Why Extreme Frugality Doesn’t Work?!
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What is extreme frugality, and why doesn’t it work?
The cost of living is constantly on the rise, so it’s no wonder why the idea of extreme frugality is alluring to some. After all, who wouldn’t want to save more money, cut back on unnecessary expenses, and build a solid financial foundation?
But while frugality has its merits, taking it to the extreme isn’t a one-size-fits-all solution. So let’s explore why extreme frugality doesn’t always work as expected and why it’s not the best approach for everyone.
1. It promotes a scarcity mindset
Extreme frugality often leads to what psychologists refer to as a scarcity mindset.
This mindset is characterized by a constant focus on what you lack, rather than what you have. When you’re constantly cutting back and depriving yourself of even small pleasures, this can create a feeling of scarcity that permeates every aspect of your life and seeps into every financial decision you make.
For starters, it might cause you to make decisions rooted in fear rather than rational financial planning. You could find yourself hesitant to invest in essential aspects of life, like education or healthcare. This fear can also result in over-saving in low-return accounts and missing out on potential investment gains.
So while it’s essential to be mindful of your spending, living with a scarcity mindset can ultimately keep you stuck and hinder financial growth.
2. It’s not sustainable (in many cases)
Extreme frugality often involves making drastic cuts to your expenses, sometimes to the point of discomfort. While this can lead to short-term savings, it’s not always a sustainable long-term strategy.
Extreme frugality, while admirable in its intention, isn’t always sustainable – a reality that often goes unnoticed. While some individuals possess remarkable self-control and can maintain an ultra-frugal lifestyle for years or even decades without issue, this isn’t the norm for everyone. For the average person, extreme frugality can come with hidden pitfalls.
Living a life of extreme frugality often necessitates some level of deprivation, whether it’s foregoing leisure activities, dining out, or buying non-essential items. At first, you may feel empowered by your newfound financial discipline, reveling in your ability to save substantial sums of money. However, over time, even the most disciplined individuals can face what’s commonly known as “frugal or budget burnout.”
Frugal burnout is that point where the relentless pursuit of saving money takes a toll on your mental and emotional well-being. After weeks or months of penny-pinching and constant deprivation, the initial enthusiasm can wane, replaced by frustration and exhaustion. This phenomenon is dangerous because it can lead to a rebound effect known as “revenge shopping.” When people burn out from extreme frugality, they may succumb to impulsive spending sprees, undoing much of the progress they’ve made in their quest to save money.
A more balanced approach to financial management – where you make reasonable cuts to non-essential spending while still allowing yourself the occasional treat – can be far more sustainable for most people. It avoids the pitfalls of frugal burnout and helps maintain a healthier relationship with money.
Ultimately, financial well-being isn’t solely about how much you save but also about maintaining a balance that allows you to enjoy life while planning for the future responsibly.
3. It ignores a bigger problem: Insufficient income
One of the fundamental flaws of extreme frugality is that it often ignores a more significant underlying issue: inadequate income.
While trimming expenses is a crucial part of financial management, it’s equally important to address the root problem – the fact that your income may not be sufficient to cover basic necessities comfortably.
Instead of accepting financial hardship as the norm and relying solely on frugality to make ends meet, it’s essential to explore ways to increase your income. This may involve pursuing further education or training, seeking a higher-paying job, or exploring opportunities for career growth and advancement. (Imagine no longer worrying about money)
Ignoring the income aspect of your financial equation can lead to a cycle of financial stress and hardship that extreme frugality alone can’t remedy.
4. It won’t make you rich, if this is your goal
While extreme frugality can help you save money and achieve financial stability, it’s not a guaranteed path to wealth. The reality is that nobody becomes rich solely by pinching pennies and living an ultra-frugal lifestyle. Becoming wealthy typically involves a combination of strategies, including increasing your income, creating passive income streams, and investing wisely.
If your goal is to build substantial wealth or achieve financial independence, it’s essential to focus on income growth and smart investment decisions. These actions have the potential to generate significant returns over time, far beyond what extreme frugality alone can achieve.
Related: Learn how to leverage your existing skills and supplement your income as a freelance writer
5. It stops you from doing the things you love
Extreme frugality often means saying “no” to many of the things you love or enjoy. While it’s true that cutting back on non-essential expenses can help you save money, constantly denying yourself the things that bring you joy can reduce your quality of life.
And don’t misunderstand me, most people can’t do what they want all the time. Even so, it’s okay to treat yourself — whether it’s eating out, planning a vacation, getting a new outfit, etc.
The truth is, not enjoying yourself from time to time will probably do more harm in the long run because missing out on life’s pleasures can result in frustration and resentment.
So again, it’s all about finding a balance between frugality and enjoyment. Regardless of what you might hear, it’s possible to be financially responsible while still allocating money to experiences and activities that bring you happiness and fulfillment.