Defining Frugality: What Are Your Saving and Spending Habits Like?

by Silicon Valley Blogger on 2009-09-2018

Is there such a thing as a “frugal spender”? My rambling reflections on frugality, saving and our spending habits.

What Are Your Spending Habits Like? How Do You “Buy Stuff”?

The story of Sam Walton has always fascinated me. Here was a guy who was worth a huge load of money yet who was reputed to live a simple life. Then there are those folks with these interesting spending and saving profiles:

  • those who buy things because they’re on sale, hoarding stuff and hoping they’ll have use for them someday, or
  • those who hardly buy anything but then save up for that big purchase. And when they finally buy something, price isn’t much of a factor.

Then of course, there’s everyone else in between. I do think that spending habits are fascinating to study, as it may reveal something about ourselves at a deeper level, maybe even revealing something about our level of happiness.

Thoughts On Saving and Spending Behaviors

A long while back, I talked about how I balance my efforts to spend and save money. I’d written a post that covered the science behind money behaviors, discussing how frugality is tied to happiness. The key finding was that spendthrifts (those who can’t stop spending) and tightwads (those who can’t spend at all) weren’t as happy as those who were deemed frugal.

saving habits spending habits

Why so? The experts say it’s because frugal people are considered more “balanced” in the way they view money and while cost conscious, they are free from compulsions that may overwhelm those who have more restrictive or even obsessive relationships with money.

I am familiar with a few people who fall in the extreme ends of what I call “the frugality spectrum” and I’ve seen how negative money behaviors and tendencies have harmed someone’s pocket book and personal relationships with other people. Their inherent attitude towards money has made them miserable — because wanting to fight the urge to constantly spend or save can be frustrating in its own right.

Frugalist, Spendthrift, Tightwad

The happiest people out there are those who can find a balance between any extreme, and it also applies to how we handle and manage our money.

Defining Frugality: Spending Money On Things of Value

Do you earn more and spend less? If your mind and heart are in tune with how you’re managing your money, if you’re able to build a healthy nest egg while spending much less than you’re earning, then I think you’re still in the middle of that frugality spectrum even if you happen to own a BMW, an art collection or a luxury condo (hey, this is an appreciating asset!). Yet this doesn’t stop others from judging you on what you own.

If we judge people based on what they own, then we could be missing out on some great lessons and examples given by true value spenders.

See, for instance, these consumer profiles:

  • They spend much less than they earn but make so much money that they can afford expensive items.
  • They buy a used luxury car because it’s half priced.
  • They are selective about the high-priced items that they buy and don’t make impulsive purchases.
  • The stuff they buy only looks expensive.

On this note, frugality doesn’t mean you have “cheap tastes”. It means that you are prudent and deliberate with your spending, and that you place your money on what has “good value”. This virtue should describe HOW someone applies their money rather than WHAT gets bought. I would refer to this classification of savers with the term: “frugal spender” (or “value spender”), or someone who’s basically a saver, who’s value-minded, yet splurges when they can afford it.

So where would you place yourself in the frugality spectrum?

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{ 18 comments… read them below or add one }

JoeTaxpayer September 20, 2009 at 11:40 am

I clip coupons, look for sales, stock up on staples (can you ever have too much TP, laundry soap, hand soap, at half price?) and am able to splurge on the Wants I really want.

Wealth Pilgrim September 20, 2009 at 1:08 pm

This question has plagued me for some time. On certain things, I’m very frugal. I really don’t like spending money on things I’m not going to use but I have no problem on spending money buying something really good if it’s very useful. For example, I just bought a netbook rather than replace my ipod. I had to spend more money than I thought I would but I’ve gained tremendous productivity as a result of it. It was worth it.

Other times, I like to throw frugality to the wind – I don’t mind splurging once in awhile – especially when it involved my kids. Like going out to dinner (once in a very long while).

But I don’t like spending money on things that don’t mean much or experiences that will be forgotten soon.

I guess that makes my frugality meter dynamic…?

Manshu September 20, 2009 at 3:43 pm

I am probably in the frugal zone, but towards the right, not balanced. There are several things I buy that I know I’ll have no use in a few days, but over the years, those type of purchases have gone down.

EyeQ September 20, 2009 at 8:21 pm

I was going to write that I’m frugal on some things, and not so much on others, then I saw the comment above.

Whilst I’m pretty tight-assed on the day to day stuff, I do like to live it up once in a while by taking the family away somewhere nice for a weekend and hang the expense.

basicmoneytips September 21, 2009 at 4:19 am

I am from the same state as Sam Walton. I remember a lot of stories about him driving around in his old pickup and wearing overalls. Plus I went to graduate school at the U of Arkansas, the area he was near – I passed by his house once and a friend pointed it out – it was a moderate sized house. He definately was a frugal man.

I tend to be a tightwad on a lot of stuff. However, in the last year since my son was born I have started to shift. Its just stuff I would have never thought to buy.

Good article.

Craig Ford September 21, 2009 at 5:31 am

I define frugality as the ability to direct your spending. Frugality simply means one might be willing to pass over a purchase in favor of another more desirable purchase. Spenders do just that spend. They spend if they have a whim that they might possibility want something. I think frugality is the way to go – even if my friends make fun of me.

Craig September 21, 2009 at 8:52 am

I am with the latter. I am more of a frugal person who does not like to spend, but plan out and save for the big time purchase or vacation. When I have enough money and done my research I spend it and am happy with my purchase and the money isn’t really an issue at that point. But small spending is not me.

Live for Improvement September 21, 2009 at 9:12 am

This bullet point describes me perfectly:

“those who hardly buy anything but then save up for that big purchase. And when they finally buy something, price isn’t much of a factor.”

I am a tight wad who rarely buys anything; but when I make a purchase, its usually a carefully thought out big ticket item. To me it is a way to prioritize my spending for only the things I really want.

-Dan Malone-

Silicon Valley Blogger September 21, 2009 at 9:21 am

I’m with you — I used to be much much more frugal until I had the kids…. Ah, all of a sudden everything seems to cost more! It’s just that all of a sudden, you’re thinking ahead a bit more — have you got enough space at home to accommodate more people? The apartment may no longer be large enough for everyone (so you’ll have to move to a house or larger place). Kids need stuff to go to school, they have activities, and maybe you may want to take them with you on travel. So it may just cost a bit more…. πŸ™‚

I am also like a few of you who say that you don’t spend but when you do, price is no issue. I feel that I spend only on the necessities for the most part, and on things I know will appreciate in value. I guess you can call this “strategic spending”?

Goran Web Design September 21, 2009 at 9:43 am

Saving is not really something that comes naturally to most of us humans, especially being used to the ready and abundant supply of cash that the past decades have afforded us, but it is time to start taking some serious heed to saving and being frugal on all levels.

My attitude towards money used to be – If I got it, I spend it, and if I haven’t got it, I don’t – that is not a good approach any more, but old habits die hard. At least I do not have any credit cards!

Lee September 21, 2009 at 2:49 pm

I buy very little these days. I just don’t seem to have consumerist desires any longer. If it doesn’t keep me alive (food, rent, fuel), I really don’t see the need for it!

If I do want something (i.e. I want a new laptop at some stage) then I’ll save for it and buy a nice one. No credit, and I won’t sacrifice my other financial goals to get it quicker (i.e. raiding the emergency fund).

Tightwad? … possibly. Frugalist? Definitely.. but probably edging towards the tightwad end of the frugalist scale!

Alex September 21, 2009 at 11:41 pm

I was in a frugal zone, but after getting some advice from my consultant, I now spend my money more wisely.

Ellen / MoneyLounge September 22, 2009 at 6:35 am

“Everything in moderation.”
That’s a phrase that can apply to any area of life. It is no surprise that people who achieve balance in their finances are happier than those who veer to one end or the other. Getting to that point is the challenge. How do you determine what constitutes this balance? I would be curious to hear more specific strategies that others have applied.

Bargain Babe September 23, 2009 at 2:21 pm

Posts like this make me go wet – in the wallet. I LOVE studying people’s spending and saving habits. I am a big advocate of frugal spending, except I call it being a savvy-spender. The main elements of being a savvy-spender are:
-buying ahead of need
-buying things that are a good value, but not necessarily cheap (i.e. the half-price beemer)
-thinking about major purchases for a month before buying
-spending less than you earn
Developing good spending habits takes time, but little by little everyone can be savvy when it comes to money!

Keith Morris September 24, 2009 at 8:28 am

Ramit Sethi talked about being cheap vs. frugal in this interview on ABC:

I’m making my way out of the spendthrift category and into a more frugal lifestyle. Getting hired as the community manager for LifeTuner has me thinking about my own finances everyday, and for the first time in my life, I actually have money in the bank. πŸ™‚

jafeth October 2, 2009 at 5:28 am

mostly i try to buy “frugal” but sometimes i must admit the best things are just expensive

Slinky October 14, 2009 at 12:23 pm

I save to spend. πŸ™‚ I decide that I need something, make a plan to get it, figure out exactly what I want. When I find that and know that it’s a decent price and I have the money, I go ahead and buy it.

Dustin - How to create a website April 29, 2011 at 12:23 pm

I agree with this post. I really only spend money on the basics. When there are things I want, I research them well and find a product I think could last me a lifetime, maybe even pass down. When I buy things, I try and get just the “tool” I need, and not get the tool with all the extra gadgets, it’s just more to break IMO. New beds with motors, heating, etc…I just want a good bed. I don’t want to have to hire a mechanic to fix it! Traveling, I free up a little. I will have one of the best darn breakfast, lunch, and dinners during my trip on separate days. Everyday day if it’s all-inclusive.:) If there’s a chance to do a once in a lifetime time type thing, I’m game.

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