Has Frugal Advice Gone Too Far?

There have been several interesting discussions on various personal finance blogs that seem to indicate there may be a backlash building against exhorting people to spend less, do less, and buy less. A lot of discussion has been on whether experiences, such as travel, fits into a frugal lifestyle.  In addition, there’s a continuous thread of guilt that seems to creep into some people when they encounter someone who lives a more frugal lifestyle. With the economy looking like it’s no longer in freefall, but also still looking anemic, it’s perhaps a good time to pause and reflect on frugal practices.  In particular, has the frugal advice gone too far?  Are people missing out on experiences that would really help their career or make them happy? Are people feeling burned out from the brown-bagging, coupon clipping lifestyle?  This is how I approach it:

–Consider your stress level – when I was a kid, my parents worried about money all of the time.  And, not being people who kept anything from the kids, they would argue in front of me and my brother over money issues regularly, and I would constantly find slips of paper where they would scribble a bunch of numbers trying to figure out the monthly expenses.  As a reaction to this, I have always made a point of spending less that I needed to in order to avoid similar types of stressors.  I am always surprised when I hear people (like my former co-workers) upon being laid off, make the decision not to change spending patterns around their young children.  The reason they cite is that they don’t want the kids to be adversely affected by what they expect to be temporary.  However, what they don’t take into account is that the kids are definitely affected if Mom and Dad are always stressed thinking about money, and that paring back an expense or two to be more sustainable could have positive benefits.  But this cuts both ways, I now hear of people who can’t go out and have a relaxing evening or enjoy a meal because they are constantly worried about how much it costs.  I would say this is going too far.

–Are short-term cutbacks likely to make you binge later — this is similar to dieting, where cutting back too far causes a sharp reaction in the wrong direction.  Unlike dieting, my understanding is that most people who get past the initial no-spend periods seem to adjust to their new lifestyle.  However, if you have tried frugal habits that are not sustainable, this is probably going too far.

–Do you feel you are really missing out — I am perhaps a bit biased here, as someone who is self-identified as experience-rich and stuff-poor, but my view is that rich experiences are an important part of the life experience.  I don’t think you need to spend huge amounts of money to get these rich experiences, but I do think they should be carefully considered as part of the overall budget.  My suggestion is to save in advance of the spending (like for a trip), have a reasonable budget for the trip, and take full advantage of the experience (by not spending the time worrying about the cost).

Editor’s pick in this week’s Festival of Frugality