Why I’m not into extreme frugality

For many people, frugality is their second nature. To me, it's pretty much being sensible with money, welcomed and kind of expected, considering my journey to Financial Freedom. If you're on the same journey - you know the deal. Lower your expenses and increase your income to accelerate your expedition. I was born a semi-minimalist, stuff in general doesn't impress or tempt me much, I don't like waste, don't care about travelling business class and never felt awkward bringing my lunch to work. But extreme frugality... is not for me. Let me tell you why.

A while back, a friend of mine suggested we go on holiday together. Her colleague had a seaside flat he hardly used and, for a symbolic fee, he'd let us stay there. Going on holidays with friends can be a beautiful thing. It can also be an ugly disaster. I knew my friend had plenty of quirks - you know, we all have them and they make us that much more interesting to be around. To give you an example, once I visited her in her house. I went to use the toilet and before I was able to close the door, she explained to me why there was a bowl in the sink. You probably know how bowls in the sink work - in the kitchen. You use them or the built in plug to do the dishes, when you don't want to do your dishes in running water, right? Right. This bowl was similar but with a twist. Here's the procedure - I was to use the toilet, then wash my hands and finally use the water gathered in the bowl after the hand washing to flush the toilet. Simple. Of course I complied as... your house, your rules and so on. To me - it was a quirk.

Fast forward a few months and I was to discover a multitude of quirks like that. I won't mention all of them but here's an example. On day one we went for a swim. Not in the sea but in a lido pool. Not sure if all lidos operate in a similar fashion but that particular one operated like that - you would pay 2 pounds something for an entry up to a certain cut off point, say 2pm, and then after 2pm you'd get a one pound discount. My friend agreed to go but on one condition - that we enter after 2pm to get the 1 pound discount.

On that holiday I finally understood that what I saw as personality quirks before were rather examples of extreme frugality. Something I'm not interested in practicing, something that I say a plain, big fat NO to - as I believe it does more harm than good. And here's why.

Pinching pennies puts you in a scarcity mindset.

You start seeing money as a finite resource. The thing is, every time the governments need to rescue the economy and print some more money - the bells should start ringing: oh, so it IS possible to add to the pool. Yes, it is! Money isn't a natural resource, it's a made up concept, an agreement. You can't run out of either of those.

There's a great legendary story once told by Alan Watts:

"The great banks of the world at one time got absolutely sick of the expense and security measures involved in shipping consignments of gold from one bank to another and so they decided that all the chief banks of the world would open offices on a certain island in the South Pacific which was balmy and comfortable and there they would store all the gold in the world. And they put it in great subterranean vaults reached by deep elevator shafts and then all they had to do when one bank, one country owed gold to another was to trundle it across the street. And this was very efficient. It went on beautifully for five or six years. And then the presidents of the world banks got together and said, "Let's have a convention out on this island and take our wives and families.”

So about seven years from the date of opening, all those presidents and their wives and families went out to this Pacific island and they inspected the books. And everything was beautifully in order. Then the children said, "Oh Daddy can't we see the gold?" They said, "Of course you may see the gold." And they said to the managers, "Let's take our children down to the vaults and show them the gold." And the manager said, "Well it's a... it's a little bit inconvenient at this time and perhaps the children would not really be very interested, after all it's just only old plain gold." And the president said, "Oh no, no, come now, they'd be thrilled. Let's go down and see." And there was further humming and hawing and delays and finally it came out that a few years before there had been a catastrophic subterranean earthquake and all the vaults had been swallowed up and all the gold had disappeared. But so far as the bookkeeping was concerned everything was in perfect order.

What this means then is that money is nothing but bookkeeping. It is figures. It is a way of measuring what you owe the community and what the community owes you...."

And so... when you start questioning what money is, you sooner or later arrive at the conclusion that it doesn't really exist. Sure, we check our bank accounts, we check the ledgers. But these are just measurements. And so the whole idea of pinching money becomes ludicrous.

"Because money is something of the same order of reality as inches, grams, meters, pounds, or lines of latitude and longitude. It is an abstraction. It is a method of bookkeeping to obviate the cumbersome procedures of barter. But our culture, our civilization is entirely hung up on the notion that money has an independent reality of its own." - that's some more wisdom from Alan.

The moment you see this, the moment you start believing that money is not something that runs out, your scarcity mindset gets replaced with that of abundance.

Another things extreme frugality does is it discourages you from living the life you want to live.

You end up avoiding spending, optimise for NOT paying and so you avoid this exchange of give and take in life. All this reducing has its limits.

I come from a country of DIYers - everybody's a plumber, plasterer, tiler and carpenter in one. We had a chat about this with my personal trainer - who comes from a neighbouring country - the other day. "In my country, there was no way to hire anybody so you did it everything yourself. In the UK, you can hire people to do anything! And it's not just DIY - when was the last time you cleaned your windows?"

Now, I can already hear some of you say: but I love DIY or but DIY saves you tonnes of money! Sure. But not everybody likes it and sometimes using your skills to make money and pay somebody else to do something you, in your heart of hearts, don't want to do yourself - is ultimately a better deal. A deal extreme frugalists will not see.

If there are saying that I wholeheartedly disagree with, it's this one: look after your pennies and the pounds will take care of themselves.

To me, it's similar to a situation in which you have debt and you focus on this fact - this having debt - so much that you don't consider opportunities to make money, to figure out ways to make money... which will eventually help you pay off that debt. In other words, you pay attention to the past, not to the future.
If I could modify that saying, I'd go for: when you focus on saving pennies, you miss a chance to make pounds.

Money making is a bit like gaming - any gamer knows that when you play a game, you move between levels. If you're a child and you're given some pocket money, a few pounds, you operate on that level. But then, later on, you start making money and you move on up one level - to tens of pounds. You start your so-called serious job and you move to another level again - the level of hundreds of pounds. Of course the game continues to tens of hundreds, thousands, tens of thousands and so on. And here's something you might not believe at the moment but what any gamer knows - you can access all these levels. If you tell yourself they are limited to a certain group of people, think of a game - sure, some players will be able to buy add-ons that will make them progress quicker. But there will be still place for other players, the ones without any paid for extras.
If you're on the level of hundreds of thousands of pounds, you will not focus on pennies.

There are many money myths and one of them is the one I bet you heard more than once: "the rich are the most stingy". If you're nodding your head at the moment and remember all the times when your rich friend was reluctant to pay for your dinner or drinks... I can send you to this book by Claudia Hammond. Spoiler alert - the rich are not stingier and they're also not more generous than anybody else.

I'd say, be aware of what level you're currently at and what level you want to progress to. Notice all money-making opportunities available to you at the moment and give them your full attention. It's always better to see how you can make pounds instead of wasting time on clinging to pennies.

These are the reasons why extreme frugality is not for me. I have other, more important aspects of my life to optimise. How to flush my toilet maximum three times a day with second-hand water...., how to cook without using gas or electricity six days a week..., how to make a cup of tea without boiling water... all these are too extreme for a 21st-century me.

Do I care about people's opinion and that's why I don't want to do such things? No. There are certain things I just plain refuse to do in the name of Financial Freedom. When I work with my clients, and they're aiming for Financial Independence, I make sure they ask themselves this very question: what am I not willing to do for Financial Freedom? Extreme frugality is on my list. What's on yours?

Extreme frugality is a dead-end alley.

You reach a point when you think: I'm optimising all these things and my universe has become so... petty. Your home suddenly has million rules that everybody needs to follow to make sure you don't overspend. And that way you place yourself in a certain group, on a certain level and accept more limitations. Ultimately you make it harder for yourself to learn boundless thinking about your life. And long term - it does you more harm than good.

Money is limited, I have no access to money, I'm not lucky with money - all these are strong narratives. Extreme frugality agrees with those myths.

I work with clients from all walks of life. Different nationalities, different age groups, different sources and amounts of income. But all of them, by reaching out to work with me, show up for whatever I suggest they do with the attitude of let's try and see what happens.

If you're into extreme frugality, I invite you to do some exercises that will put you into a more abundant mindset.

First - put down in your budget and in your calendar something you've been denying yourself for a long time. It could be paying a full price for a movie ticket, it could be going out for a meal instead of batch cooking and having the same meal every night. Make it small, make it big - it's up to you and how bold you feel. Trust me, even this step - scanning your daily rituals and reflecting on your habits can reward you with some insight into your life. Maybe you will question your actions a bit, your motivations, origins of these habits and finally how happy or unhappy they make you. That's the first step. Then comes the fun part. Think about the ways to make this treat of yours, this wonderful whatever you'd put into your calendar... happen. What will you need to do? How will you make that extra money? Move from the I can't afford to HOW can I afford it? And see what happens.

Another thing I suggest you do - hang out with people with a generous mindset. Not frivolous spenders, hoarders or credit card abusive hedonists - no, no. People who believe that money is not limited and make it without ever doubting this belief. Shut your mouth, open your ears and learn. And every time you judge their opinions or behaviour, notice that judgment. Nothing else, it will be most often enough to make this judgment disappear. In other words - let your scarcity mindset clash with the other person's abundance mindset.

Finally, consider the root cause of your extreme frugality. This will take some digging but I promise it's worth the effort. Ask yourself how money was treated in your family home. How it was talked about. Then compare that past reality to your current reality and see how many money choices and beliefs are truly yours and how many are just ghosts from your childhood that got miraculously transported to your adult life. And you know what, sometimes you don't even need to dig that far to find out the cause of your extremely frugal habits. But whatever it is - explore and reframe that old thinking.

Are you into extreme frugality? What are YOU not willing to do in the name of Financial Freedom?