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The Difference between Frugal by Circumstances and Frugal by Choice

2 years ago, My colleague shifted to another team, and he got to know a new colleague of his.

The first thing he noticed during a few lunch sessions with this new colleague is that this colleague picks food that were well-priced. It looks like this gentlemen is quite the value eater. He eats simply and the more my colleague got to know him, the more he realize what a frugal lifestyle this gentleman have.

After a few months, they got to know each other better. Then more was revealed.

Turns out, this gentleman wasn’t feeling all so satisfied about his situation. To others, living this way seem to be a very responsible way to live. Who can fault someone for not anyhow spending his or her money?

Yet, the reason that he has to selectively pick his food was this: When he started work not too long ago, he and his girlfriend got to know this insurance adviser. He thought by buying an insurance savings plan, it is a good way to be responsible and save money.

So he went ahead and commit an insurance savings plan, a whole life insurance.

The total premiums per month comes up to $1,800/mth. The problem is that his gross salary was only $3,000/mth and thus his take home salary is $2,400/mth.

There is not a lot of room for him to play with! So you can imagine why he has to be thrifty with his money.

The more my colleague observed, the more he realize this guy isn’t enjoying living this way.

Frugality by Circumstances

What my colleague came across is not uncommon.

You may have seen such examples. A friend eats caipng (mixed vegetable rice) every meal, always making sure she doesn’t pick more than $3.50. Will only go out with friends once in a while. Dreaded it when colleagues pick eatery which costs a bomb.

Secretly, she always wonder when she can stop this way of life, when she can eat what she wants, wherever she wants.

A lot of time, they are thrifty due to their circumstances.

  1. They got into debt, and they have to pay off the debt monthly by minimizing other expenses
  2. Renovation and Banquet is coming. They have to reluctantly save for these items

Frugality should be by Your Own Choice

Frugality is a focus not on being cheap. Frugality is a way of life where you choose to buy things that are of value.

I look at frugality by circumstances as a form of false frugality.

The main reason for that is that frugality by circumstances has an absence of belief in frugality. One key trait here is the lack of ownership.

When you believe in the frugal way of life, you have a strong sense of ownership in the decisions you make in life.

You choose to not spend this amount of money today because you belief that in the future, this amount of money is spend in something that provides you more value.

You do not spend this amount because you do not place a high value of what you are thinking of purchasing.

If you do not own your decision, or a lack of understanding of why you do things the way you do, you will make a decision, and be trap in the prison of the repercussion of your decision.

Shift to Appreciate the Fruits of your Choice

It can get very tiring and draggy to live a life of saving money or paying off debts.

One way I find it more acceptable was to define why the hell we are doing all these for.

If the fruits of doing this is REALLY worth it to you, then it makes it very worthwhile to work towards it.

Here are some examples.

What happens when you cleared off a huge debt? The reward is that no one owns you anymore! Well, your boss still owns you, but you don’t have to live with the constant hounding by the banks the moment they realize you are not keeping up with your debt repayment.

You value debt freedom.

Why do you not want to spend so much on your mobile phone plan and internet broad band? You conclude that it does not make sense to spend extra money, buying more data or bandwidth, to carry out more web surfing that does not give you a lot more enjoyment then what you are currently using. The reward here is the ability to tell yourself you didn’t do something you think is entirely irrational and stupid.

You value how people or yourself see you as a rational person.

Why do you save money for your home renovation and banquet? It is because you anticipate living in a home of your own and want to furnish it in such a way that you will look forward to staying inside it for a long time and that you cherish your relationship with your spouse and your mutual family.

If you question this reward, then perhaps you should not be frugal for this reason.

If you understand frugality well, you might not save as much for a particular purpose as you don’t believe enough in it.

Frugality is about finding your values and allocating your resources well based on your values.

This article is part of my Redesigning Life Series. If you like this, you may be interested in my other articles that provide actionable advice to plan your life for the better and shift your mindset philosophically.

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Sunday 28th of May 2017

Hi Kyith,

Ha! Ha!

Can frugality be define as :- "You live below your means"?

Be you A Millionaire or an average-paid Worker.

Have never believe in "Forced Fugality" due to any circumstances because of one's action.

If not we would have tightened our belt (literally) and bought a 2nd Investment property when we were working.

For me, i can be frugal for a lot of things but rarely on food.

If i can not live to eat then already missed one of the joys of life.


Sunday 28th of May 2017

Ehhh didn't anybody try to advise him to reduce his sum assured to like $30K or $10K to minimize the monthly sucking?? And get rid of any riders attached to that sucking WL...

Damage is done ... he'll lose most if not all of his paid premiums if he surrenders now. Since he's pumping in $1800 per month, and not the typical $200-$300, surrendering involves high losses. Better to reduced SA to the most minimum possible and simply hang on till better time to surrender. Can reduce to about $40 or less per month sucking.

For $1800 every month, that WL probably provides about $1M sum assured. A very very expensive way to get life coverage. Nobody bothered to show him much cheaper term alternatives??

As a savings plan, WL fails badly as after 20-30 years "forced savings" your yield is only 2.5% to 3% per annum. Evidenced by 100+ of surrendered WL and matured endowments that I've witnessed over last 10 years.


Sunday 28th of May 2017

Hi Sinkie, 2.5% is a good yield in the grand scheme of not putting in any work. I believe my colleague tried to reason with him this is not right. Have not check back if the gentlemen is doing better! Thanks for sharing your thoughts.


Sunday 28th of May 2017

I believe there is another form of frugality that exists - a programmed frugality which is those are so used to frugality by circumstances that he ends up being frugal for sake of it his entire life. The result is the resistant to spend on anything at all including those of value


Sunday 28th of May 2017

Hi Choong, quite true. It became habitual. I am quite like that in that, you felt that if you spend too much its like not living up to a particular code of conduct (which can be quite stupid strangely)

Jasmin Lim

Sunday 28th of May 2017

With a take home pay of 2.4k and paying an insurance premium of 1.8k, leaving himself only $600 to spend per month is challenging nowadays


Sunday 28th of May 2017

It is, but sometimes we thought we were thinking logically. I could have given many examples of all the "great" decisions I made that looking back are very facepalm situations.

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