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Tuesday, September 9, 2014

Disadvantages of excess frugality

Freeganism vs frugalism
Dumpster dive in cheap clothes to avoid damaging nice ones
Weathering icy roads and frostbite on a free pink low rider bicycle with bald tires to save on gas is neither frugal nor wise, it is dangerous. 

Sometimes it is just not worth it to be excessively frugal, and a seemingly edgy idea may be far less practical than another money saving method. 

To illustrate, a smart shopping strategy can be far more beneficial than stunting the growth of children with less nutritious food because it is cheaper. 

Knowing if you are being too frugal involves recognizing when a decision borders on the divide between common sense, and hazardous consequence.

Hygiene

A good question to ask when being frugal is would it be something that in any other instance would violate cautionary practices you live by in the rest of your life. For instance, before eating that squirrel found on the curb, can you be sure it didn't have rabies? Will salmonella really vanish after using dish soap that has been watered down four times? At some point a reality check is in order, and the value of money actually begins to be trumped by existential circumstances.

Legality

Another way to tell you are being too frugal is when you find yourself breaking the law or being frugal at the expense of someone else according to a New York Times Money report. Moreover, frugal is too frugal when foresight goes untended. For example, dumpster diving may yield some legitimate products, but if it means getting bed bugs, or a housing code violation it will end up costing more for effective pest control.

Planning

Compensating for poor financial planning via frugality is also a reason to not be as frugal. Careful financial planning allows money to grow securely for future financial needs, but also accounts for rational spending via pre-established monthly allocations. For example, the Financial Planning Association of Houston recommends paying a little more for insurance if it provides a stronger guarantee of future cash-flow. What's more, a good financial plan allows for a budget that actually includes enjoying life, and not restricting it to the point of having a wealth of deposits at the bank of misery.

Awareness

Valid financial thinking extends beyond financial planning and into everyday decision making as well. Sometimes the smallest of financial decisions can benefit from a little extra thought. Moreover, being frugal with financial thinking can negatively affect the outcome of financial decision by making it wrong. A Princeton University study highlights this point precisely by illustrating how simplified judgements can be faulty. Furthermore, after completing three experiments to test the accuracy of an individual learning mechanism called a 'recognition heuristic', the authors found it to be inaccurate.

Image: Jim Fischer, "L.A. Dumpster Dive";  CC BY-S.A. 2.0

1 comment:

  1. When I was in debt, I had to critically analyze every single item on which I wanted to spend money. Now that my debts are long gone, and I continue to live frugally, I have all the expendable cash that I need. This makes it much easier to budget for large purchases, like a refrigerator or stove, and it's also less stressful when I want to make a purchase for pleasure, such as a new laptop or flat-screen TV. When I need a big sum for large purchase I turn to cash online for UK citizens which is a fast and secure service.

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