps it’s the accountant in me. But there are times when I haven’t, so I’m not trying to be an idealist here.
Now age 45 I watch my spending and don’t have any debt. I love my house and don’t want to upgrade. I’m surrounded by the people and things that make me happy. The carpet, kitchen and bathrooms are about 15 years old and could do with replacing, but I’m not bothered. Life’s not about status, it’s about living.
With eating, we should eat until we’re 80% full. Apply the same to money.
That’s not to say I don’t spend money and haven’t blown it on big-ticket items in the past. Now we try to spend money on things that give us income (investments) or memories. At the end of our lives the experiences, (like family holidays) will remain in our memory more than the latest clothes and devices purchased each year.
Freedom from debt means you don’t have to work so much. And that time can be spent doing the things you really want to.
Becoming debt free requires creative and logical thinking and restraint. And it will be boring and frustrating if we don’t change our mindset (much like going on a diet). But it’s possible for anyone, especially if they give up their ego and habits of constantly buying stuff they don’t need.
Why can’t money be simple – don’t spend more than you have. With eating, we should eat until we’re 80% full; apply the same to money.
Sacrifice the luxuries of today to enjoy the freedom of tomorrow.
Don’t spend money on budgeting services; a profiting industry where people spend money to be taught how to not spend money.
Get someone you know to help manage your money. Someone who’s good with their own money; a trusted friend or relative who can assist with establishing budgets and setting up automatic payments etc. In New Zealand we also have a local based Citizen Advice Centre who offer free budgeting services.
Go back to simplicity
Restraint doesn’t have to mean going without. Think creatively about how you can still have and do things you want, but in a different way. How you can still have holidays, eat yummy food and buy clothes. Get resourceful, ask for help, borrow stuff if you need it and learn how to do things yourself.
Stop caring about what others think of you, it will only keep you poor.
In Sweden there’s a common word they use called “lagom.” This word means “just the right amount.” It has nothing to do with being cheap, and everything to do with spending money wisely on those things that truly matter. And stop caring about what others think of you, it will only keep you poor.
The more we focus on the benefits of a thrifty lifestyle, the easier it gets. The Penny Pincher has gotten a bad reputation and maybe it’s time we praised ourselves and others for what we have achieved by not spending money.
I welcome your views and feedback.
Keep looking at everything Differently.