Millennial Money Man

Helping Millennials Make More Money, Save More, and Pay Off Debt

May 28, 2018

Should Frugality Change With Your Income?

27 Comments

This post may contain affiliate links. Please read my disclosure for more information.

Should Frugality Change With Your Income?

Sharing is caring!

I looked down at my flip-flops the other day and realized that they were literally falling apart. And I'm not just talking about a little wear here and a little wear there – these things are straight-up embarrassing.

As I was looking at them, a few things came to mind:

  1. I make good money now…why the heck am I wearing stuff like this?
  2. Wait – does making a lot of money even matter here? Like is there a rule where you make a lot of money and need nice flip-flops? No. That's dumb Bobby.
  3. Man…am I even frugal anymore? I used to be proud of wearing stuff like this. What happened?

For the past few months, I've been going through a bit of a paradigm shift in my relationship with frugality. Back in the early days when I started this website, I used to absolutely pride myself on driving old cars and wearing clothes that didn't show my income.

One of the very first posts that I wrote on M$M was about my “sacrifice shoes”. It was basically an entire article about how my students made fun of me for wearing old shoes, and I kept wearing them like it was a badge of honor. I loved it when people called me out for being cheap because it meant that I was doing things differently than everyone around me.

(Not that it matters too much, but I actually still have the shoes haha).

And truth be told here, the clothes and the car thing really haven't changed that much. I still drive the same crappy car that I've been driving for years now, and my wardrobe is still pretty questionable.

But I have noticed that as my income has risen, I've slowly loosened the grip on the ultra-frugality that I used to practice just a few years ago. It's not even something that I'm trying to do. It's just kinda happening.

Before I go on here – please don't think that I'm complaining about all of this. The last thing anyone wants to do is listen to me whine about being able to afford nicer things now. I get it, and that's not the point here. I'm incredibly lucky in many ways to have the opportunities that I have in life, and it's never lost on me.

The reason I'm even bringing this up is that I know it's something a lot of you are going to wrestle with as your income rises over the years. I mean honestly – I thought that making more money would never impact the way that I handled spending or my view of “stuff”.

A lot of M$M readers are pretty frugal (some of you put me to shame in that category), and I think it's worth sharing how my relationship and approach to frugality is changing as my income increases.

First of all, what the heck does frugality even mean?

Via Dictionary.com:

Frugality – the quality of being frugal, or prudent in saving; the lack of wastefulness…

And yeah, that's a pretty broad definition. Back in my ultra-frugal days, I barely spent any of the money that I made. When I was paying off my student loans, I was throwing nearly every cent I possibly could at them.

You don't pay off $40,000 of student loan debt in 18 months (on a teaching salary no less) without having a…simple…lifestyle.

There's one thing I know for sure: I have zero freaking interest in going back to living that way.

I was renting a room from my in-laws, only had a few outfits on a rotation (which is still the case – I need more clothes), drove an even cheaper car than I do now, and the list goes on and on.

When my wife and I got an apartment a few years ago and moved out of her parents' house, I was just happy to have a rack in the closet to hang clothes from instead of having them in the garage!

It was the little things in life.

As my income has risen though, I've definitely moved further and further away from ultra-frugality.

And now after a few years of intense work and a horrific work-life balance, my income has done this:

Now don't get me wrong – I was already making great money in the past year or so. But I was putting a lot of that back into my business, and the reality for me during 2017 is that I was terrified to spend money because I still thought my business could fail at any point.

For a long time, I was only paying myself a salary that was pretty close to what I made as a teacher. The rest of the money either stayed in the business account or went into advertising for this website so that I could continue to build my readership.

So in the first two years of running M$M, I was still what I'd consider being very frugal. I really didn't have a choice to not be frugal anyway, so it was super easy to do and write about on this site.

But then, January was a pretty big inflection point with my business and I started making a lot of money all at once.

What did I do?

Well…I spent a pretty decent chunk of it in the first month. My wife's car was getting older, so we bought a newer and much nicer one. That purchase was easy to justify in my mind because she had done so much to support me in the early days of this thing.

But it really wasn't just the car. I noticed that I was MUCH quicker to pay for things that I would never have thought about buying before.

By the end of February, I didn't really recognize myself anymore when it came to being frugal. The funny thing is that I wasn't going out and financing a bunch of stuff or spending more money than I had, which unfortunately is what most people do. Frugality is so ingrained in me now that it's part of the fiber of my being.

You'll never see me finance a brand new car or outpace my income with spending because it just goes against the financial laws that I've created for myself and adhered to for years now.

With that said though – I could still do much better moving forward, and I know it. It's just a matter of how much better, and I haven't quite figured out what that's going to look like.

As all of you get raises and change jobs for an increased salary, this is something you're going to have to think about as well.

So now I've been developing a new plan, which basically just revolves around investing as much money as I can (shooting for 60% of my take home after setting money aside for taxes) and being more mindful of purchases. There are a lot of cool things I want to buy right now, but I'm going to go back to what I know best and be patient.

Just like a lot of you are going to have to do over the course of your career and life, I'm redefining my version of frugality.

I don't want to be so cheap anymore that my clothes are falling apart, but I also want to build wealth and be kinda stealthy about it.

When you start to reach your financial goals, it's hard to know whether you should stick to frugal living and saving money or if you should reward yourself for your success in personal finance.

Rewarding yourself for hard work vs. being wasteful

One of the aspects of frugality that I'm actually loosening the belt on a little bit is rewarding my hard work.

For the first two years of running this business and even back in the day when I was paying off my student loans, I didn't celebrate anything. I didn't want to spend the money.

But lately I've been doing more to celebrate milestones (big and small), and you know what?

I like it. I like it a lot.

When we had our first $100,000 launch for the FB Side Hustle course, I bought a $60 bottle of wine with my business partner to celebrate.

It was stupidly hard for me to do, and I stood there in the store staring at the bottle for a solid 10 or more minutes because I legitimately felt guilty about buying something that expensive.

But eventually, I did buy it, and quickly realized that good wine is…well…really good haha.

Since then I've been a little faster to reward myself and recognize the hard work that I put in, and it's been really healthy. For all of you that are working on your debt or trying to hit investing milestones – I highly suggest that you step out of your frugal ways from time to time and reward yourself for the hard work that you're putting in.

I didn't, and I really wish that I had now that I'm able to look back on it.

It doesn't have to be expensive wine or anything like that, but for my wife and I it might be going out to eat or making what we call “adult lunchables” (which is basically fancy cheese and crackers) at home and renting a movie on Amazon.

The key is just to not get carried away. You can justify a tooooon of stuff for mini-celebrations, but then they don't really matter as much and you're just making excuses for spending a bunch of money and/or becoming an alcoholic if you always reward yourself with wine.

Here's what M$M readers are saying about THEIR version of frugality…

If I've learned anything over the years, it's that everyone seems to have their own definition of being frugal. As I'm still trying to figure out exactly what mine will look like moving forward, I know that I can draw on the definitions from the M$M crew to get some inspiration.

I recently asked the members of the private M$M FB group what they thought, and they had some killer answers:

Fine, I'll wrap it up:

As you can see above, it seems like everyone has their own version of frugality – and I think it's awesome. There are so many times in the personal finance community that I see blanket advice for stuff like this, but that's just not realistic.

All of us are going to have our own path and relationship with money. All of us are going to feel differently about how much money we should or should not spend, and there's a good chance that it's going to evolve over the years for you like it is for me.

Live differently. Your bank accounts will thank me later. ~M$M

Don't miss another M$M post.

Learn more about attacking debt, making more money, and creating an awesome life you love.

Comments

  1. As we grow we evolve, this is the biggest thing people fail to account for in life. Just because something makes sense for you now, doesn’t meant it will in the future.

    In the last year or so, my mind started shifting from the state of being frugal, and pinching every penny, i think it breeds a scarcity mindset which in turn stops you from achieving the thing you want most, financial independence.

    We live in an abundant world, as you have proven coming from a teachers salary to making over $100,000 in one month. Anything is possible, there is an abundance of wealth and resources out there, we just have to stop thinking and playing small and go get it.

    Congratulations!

    Reply

  2. I grew up in a very outwardly frugal household: I don’t think we ever had a car newer than 13 years old, my mom didn’t buy fancy snacks at the grocery store (although part of that was definitely to keep us from eating too much processed crap) and we got all our clothes secondhand. During the early ’00s my dad was making good money, so this was not a necessity, but a choice.

    Despite this frugality, we went on these amazing trips to Europe, Asia, South America, etc at least once a year. Being frugal to me means you can focus your resources on the things that take priority for you. Another priority for my parents was minimizing debt, and they’ve owned their house free and clear for several years. This was a lesson I am glad to have internalized, as I’ve managed to stay out of debt most of my life so far.

    When I was in college, I lived on about $500 because my biggest priority was graduating with very little debt. Now, one of my priorities is only acquiring quality items I love that will last for years. Travel is still a big priority for me. However, even though I’ve upgraded my lifestyle in the years since college, I still have areas I don’t splurge on. I still buy phones that are two generations behind, and I evaluate big purchases on a case by case basis to see what makes the most financial sense.

    When I was looking for a car, I was anticipating buying something around 10 years old, but I ended up finding a woman who needed someone to take over her lease as her visa was not being renewed. Because I didn’t have to pay a down payment, it ended up being a lot cheaper. Now that I’m in love with the car, I may very well buy it when the lease runs out, but it will have years and years of life left in it because it’s so new.

    What do I splurge on? I’d say weekends away 🙂

    Reply

  3. Great article. My husband and I struggle with the exact same thing. We’ve done crazy things in the name of frugality and laugh at ourselves when we do things like searching through coupons to save $0.50 on toothpaste while giving a ridiculous tip to a service worker without batting an eye. One of the things we have tried to do, same as you, is celebrate more. Yes, sometimes that involves going out for a nice dinner or spending money on wine (I laughed about your check- out line mental battle) but more than not it’s the mental state of gratitude. Savor what you’ve accomplished, be thankful for where hard work and blessings have taken you. It’s important to pay attention to those things as we can get so used to the “work, fight, push, sacrifice” grind of frugality.
    One of the things you learn over years of frugality is the true value of things. To me, that will always be a running dialogue no matter how much we earn. Now, however, when we do spend more money on things, we have to make a conscious decision to do so. We consciously decide to spend more, now, on things that matter to us. We like to travel, we like to enjoy a nice steak every now and then, we like to donate to organizations that matter to us.
    Remember why you started this journey to begin with… What were you hoping to be able to do or afford? For us, that means through the lessons we’ve learned over the years, we can be comfortable to ease open the water faucet and slightly increase the flow without being afraid it will become a deluge.

    Reply

    • Thanks Anne! So glad you liked it. 🙂

      I laugh at a lot of the stuff I used to do now too. I used to try to haggle to a ridiculous degree every time I bought something, holes in my socks and underwear, etc. It was just too much, but it worked at the time haha.

      Love your advice on remembering why you started. Definitely a good way to stay grounded.

      Reply

  4. Love your standpoint of view. Frugal ? I honestly never knew what frugal meant till today. First off congrats but my version on frugal doesn’t compare to the kind of $ yr making so its a little diverse & I always thank God first but splurging on myself is spending on family, i mean at the end of the day who’s going to care when yous die ? Family.

    Reply

  5. This is a great topic and seeing all those different viewpoints on frugality was really interesting. I’m naturally frugal, but we were definitely much more hardcore as we were paying off our debt. Now that our student loans are paid off, we’ve loosened up a little bit. I look at hardcore frugality as a sprint that you can do in the short term, but if you try to do it longterm it starts to feel like deprivation. Reaching financial independence is a marathon, not a sprint, so it means finding a level of spending that is comfortable, yet mindful for all purchases.

    Reply

    • Yeah I actually didn’t expect so many different viewpoints on it, but it was cool. I agree on the deprivation. You can definitely overdo it, and now that I’m a little older I just don’t want to do that stuff anymore haha.

      Reply

  6. Frugality to me is being smart about how I spend money. It’s not about automatically buying the cheapest version of a product 10 times. It’s about buying a quality product 1 time.
    When I want to treat myself, I buy a video game. But I never pay full price. I feel bad about paying $60 for a game that I know will probably be $15 in 5 months.

    Reply

  7. Our idea of frugality is spending just over $19k last year on living expenses, and another $10k on vacations. We couldn’t care less about things, but we love to live, man.

    Reply

  8. To me, money is just another tool to get what I want. The more I make, the more I can use it towards what I love doing (taking care of my family, traveling, etc.) I think you can still be frugal, but to try to live on let’s say $30k when you’re making $500k just doesn’t make sense. It’s okay to treat yourself, as long as it’s within your means. Like you said, it’s not smart to finance things, but why not pay cash if you can afford it, and not feel guilty about it? I think frugality changes with your income, but that’s not a bad thing if done correctly!

    Reply

  9. Completely agree that the definition of frugality is different for everyone, and that it should probably change as your income changes. Someone who makes $1 million/year has a different sense of being frugal than someone who makes $20k/year. It’s all about finding the right balance when your income rises and making any changes sustainable. Most importantly, keeping spending less than you make…. by a good amount.

    And I reward myself for my good habits everyone once in awhile. A nice meal or a vacation. It’s all about keeping your reward in check with what you can afford and still hit your goals.

    Reply

  10. I definitely have my fair share of crappy flip flops, but I love them. Definitely agree with several others, that frugality is living on less than you need to, to accomplish goals faster, and being able to do the things I want to do without having to worry where the money will come from. With that being said, regardless of what frugality means to you, I think everyone should have a PLAN for their money. If you don’t tell your money what to do, you’ll likely be wandering where it went. I’ve made pretty good money for awhile, but my wife and I have been focused on getting her student loans paid for as quickly as possible, so we’ve both been driving cash cars for the last 4 years, and plan to continue that forever, although the cars should get nicer (hopefully). We also don’t budget much for clothing, entertainment, etc., but love to reward ourselves with wine, craft beer, and a vacation a year (those will get nicer too). We are only 2 months away from paying off over 160k of student loans, and are celebrating with a 2 week trip to Europe, paid in cash, of course. We never plan to be in debt again, other than 1 mortgage at a time, and hope to have several paid for rentals in the next 10 years. I might even buy some new flip flops when we get those loans paid off!

    Reply

  11. I think you’re exercising AMAZING self control actually. Most Americans – if given the $$ you’re making now – would have 2 Tesla’s and a bunch of crap they don’t need. Just to show off.

    As I progressed to FI, I did gradually loosen up in some areas. mainly as related to my love of outdoor sports. I have 6 bikes. I have 2 stand up paddleboards (and they’re expensive). I have more rock climbing gear than any climber should, and I’m not even a great climber!

    But I still stay pretty frugal on other things. So it’s a balance for me, mainly by the category of spending.

    Reply

  12. For me, being frugal means never paying full price for anything. Other than a shirt for my wedding (which I still used sales and coupons for) I rarely ever shop for needed clothing outside of discount stores like Ross or Marshall’s. While shopping for my new home, most of my furniture and appliances came from scratch and dent stores, offer up, or furniture stores that were going out of business and liquidating their stuff. I estimate that I saved about $8000 by bargain hunting rather than just going to a store and picking out what I liked and buying it on the spot. If I splurge, that just means I get to buy a hamburger from Whataburger or a 6 pack of beer for my Saturday afternoon bbq which only happens like once a month if that. I guess I’m a cheap date haha

    Reply

  13. My recent “frugal wins” include buying all brand name pants for $1 or less each at a local thrift store’s half price day. GAP, Loft, Old Navy, Express, etc. They all look brand new, but without the price tag. The quality is good and they’ll last til they’re no longer in style. 🙂 For kids clothes, this means I don’t have to get upset when they get stained, ripped, etc, because those $30 jeans cost me $1-3. Or they may stay nice and get passed on to other kids.

    For a splurge– an ice cream sundae instead of just a cone at the local ice cream stand. I’m a cheap date.

    Reply

  14. I’m a subscriber to the Daily Stoic, and this is from today’s email : “What the Stoic does is not increase their expectations and demands commensurate with their success or status. Because if you do, you will always feel poor, as Seneca has said, and you will always be unhappy. True poverty, he said, is not having too little, it is the need for more, more, more.” It feels very apropos.
    Thank you for sharing!

    Reply

  15. I think we all go through different versions of frugality in different stages of our lives. When I had a goal to pay off debt or sacrifice income during my education, I was maximum frugal. I’ve found that I’ve reached a point to where I won’t pinch every penny, but I won’t be wastful either. We work hard to earn money to some times splurge and enjoy life. No matter how much we save we don’t get to take it with us in the end. I’m frugal in some areas so that I can spend in others.

    My big splurge last year was upgrading to first class for a flight for the first time ever. And yes, I still question if that was worth doing or not.

    Reply

Leave a Reply

Your email address will not be published.