On one of my earlier posts, “Motivation For Frugality - It Is Not Always About The Money“, a reader (a self-declared minimum wage earner) left this comment:
This indefinite frugality has produced in me a feeling of smug superiority, as in “you’re a spendthrift, I’m more frugal than you.†It has also made me wince more than a few times when reading bloggers discuss how frugal they really are. Ha, they don’t know frugal until they have to live it.
At that time, I replied to his comment with this:
I think it goes with “lack of resources†type of motivation. I am sure people who go through hard times have a better sense of frugality than people who don’t. It’s probably that “make-do†attitude that plays a role.
Btw, this leads to an interesting topic - are poor people more frugal than rich people? or it’s just that a poor man’s frugality is different than a rich man’s frugality?
I have been thinking on the subject since then, and now I have convinced myself that it doesn’t matter whether you are rich or poor - you can still be frugal to the highest extent. It all depends on how you perceive and define “frugality”.
If you define frugality directly in terms of material possessions (like it is usually done), there is always a scope of conflict with that definition. Things you consider frugal may be *lavish* from the perspective of some people, and *stingy* from the perspective of some other people. Here is a schematic that will help me paint the picture more clearly:
With reference to the money-scale in the image above, let us assume that there is a rich man can afford to spend a lot more money than a poor man. Based on how much each can afford, the rich man and the poor man define *frugal* in different ways. For example, assume that the rich man has enough money to easily buy a new Mercedes-Benz S-Class ($127,000). Now, for this rich man, buying a new Honda Civic ($20,000) is an extremely frugal decision. But, for someone who is much poorer (perhaps barely able to pay for health insurance), buying a new Honda Civic is an extremely lavish decision.
Similarly, the poor man might consider a 20″ regular TV (less than $100) as a *frugal* option - whereas, the rich man, who owns a 60″ plasma in his mansion, might consider it as a *stingy* option.
Evidently, the scales of frugality are different for rich and poor people. And hence, it might be a bit presumptuous to call someone a spendthrift or frugal based on the things they buy (or the things they pay money for). Personally, from a monetary perspective, if you are living within your means, then you are probably frugal. It doesn’t matter if you just bought a plasma TV or a brand new car - you are still being frugal as long as you are buying things you can afford.
Before we come to a closure, let me put some emphasis on “..from a monetary perspective“. There are different perspectives on frugality and monetary aspect is just a small part. You could look at it from the perspective of “need” - people who buy things they don’t need are not frugal; or “wastage” - people who waste stuff are not frugal; and so on. On top of this, there are different motivational factors for frugality. All this creates a variety of different definitions for what is considered “frugal” - makes frugality a very relative term.
In summary, I don’t think poor people are more frugal than rich people in absolute terms. Rich and poor people are frugal in their own relative ways and hence, we should think twice before laughing off other people’s frugality.
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My husband and I have talked about this topic a lot recently. I agree with you completely.
And then there are poor people who are poor because the are not frugal…
I think your quote sums it up: Personally, from a monetary perspective, if you are living within your means, then you are probably frugal.
Yet again, I love your graphs. In your posts, a picture truly is worth a thousand words. I studied the graph for about a minute before I got around to reading the rest of the post, and really the rest of the post didn’t add anything to my understanding beyond what I got from the chart. Well done!
Very nicely done.
So “frugal” is the happy medium between “stingy” and “lavish”? Love it.
I think frugality has more to do with the worth of your mindshare and time than your net worth. Working is a simple exchange of your positive time (and depending on your profession, mindshare) for your employer’s positive money. Frugality seems to be a similar form of exchange, but internally, not externally: you are making a positive exchange of your time/mindshare with a negative exchange of your money.
This could be why the less affluent have more motivation to be frugal. To those without means, those means are more valuable than the time they spend being frugal to increase them. For someone with means, that value is necessarily decreased unless propped up by some altruistic feeling of thriftiness, in a similar manner to when someone has means, they tend to work for reasons that aren’t monetarily motivated.
You have exceptions of course: for those Gordon Geckos out there who view money as a way to keep score, harder work (and sometimes unethical acts) are monetarily motivated, but not in the same way. Warren Buffet is definitely someone who is altruistically thrifty (by living in the same house and owning the same clunker of a car for decades). What it all comes down to is how one values their time and mindshare against their wallets.
I agree, and add that sometimes buying the cheapest/smallest isn’t the best. We had a small car, but with kids and pets needed something bigger, so bought a larger and more expensive minivan.
As my spouse pointed out when our TV died over the weekend (maybe related to your car?) — in our home a 25″ screen is too small for the space. The way the living room is laid out anything smaller than 32″ would be microscopic from most seats. Personally, I would be happy without a TV, but…
since it takes the place of going to movie theaters, it is a more frugal choice!
Great article, and couldn’t agree more. I think sometimes us pfbloggers take frugalness to unhealthy extreme….
I agree with your assesment that if you spend within your means and save money with a long term perspective you’re frugal financially.
As the old saying goes. Its not how much you earn its how much you save that counts
Of course it is like that, poor people more frugal, because they know the worth of how to earn money. So they are careful when spending money on things.
Economies of scale have a lot to do with it, just as your chart eloquently shows. However, a major part is played by the fact that so-called “poor” people aren’t really poor in money, but rather poor in judgment and decision-making when it comes to spending and/or allocating money.
Sorting out financing terms comes to mind, as do noticing the price variations of shopping downtown or in convenience stores versus shopping in suburbia or a regular grocery store.
Another pet peeve of mine: seeing these so-called “poor” whining about wanting universal health care, yet they care nothing about their OWN health (judging by what’s in their grocery carts).
The heart of the matter between “haves” and “have-nots” is the degree of abdication of personal responsibility. Those who’d rather not have control of their health, retirement, income, etc. are willing and eager for someone else to take charge (i.e., the government) and just hand over tax dollars in exchange–anything to avoid having to exert one’s self beyond a certain comfort level. Those who eagerly and willingly take control of their health, retirement, income, etc. are going to have more by definition–they have INCENTIVE to seek more.
It’s bad enough that various community groups have holiday or back-to-school giveaway programs–all the “poor” need to do is sigh their kids up, and all is given for free. Where’s the personal responsibility to the kids? All the parents have managed to do is show them how to skate by in life.
Wrap-up: “poor” people lack incentive, personal drive, and desire to get out of their own comfort level, and prefer to adopt “victimhood” as their life mantra. Unfortunately, too many of us take pity on these souls and contribute to their lack of incentive and personal drive, perpetuating the problem. The more they skate by, the more they skate by WITH.
Thanks for an interesting article. I sometimes worry about appearing stingy to extended family members who make more money than my immediate family makes, but maybe they’re more frugal than I think they are!
I’ve subscribed to your feed and look forward to some more thought-provoking posts.
You ask “Are Poor People More Frugal Than Rich People?” I have no statistics to demonstrate that there is a stronger correlation between “poverty and frugality” versus “wealth and frugality.
However, I really do believe that time wasted perusing an extreme frugality can actually damage ones potential for wealth attraction.
It’s bad enough that various community groups have holiday or back-to-school giveaway programs–all the “poor” need to do is sigh their kids up, and all is given for free. Where’s the personal responsibility to the kids? All the parents have managed to do is show them how to skate by in life.
HELLO to every who reads this yes I am poor and need help I owe $60.000.00 on my home card det med det and no real job I went from $3000.00 a month to$ 1000.00 from social security I had step down had a chance to become a master plumber an doble my income but not now so I you can help me please do will work for it my hobby i build pc my adress is 1905 wise ave se roanoke va 24013 anty help will help PLEASE…have a blesd day..thank you
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