Last week, I was talking to a friend on the phone about finances and I decided to pay her a compliment, telling her that I could tell that she really started cutting back on her spending and that she has a finer control over her finances.
In her past she has overdrawn her checking account so badly, that at one time she bounced around 10 check during one time interval. The kicker was that she had overdrawn her check account before… So if the bank charges $20 per each bounced check, that comes to $200 in banking fees. Ouch!
During our conversation, she told me “Well, I’ve always been frugal”. I couldn’t believe that statement! She travels overseas every other year, always had leased newer large SUVs, every years goes skiing multiple times, and goes on out-of-state beach vacations at least twice a year.
The credit card balances were so high, that at her low point she actually cut up all of her credit cards except one. The one card she took and froze it in a small chunk of ice and kept it in the freezer for emergencies.
And now my friend is saying that she is “Frugal“? Doesn’t make sense huh!
That when I realized that the “Being Frugal” concept is the same as “Being Rich” concept in that it’s all relative! Her family (especially her brother) spends a lot of money and even spends more than she does. So while I think she spends way too much when she doesn’t have a strong enough income to support her spending, she see her brother’s level of spending and thinks that she is frugal.
What she doesn’t really take into account is that he’s a small business owner and probably has a positive cash flow.
So perhaps a better gauge of whether you are frugal or not would be your savings delta? But even that number doesn’t really say if you are frugal or not. You don’t have to be getting rich to be frugal. At least this number would tell you if you have a positive cash flow or not.
In the end, frugality (much like being rich) is relative to your peer group. This enables people who have a spending problems to believe that they are living a frugal life, but when compared to the averages they aren’t.
Do you have any friends that believe they are being frugal but are in massive debt to the credit card companies?
Cheers,
MR
I absolutely think people’s impressions of what’s “frugal” is as relative as being “rich”. I don’t have any examples as extreme as yours, but I commonly see people saying that the prepackaged dinners at Trader Joe’s or other stores are “frugal” since they’re cheaper than eating out where I’d wince to pay $5 for one serving when I could cook for $1.
When I heard her say that she was “frugal”, my jaw about dropped! I almost laughed! Luckily we were talking on the phone!
I think many people (including myself) can look at the areas of our lives where we budget, skimp and cut back and view that as frugal.
I look at my annual spend and I think “wow, that’s a lot of money.” It is compared to my bare bones college self, but it’s really not compared to my peers.
I think you’re right though. My mother in law is convinced I’m cheap because I buy and sell stuff second hand. But if another person knows about my travel history, they probably think I’m living large. It is a lot about perspective.
I was almost going to critize my friend on the phone when I realized that in her world, she really might be considered the frugal one.
After reading so many cheapskate books (extreme frugality), I guess I thought frugality was a certain way. I now think that I was wrong 🙂
What a funny story. I guess it is relative. I hadn’t really thought of frugal as being relative while easily thought of rich as being so. An interesting perspective. I guess it takes all kinds to make the world go round.
Yes, at the time it gave me a good chuckle.
Apparently her definition of frugal and yours is very different! I may be the most frugal of my friends and they use me as a resource for their purchases. We frequently travel together and they have me set things up for all of us.
Yes, defnitely. But lately she has seen the way that my wife and I are frugal and started to pick up some of our more frugal ways. Funny huh.
It’s all perspective, right? Relative to her family (no pun intended) she might have been frugal. Compared to the rest of the population? No way. Well, at least compared to those of that are PF bloggers we can say no way!
I’ve seen people like that, one person I know hated to spend money on little things but paid $20,000 for a bedroom set his wife liked. Hard to imagine!
Maybe she considers herself ‘frugal’ for certain things (like maybe she doesn’t eat out very much) but doesn’t realize she’s not being frugal for other things (like driving a leased SUV or going on overseas trips).
It definitely is all relative- I consider myself frugal, but have some friends who are even more frugal than me (e.g. they shop only in thrift stores)
Frugal is in the mind of the spender. Every person has their priorities that’s different from the next person. The bottom line is how is your overall plan doing? Are you saving as much as you want? Not talking about saving on a purchase–you can save yourself into debt that way! I mean how much is in your emergency fund, how much saved for retirement and/or college. When those areas are covered, you just have to see if you can afford something based on your plan.
I definitely know a couple of people who consider themselves “frugal” but then feel like they have to have the next ipod or bluetooth device.
I have another friend who really is frugal about a lot of things – when I go to visit her in NYC she takes me to the grocery store to buy my own food to eat at her place, so she doesn’t feel like we have to eat out, nor does she even have to pay for groceries to support an extra person.
On the other hand, she chooses to live in NYC and when she goes to a wedding or something, she believes she HAS to have new $300 shoes. I would think there’s no point cutting the small stuff when she (in my eyes) “wastes” her money on those shoes – but she’d be worse off if she didn’t cut costs elsewhere, and in her eyes, those shoes are really important.