stingy en-US Does your culture support saving? <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/does-your-culture-support-saving" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="/files/fruganomics/imagecache/250w/blog-images/piggy-bank-yearns-for-the-far-shore.jpg" alt="Piggy bank looks across a lake" title="Piggy Bank Yearns for the Far Shore" class="imagecache imagecache-250w" width="250" height="188" /></a> </div> </div> </div> <p>My brother told me once that, when he was in college, he handled money this way: &quot;When I got paid, I set aside enough money for cigarettes, then spent the rest buying pizza and beer for everyone until the money ran out.  The other people I hung around with did the same.&quot;</p> <p>As I was researching my previous article (on a way to <a href="/money-to-start-your-business-without-banks-or-saving">raise capital</a> to start a business without banks or saving) one of the advantages mentioned was that it was an alternative to saving for people whose cultural or family values frowned on saving.</p> <p>I started wondering if there were other cultural mechanisms to support accumulating capital for people whose culture frowned on saving, and that got me thinking about <strong>why</strong> a culture would frown on saving.  That actually turns out to be pretty easy to explain:  Saving only works when there are things to save, and there are plenty of circumstances where there <strong>isn&#39;t</strong> much to save.  </p> <p>Hunter-gatherers, for example, probably had very little that was worth saving.  Trying to hoard meat or berries beyond what you could use immediately would just mean that they&#39;d go to waste.  Everyone would be better off if the general rule was to share any bounty--less went to waste, and fewer people would starve just because they had a string of bad luck.  Making it a cultural value made everyone more secure, because you could count on others reciprocating. </p> <p>Agriculture worked a change, of course.  Suddenly there were both reasons to save, and the means:  Grain could be stored, and you <strong>had</strong> to keep seed, or you couldn&#39;t plant next year.  On top of that, a culture of sharing didn&#39;t help the community as much as it had for hunter-gatherers, because you and your neighbors all got your harvest at the same time.  When things got tight, you couldn&#39;t expect anyone else to have stuff to share with you--their supplies would be running out at the exact same time as yours.</p> <p>The fine points of these pressures for and against saving versus sharing would be different, depending on the kind of agriculture.  Wheat can be stored for decades.  Root vegetable for a season.  Milk hardly at all.  Live animals can live for a long time, but they need to be cared for right along--you can&#39;t just stick them in a granary--and once you slaughter them, they&#39;re gone whether you use the meat or not.</p> <p>You&#39;d expect, then, for different kinds of agriculture to lead to different kinds of cultural traditions about saving.  The more your crops could just be saved (such as wheat or rice), the more the culture would tend to encourage families to be self-relient.  The more your crops tended to be hard to preserve--and especially if they produced their bounty in irregular bursts, rather than all at once--the more the culture would tend to discourage saving in favor of sharing any surplus.  </p> <p>Fishing might be an example of the latter, and among the Native Americans of the Pacific Northwest coast (where fishing provided ample food), there were cultures that encouraged sharing to the point of making <a href="">big ritualized productions</a> out of it.</p> <p>Other things besides agriculture might influence this.  Feudal social structures often specify how the harvest is supposed to be divided up, but details matter.  If any surplus tends to be seized by the lord, then there&#39;s not much advantage to saving over consuming, and no reason not to share any surplus with others.  On the other hand, if there&#39;s a strong tradition of the peasants keeping their surplus, traditions of saving could begin to form.</p> <p>My brother calls the way he managed money the &quot;three musketeers model for financial management,&quot; since <a href="">they</a> did much the same thing.  They not only provided for one another whenever any one of them had money, they would also treat all their friends when they were flush, and then mooch off them when things got tight.  From chapter 8:<br /> <blockquote>The hungry friends, followed by their lackeys, were seen haunting the quays and Guard rooms, picking up among their friends abroad all the dinners they could meet with; for according to the advice of Aramis, it was prudent to sow repasts right and left in prosperity, in order to reap a few in time of need.</p></blockquote> <p>Among Wise Bread readers, I would expect the &quot;three musketeers model&quot; to be generally considered improvident at best--irresponsible, reckless, and foolish all come to mind as well. </p> <p>You&#39;d think that the fact that American English even has a word for &quot;improvident&quot; told you where our cultural traditions come from, but we also have words like stingy, miserly, niggardly, and tightfisted, which shows considerable diversity of tradition.  If your natural inclination is to be a saver, you can find endless support and role models, from the &quot;millionaires next door&quot; back to Benjamin Franklin.  On the other hand, if your natural inclination is to spend money as fast as it comes in (or faster), you can find lots of only half-joking references to debt as &quot;the American way.&quot;</p> <p>Even where the culture strongly supports saving as a way to get ahead, there are still tensions when people try to put money aside, mostly from members of the household that would like to have a higher standard of living, but also from friends who feel threatened if one of the group takes steps to move ahead, and from neighbors who fear that property values will be threatened if someone doesn&#39;t spend as much as they do on conspicuous consumption.</p> <p>I can think of a few other structures that provide the advantages of saving without running afoul of social prohibitions against saving, although none as clever as ROSCAs.  Most of the ones I can think of really are &quot;saving,&quot; just with a bit of a disguise.  (I&#39;d be interested to hear of others in the comments.)</p> <p>Many kinds of insurance policies include a savings element, such as providing dividends or a lump sum to anyone who pays up the policy for its full lifetime.  (Most such insurance policies are poor deals, by the way--one of the costs of lying to yourself and your family about what you&#39;re doing is that you can&#39;t get the best value for your dollar.  But, if your family will let you buy insurance, but will insist on spending any money that you put in a savings account, then even an expensive insurance policy might be better than nothing.)</p> <p>If lottery tickets were fair (as they are <a href="/creating-an-artificial-windfall-generator">some places</a>), they could serve this function--you buy a ticket every week, and then eventually get a lump sum when you win.  Lotteries in the US are such a poor deal they don&#39;t provide an alternative to saving (although some people seem to treat them as if the did).</p> <p>Anything you do to improve your land or your business--planting trees or buying tools--can serve the same function as saving.  In fact, this is often a better investment than just putting money in the bank.  (Which may explain why frowning on saving persists as a factor in many cultures.)</p> <p>And, of course, sharing your bounty with your friends and your neighbors builds up a kind of good will that can bring some of the benefits of saving--food when you&#39;re hungry, for example--which brings us full circle.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="">Philip Brewer</a> of <a href="">Wise Bread</a>, an award-winning personal finance and <a href="">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="">Frugal Tip: Do Not Spend When You Are Sad</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="">Pay attention</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="">Not the sort of person who ...</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="">9 Financial Skills Everyone Needs During Hard Times</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="">15 Personal Finance Rules You Should Be Breaking</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Frugal Living improvident saving sharing spending stingy thrifty Mon, 30 Jun 2008 14:26:10 +0000 Philip Brewer 2206 at The line between frugal and crazy <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/the-line-between-frugal-and-crazy" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="/files/fruganomics/imagecache/250w/blog-images/sphinx.jpg" alt="Sphinx statue " title="Sphinx at Allerton Park" class="imagecache imagecache-250w" width="250" height="188" /></a> </div> </div> </div> <p>You don&#39;t have to go very far down the path of being frugal to reach the point where people start questioning your sanity. (You bicycle to work? Even though you have a perfectly good car?) On the other hand, there&#39;s no idea so crazy that there aren&#39;t some frugal folks out there who swear by it. (I hesitate to suggest an example, for fear of offending some of our committed readers.) Still, there is a line where frugality becomes pathology. In fact, there are two lines. We have names for them.  We call them stingy and miserly.</p> <p>The English language is rich with words to describe personal economic behavior. There are words people use when they&#39;re happy that you&#39;re not spending too much: thrifty, frugal, provident. There are words people use when they&#39;re not so sure: sparing, parsimonious. These are the words people use when they&#39;re unhappy that you&#39;re not spending more: stingy and miserly. </p> <p>The fact is, though, that these words work pretty well for marking the dividing line between normal behavior and crazy behavior.</p> <h2>Does it make you happy?</h2> <p>Miserly is the easy one. The word miser shares a common root with miserable, and the classic misers in literature (Charles Dickens&#39; Ebenezer Scrooge, Robert Louis Stevenson&#39;s Ebenezer Balfour) are wretched, miserable creatures--desperately unhappy despite their wealth. Misers aren&#39;t just normal people who choose to hoard money. Being miserly is a pathology akin to anorexia nervosa--a miser refuses to spend money because he feels his life is out of control; refusing to spend money is a futile effort to take control.</p> <p>The nature of the pathology, though, is that this behavior doesn&#39;t produce happiness. You sometimes find parodies of happy miserly people (Scrooge McDuck, for example, takes great delight in his swimming pool full of money), but real misers are just sad and lonely.</p> <p>So, that&#39;s the first &quot;frugal or crazy&quot; check: Does it make you happy? If you do the frugal things you do because you like living that way, then they&#39;re normal-frugal, not crazy-frugal, no matter what other people think of them.</p> <p>Riding my bicycle for transportation gives me great joy (as does walking for transportation). I really like going to the library. (There are some things I like better, but it&#39;s a short list.) My wife spins and weaves and knits because she likes it--the beautiful, warm hats, sweaters, mittens, and scarves are something of a bonus. Either one of us can make a better lunch than any fast-food joint. Neither one of us lets the other hog all the fun of baking sourdough bread. </p> <p>Most of these things are frugal, but that&#39;s not why we do them. </p> <p>On the other hand, you may be doing things because you think they&#39;re frugal, but that you hate. Maybe you buy cheap shoes that hurt your feet because they&#39;re so much cheaper than good shoes. Maybe you keep on using a bar of soap until it&#39;s just a tiny sliver, because your mom always did. Maybe you reuse tea bags. Any of these are fine frugal ideas if you like the results. But if they make you unhappy, and yet you do them anyway--that&#39;s when you start getting into the area of crazy-frugal.</p> <p>Other people may think your frugal choices are crazy. But the test of crazy is not whether &quot;normal&quot; people do stuff like that. The test of crazy is whether your choices support the sort of life you want to have. Be especially wary when your friends and relations start saying things like, &quot;Why are you still doing X? You make good money--you can afford to do Y!&quot; If doing X makes you happy, stick with it.</p> <h2>Are you deciding for yourself?</h2> <p>Stingy is tougher. The word stingy turns up when people talk the effect on <strong>them</strong> of spending decisions made by <strong>someone else</strong>. A boss can be stingy with raises. A husband can be stingy with money for groceries. A father can be stingy with an allowance. A cook can be stingy with meat in the stew.</p> <p>I read an article once about a family where the father was a scary, controlling, frugal monster. He micromanaged every detail of the family&#39;s budget, with his wife acquiescing to all sorts of bizarre rules about where money could and couldn&#39;t be spent. Reading the article, though, I was disturbed to find that, although the guy was clearly a crazy person, about half of his supposedly crack-pot frugal notions seemed perfectly normal to me.</p> <p>Once I gave it some thought, though, I realized that what made this guy a crazy person was not the extreme frugality, it was the scary, controlling monster part. Reasonable people can differ on whether washing and reusing plastic bags is out on the lunatic fringe. But yelling and screaming at your spouse because you found a used plastic bag thrown away in the trash--that&#39;s scary crazy. Buying the cheapest brand of toilet paper is fine (as is buying a more expensive brand, if you like it better and can afford it). Monitoring how many sheets of toilet paper your kids use and punishing profligate use--crazy.</p> <p>If you&#39;re choosing for yourself, you can be just as frugal as you want without crossing the line into being stingy. But when you&#39;re making decisions for other people, their opinion counts too.</p> <p>Of course, just disagreeing with your spouse, children, employees, neighbors, or friends about how much money is the right amount to spend on any particular category of purchase doesn&#39;t make you crazy.</p> <p>What is crazy is trying to resolve these sorts of disagreements through means other than communication, negotiation, and compromise. Even with children, where the parent has to make the decision (even if it&#39;s just the decision to let the child have its own way), communication and negotiation is the way to go. Insisting on always having your own way, even if you&#39;re right, is crazy.</p> <h2>But you can afford it!</h2> <p>People who want you to spend more money will often point out that you can afford whatever expenditure they want you to make this time. But the fact is, the question of &quot;crazy or just frugal&quot; never comes down to whether you can afford something or not.</p> <p>This is asymmetrical, because the opposite question <strong>does</strong> come down to what you can afford: it&#39;s almost always crazy to spend more than you can afford. (I say &quot;almost&quot; because there are exceptions: necessary medical care, food when your family is hungry, shelter when they&#39;re homeless--it&#39;s not crazy to provide the necessities.)</p> <p>Just like English has plenty of words for thrifty behavior, it also has plenty for the opposite: squander, prodigal, spendthrift. Those words, though, seem to have fallen into disuse. </p> <p>We live in a time and place where the concept of &quot;necessities&quot; has been redefined up to the point that people consider you as abnormal--as a crazy freak--if you don&#39;t spend money on things that all humans got along without for a hundred thousand years of human history, and that most people in poor countries still get along without.</p> <p>What you can afford is not what makes your choices frugal or crazy. The right question to ask is: What makes you happy? If you want to <strong>stay</strong> happy, you&#39;ll want to follow up by asking your spouse and children what makes them happy. And you&#39;ll need to give at least a moment&#39;s thought to what your friends, neighbors, colleagues, and even passing strangers think. But don&#39;t do it because you think their opinion of your lifestyle has much to say about whether your choice is crazy; do it because people&#39;s opinions can influence their actions, and their actions can affect you.</p> <p>Lifestyle choices that make you and your family happy are never crazy, no matter how other people choose to live.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="">Philip Brewer</a> of <a href="">Wise Bread</a>, an award-winning personal finance and <a href="">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="">It takes a frugal spouse to make a frugal home</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="">The new normal economy</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="">Chinese Money Habits - How My Culture Influences My Attitudes Toward Money</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="">Book review: Retire on Less Than You Think</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="">Is living on one income a status symbol?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Frugal Living crazy frugal frugality happy insane miserly stingy Sun, 13 Jan 2008 19:09:33 +0000 Philip Brewer 1627 at