When Being Frugal Isn't the Solution
Here at Wise Bread, we have a lot of articles on how you can become more frugal and still enjoy a great lifestyle. All of these articles are very useful, but sometimes being frugal isn't the solution to improving your life. Here are some instances when frugality isn't the whole answer, and some additional solutions for achieving a happy balance. (See also: 12 Frugal Compromises)
When Your Savings Are Limited by Your Income
If you are trying to achieve financial goals simply by spending as little as possible, then you are ultimately limited by how much income you have. Some readers have written to me and said that it is impossible for them to save just because their fixed expenses eat up most, if not all, of their income. Most of them are not lavish spenders, but are just making so little that they're surviving paycheck to paycheck. In that situation, it's better to focus more on increasing income than saving nickels and dimes. If you think about it, an extra $25 earned a day equates to $500 a month, and that side income will definitely help pay down debts faster.
When Being Frugal Is Wasteful
I have seen those extreme couponing shows, and it actually scares me that some people buy so many boxes of processed foods. I'm not sure if all that stuff actually gets consumed, but I have seen many instances where people bought so many of something just because they got a good deal, and then a lot of it went to the trash. With the rise of deal sites like Groupon, I've also heard of stories of many paid coupons that aren't redeemed. I am a fan of looking for coupons for the things I need immediately and buying just enough, and I really like Phillip Brewer's article on shopping European style. I think more people can actually save money by buying what they need on demand instead of buying too much of something on sale.
When Frugality Makes You Unhappy
A phrase that has been popping up lately is "frugal fatigue." Basically, it means many people became frugal due to the recession, but now they are sick of pinching pennies and out to spend again. I've heard stories of people giving up their coffee or changing the grocery store where they shop, and it's the mentality of sacrifice that makes people unhappy. I think as long as you can comfortably afford something, then there is nothing wrong with treating yourself once in a while. Sometimes happiness costs very little, and you don't have to feel guilty about spending.
Ultimately, I think that a combination of living below your means and generating extra income will help you reach your financial goals faster. You can't just concentrate on looking for deals and clipping coupons to improve your financial situation. Just like a well-balanced diet is good for your physical health, a well balanced set of financial actions will improve your financial health.
What do you think? Are you too fixated on saving money and not on earning money?