Yes, Frugality is Only for the Rich


The Difference Between Absolute and Relative Frugality

Let’s imagine two families that each spend $46,000 a year. If that family makes $46k/year, they are a cautionary tale. But if that family makes, say $250k/year, they are paraded around as frugal experts.

This is basically how I read the uproar about the Frugalwoods, i.e. the latter couple. There was an article critiquing them because their situation is unrealistic to most people. Then there were critiques of that critique, stating that frugality was for everyone.

These latter articles made it seem like the lower and middle class should aspire to the “extreme frugal” habits of the Frugalwoods.  One article even says the Frugalwoods should be applauded because “they’ve exhibited a level of self-restraint and stick-to-itiveness that the rest of us can only dream of.” I mean, I guess the rich can only dream of it. The lower income and middle class live this reality every single day.

Why Do we Celebrate the Rich for Something that the Middle Class Do Every Day?

Consider that 50% of U.S. households earn $50k or less, representing 70% of the population. Captain Obvious says, that’s the vast majority of people in this country. Some of these households are going into debt, sure, but if we assume 50% of this group is living below or at their means, that’s 44 million households (34% of all U.S. households) living on less than what the Frugalwoods spend per year (assuming $50k after taxes is around $40k. Some commenters have stated the Frugalwoods are living on a bit less than $46k but it’s still around this figure).

If frugality were actually about living on less, then these 44 million households should be as equally vaunted as those making more. But living off <$46k when you’re making <$46k is stressful. No one wants to follow advice on how to be struggling, even if the actual budget would be the same. What’s better is living a bucolic Instagrammable lifestyle where one can talk about minimalism and having “more time for the things that matter” on $46k. The only people who can live that life are the rich.  

I love love love this comment by Dr. McFrugal:
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On Reddit, this sentiment is echoed:
Being frugal really starts to apply when you make enough money that you could afford luxuries, but you turn them down to save money. That’s frugality. The college kid who is eating Ramen every day because he doesn’t have a choice – that’s not frugality, that’s survival mode.

Frugality is only for the rich because the poor and middle class are just surviving.

I have nothing against the Frugalwoods. It’s not their fault that they’re celebrated for something that millions of other people are forced to do. It’s like a couple that’s celebrated by living on $12/day traveling to another part of the world, even though the general populace lives on $2/day. It’s like an able-bodied person using a wheelchair for a day, and being average at it, and everyone saying, hey people in wheelchairs, look and learn from this guy.

It’s not the couple’s fault that they’re feted. The problem lies in the lack of understanding of what is normal for the majority. There are millions of families with even lower than “extreme frugality” budgets, but it’s the rich people with higher budgets who are getting celebrated. That means it’s not the budget that is celebrated but the income and the percentage. Lower and middle incomes may win on absolute spending but if you define frugality as percentage saved, the rich will always win. 

This is not to say that the lower or middle class should give up hope and spend willy-nilly.  Saving money is obviously good and should be encouraged even if you don’t get a book deal. What I’m really critiquing is the critiques of the critique.  If “extremely frugal” people like the Frugalwoods are spending more in absolute terms than lower and middle income people, then the lower and middle income people are just as frugal. At some point,  you hit the threshold for how little money one can spend. If well-educated, book-selling, rich “extreme frugal” people are spending more than you, even with all the advantages that the rich have for saving money (like better rates because they can pay for their house in cash) than maybe the 44 million households making it work on less have hit the absolute limit. Let’s not chastise them regarding “learning frugal habits” just because their savings percentages are low. The savings are low because of lack of income, not lack of frugality.

We also need to question why we inexplicably praise rich people for doing the same thing as the middle class as if that’s a huge hardship for them. We have impossible, standards for the lower and middle class and very low standards for the rich. This is unfair. There are a few takeaways I get from this situation.

1. Let’s stop pretending rich people have all the answers.

I know someone might say, well saving a lot of money on a high income is more difficult than living paycheck to paycheck on that same income. I don’t even know if I need to explain this but here are 4 reasons why being rich is easier than being poor:
  • There’s a lot of comfort from the idea that you can just solve problems with money if you want to/have to. You can’t do that if you are lower income.
  • There’s comfort in knowing that saving money can produce tangible results soon. If you’re rich, you can live like a pauper and possibly retire in a few years. If you’re poor, living like a pauper means you can retire in 45 years. It’s the difference between sprinting for 500m and sprinting a marathon.
  • Being rich makes saving money easier. I got a coupon in the mail for a free meal at a new fast casual place that opened up. That would never happen if I didn’t live in a fancy area where people can be expected to come back for paying meals in the future. Living in a rich area means you’re treated better and have better perks. And don’t tell me “avoiding lifestyle inflation is hard.” No, figuring out if you can afford rent next month is hard. Not buying new things when your old things are getting faded is easy.
  • Being rich means you can screw the poor. My friend told me that when he was a kid, his mom paid way too much for a beater because she had bad credit. If I wanted that beater (this never would have happened because I was 10 at the time, but let’s say this happened today), the dealer would have offered it to me for less because I have excellent credit and could pay cash. Not only would I have gotten a better deal on that car, but if I had gotten that car, which was just one option for me, she would have been screwed. That was the only car available for her. Being rich means you have all the options that the poor have and also the options of the middle and upper classes. Being poor means you hope the rich don’t take your options in their quest for frugality.

So yes, being rich makes everything easier. Don’t let anyone tell you differently. It’s more impressive to live on a lower income if you’re lower income. It’s easy being rich.

2. Everyone should first seek to understand.

I’m weirded out by bloggers who talk about “nonfrugal” people as if they are some single entity that is obsessed with conspicuous consumption. Some people are like that, for sure. But others are making all the right choices and are constrained by their circumstances. Others are making most of the right choices. Others are recovering from some of the wrong choices. Some people just make different choices.

And most people suffer from the simple malady of not being rich.

The middle and lower class have tips and tricks that the rich can’t even comprehend and it’s a bit sad that they’re underrepresented in personal finance blogs.  Poorerthanyou started a group highlighting articles geared for lower or middle income folks but it shouldn’t just be people with lower incomes that read it. Everyone should read this. Personal finance shouldn’t be about lower income people needing to learn from higher income people –  everyone should be learning from everyone else.



How to Keep Shame From Messing with Your Finances

shame and money don't mixWhy Shame Is Our Default Response

During a tough time, a friend asked me how I was doing  and I deflected with my usual disclaimer. I said it was tough but I acknowledged that some people were suffering much more than me. There was hunger and there was death and disease.

I wasn’t saying this just to be polite. In fact, I was incredibly embarrassed by how difficult things were for me. I shamed myself often, telling myself, c’mon Lisa, get over yourself. People are fighting wars and running for their lives and you have stupid X, Y, Z problems. Anyone would be happy to have your silly problems.

My friend, though, saw right through me. He said, that’s a terrible way to look at it. Acknowledging that I have problems is not the same as discounting other people’s problems. We are not in a competition for who has it worst.

His message has stuck with me. I am not in a competition for the worst life. And when I think of things that are actually shameful, they are about doing bad things, not about struggling with our lives.

How Shame Messes with Our Finances

So why was shame my default choice? As a society, we are taught that shame is good. Shame is supposed to motivate us to better things – altruism, success, exercise. But shame is meant to make us feel bad in order to correct our bad behavior. If you feel shame all the time, or if you feel shame when you haven’t done something wrong, something is awry.

In fact, after I started letting myself wallow in a carefully regulated amount of self-pity, I finally got over it. I think discounting my  emotions as silliness held me back. I spent all this time shaming myself and not enough time figuring stuff out.

Sometimes I follow the same pattern when I talk about my financial journey.

I have a high income. I have quite a bit of savings. So when I feel inadequate that people younger than me have saved so much more, have higher incomes or have already bought multiple houses, I tell myself, well there are people who are worried about losing their house or their job or their kids. My worries are inconsequential, I think. But that’s the wrong approach.

It’s the wrong approach because you are entitled to have your feelings and to the extent that shame keeps you from acknowledging that you have emotions and struggles, it’s counterproductive.

It’s ok if your problems are really hard for you.

I don’t have to have the biggest problems in the world for them to be valid. I don’t have to have the best story in the world to own my story. Being honest about my floofy problems and my true story might be helpful to someone else. But nothing good is going to come from me tamping down my problems and my story.

I don’t have the biggest problems but they are my problems and I’m figuring out how to deal with them. I don’t have to compete on problems with anyone else.

But won’t treating my small potato problems like big problems indicate a lack of self-awareness? Isn’t that the kind of thing that should be ridiculed? Look, if someone is trying to diminish or one-up you on your problems, then let them diminish or one-up you and then find some other people to talk to. If someone is telling you your problems don’t matter, then they don’t care about you. My friends, who are all saints in my opinion, still care about what problems I’m going through even when they have their own setbacks. And I care about their problems so why can’t I care about mine?

This will sound very unproductive, but I hereby give you all permission to wallow in your problems. Don’t be obnoxious about it but don’t be dismissive either.

Shame isn’t the answer.

I heard this story on a podcast. This woman slept around quite a bit and she was ashamed of herself for doing so. But, she figured, at least she felt the shame. If she didn’t feel the shame, then she knew she was really far gone. Later, however, when she learned to accept herself and her actions without the shame, she found she didn’t want to sleep around anymore. So paradoxically it was the shame over doing the things that she didn’t want to do that kept her doing them. In fact, rather than preventing her from doing something worse, it was the shame that was the instigator of it all.

It’s a bit funny that all of us can feel ashamed of our finances, of where we’ve come from, of where we are or where we’re going. And maybe we justify all of it by stating that at least we know we’re wrong or privileged or a spendthrift and we feel badly about it. Maybe that’s not the right approach at all. Maybe the first step in everyone’s financial journey is saying, this is how I feel and that’s ok. I’m ok for feeling these things.

And maybe what follows is that we need to forgive the past and everyone that played a role in the mistakes that were made.

Of course, forgiving everyone includes forgiving ourselves.

Forgive yourself for having privileges that others didn’t have. Forgive yourself for not having the privileges that others had. Forgive yourself for not saving as much as you wanted, making investment mistakes, not making a high enough salary, making too high a salary for what you do, for anything unethical you’ve done, for anything unethical done to you, for any jealousy that you’ve harbored against anyone else.

Forgive yourself for having problems. Then wallow. Then fix it or get over it and then go help someone else.

Change Your Money Story; Change Your Life


You Write Your Own Story

I unashamedly love watching America’s Next Top Model. To me, it’s not mindless entertainment. I have learned a lot from Tyra Banks’ timeless wisdom over the years (although I still haven’t perfected “smizing”) and from watching the contestants talk to themselves in their confessionals. It’s easy to see the patterns because the formula for how ANTM picks its contestants always stays the same: they pick stereotypes.

There was always the one who struggled with doing “girly” things (yet wanted to be a model). There was the one that struggled with her age. There were others who thought they were too heavy, too thin, too short, too tall, too pale, too weird-looking, too foreign.

And every model thinks that, of all the models, she was the one that fit in the least.

Don’t Believe Everything You Think

I always wanted to take them all home with me and tell them, can’t you see that everyone else is as insecure as you? But I don’t think the ladies would believe me. The producers don’t feed these stories to the women; instead, the producers pick women who have these stereotypes deeply ingrained inside themselves.

At some point in their lives, these women had interpreted things about themselves based on their situations. And no matter how wrongly they had interpreted the previous set of circumstances and no matter how things had changed since their initial investment, they keep looking for facts to confirm these ideas to themselves. This is known as confirmation bias.

So the lady who thinks she only likes boyish things – that has become her identity no matter whether she actually still likes stereotypical masculine things or not. It doesn’t matter that she is trying to become a model, which is one of the most stereotypical feminine activities ever after, say, giving birth. She is, in her mind, boyish.

And perhaps it wouldn’t matter if this belief wasn’t holding her back. But she tells herself that she can’t wear a dress, which is a big problem if you’re a model. She can’t have long hair. She can’t even act the part of a pretty lady in photographs, which, again, are basics of the job of being a model. These are thoughts that come from the past but they’re ruining her present and her future.

How To Change Your Mindset to Lead to Success

I remember listening to a woman talk about manifesting success and I was ready to tune out. She said, she was manifesting a call from Oprah to be on her show. (eye roll). But then she said something that made her belief seem normal.

She said that she had spent years creating a great product, a great company, a great story, and that she had applied to be on the show and had been networking with the producers. It wasn’t like she was sitting on her couch dreaming of being on the Oprah show – she had put in a tremendous amount of legwork to get on the show and, when she basically had nothing left to do, she was thinking good, positive thoughts. Any bit of further contact she had with the producers or anyone connected with the show, she kept this thought in her mind – I’m going to be on this show. And what do you know, she got on Oprah.

I don’t want to get all hippy-dippy on you, but I don’t think it’s too controversial to say that you’re more likely to achieve your dreams if you believe you can and you’re less likely to achieve your dreams if you believe you can’t. Both Ms. Manifesting and Ms. Tomboy Model both had the raw skills it would take to achieve their dreams. But one of them used her thoughts to move herself forward while the other used her thoughts to hold herself back.

Change Your Money Mindset to Change Your Money Life

I can tell you all sorts of reasons I would be bad at money.

I never had any financial education in school. My personality type makes me a likely victim of financial abuse and overindulging. I’m a minority woman. I like being generous. I didn’t grow up rich.

I could tell myself all these things, which are all true, and come to the conclusion that I am bad at money. In fact, I could believe that I have to be bad at money and there’s nothing that I can do about it.

But I could also look at some other facts. I have very simple tastes. I don’t “get” FOMO. I have good financial role models. I earn a salary that far exceeds what I need.

And it turns out, I’m pretty good with money. I save 70% of my salary mostly because I don’t know what else to spend money on. When people say I shouldn’t be good with money, that’s a story that I don’t agree with. I’ve created my own story.

So what happens if you have a bad story? I think the thing to remember here is that we are all telling ourselves a story, every minute of every day. I’m this kind of person. I’m not that kind of person.

Maybe these stories are based on past events. Maybe they’re aspirational. Maybe people have told you things and you believed them. Maybe you think you’re like your family or your spouse or a certain TV show character.

The important thing to realize is that 1) the story you tell yourself might not be true and 2) the story you tell yourself can change. Maybe you were a big spender before, but you aren’t necessarily a big spender now and you don’t have to be a big spender in the future. Maybe you were a responsible kid, but that doesn’t mean that all your decisions now come from that same responsibility framework.

So I would question the stories you make up in your minds. You can ask if the stories are rooted in truth, but perhaps the more important question to ask is are they serving you. I have this belief that I’d rather lie to myself to get what I want then to tell myself the truth and miss out. The dirty secret of Asian American success is that everyone expects Asian Americans to succeed. Asian American C-students become A-students merely because the students are inundated with the belief they will succeed.  (Based on this, I’m wary of all the reporting on minority underperformance because I think it’s creating a self-fulfilling prophecy of failure for other minorities).

Are you good with money? Don’t look at your bank statements. Tell yourself you’re good with money. Think of the reasons that you should be good with money. Envision yourself being good with money. Envision everyone believing you are good with money and watching you. Create the story that you are good with money. Then act like you’re good with money. See what happens.

I think people often underestimate how important our thoughts are in achieving our goals. Our thoughts become our words and our words become our actions. Thus, the stories we make up in our minds become our lives. 

What I Mean When I Say I’m Rich


When I Realized I was Privileged

He grew up on the other side of the tracks, so to speak. I kept hedging that I didn’t grow up with the silver spoons of my colleagues, with private schools and summer homes. But it seemed discordant to make these comparisons to someone whose mom died of a drug overdose and whose dad worked in construction, a career he inherited.

In my mind, it was like Bill Gates insisting he wasn’t Warren Buffett.

I was a little embarrassed. It may not have been a silver spoon, but it was at least plastic and durable. Also, we had soup! By being steadily employed in white collar jobs and never buying things, my parents rose through the middle class ranks. And I was now a lawyer, making an income that put me in the top 10% of salaries, if not higher. If he was lower-income, I was higher-income. If he was poor, then I’d have to be rich, right?

It’s apparently not so simple. It’s such a subversive thought – believing you’re rich. There’s a lot of stigma associated with being considered wealthy, even in the personal finance blogosphere. I recently asked on Twitter whether it was off-putting for me to describe myself as “rich” and most seemed to suggest that it was. Some people would have been put off because I’m not “rich enough” to consider myself rich. Some others would have considered it bragging or tempting fate. Others have been bred to hate the rich, so they take it as an invitation for open season against me.

It was funny, because the tweet followed a lot of rabid discussion stating that earning multiple times the median income does not count as middle class. Ok, fine. I won’t call myself middle class – but I still can’t consider myself rich. I’m “upper middle class,” which I guess insulates me from associating myself with the middle and the rich. It could be the best of both worlds, even though mathematically it just doesn’t make sense. (For instance, if you subdivided incomes into five categories – poor, lower middle, middle, upper middle, and rich, I’d still be rich. The top 10% would still fit into that top 20%).

Why People Won’t Acknowledge That They’re Rich

Why should it be a problem in personal finance to consider yourself rich? Well, it’s probably because the rich are now seen as punching bags. I remember reading a blogger sarcastically snarking about Taylor Swift talking about having a problem. Oh she’s rich and pretty and young so she doesn’t get to have a problem. She doesn’t get to complain. Sorry, rich people – you don’t get to have sadness or loneliness or stubbed toes.

Part of the disdain may come from the idea that the rich are associated with wasteful spending. We’re not lifestyles of the rich and famous – we’re lifestyles of the financially independent and the frugal.

Part of me wants to say that labeling myself as rich ignores my parents’ sacrifices and hard work, making it seem like we took a road to success lined with trust funds and limos.  I’m sure, however, that my parents would be very gratified that they were able to provide for their kids. It’s a different generation – they unabashedly want to be rich. They see the rich as aspirational, as good and hard-working. I don’t know when the definitions got turned around.

I would think that of all blog communities, this one should realize that money doesn’t solve all your problems. And that money is nothing to be ashamed of. And that money is really a story that unites us more than it divides us. But once we start defining ourselves by our incomes, then it seems the claws start coming out.

Why I Believe I’m Rich

Part of the evasiveness might not be from fear but from honestly not realizing that one is rich. There’s that joke that we define wealth as “a little bit more.” And when you’re wealthy, and surrounded by wealthy people, it can be easy to feel poor. After you’ve obtained enough money to be stable, being rich is more of a feeling than an actual number. And a millionaire can feel poor next to a billionaire. And anyone can feel poor when someone has more or better or newer.

We are all like dogs chasing their tails. But at least a tail is something tangible. We are always chasing something that we’ll never catch, and frankly when we catch it, we deny we’ve caught it. And I’m tired of the chase. I want to stop and just look around. My definition isn’t “a bit more.”

My definition is “I’m fine right here.” Does that bother you? Why? I’m not selling anything. I’m just letting you know I’m not chasing. I already realize what enormous privilege I have and will continue to have. I realize I don’t need any more.

My current financial status is not indicative of my childhood or my future. It doesn’t make me a good person or a bad person. So here is my unvarnished truth.

When I think about spending my money, I think about aligning it to my values  – not meeting my basic needs. I don’t check my bank accounts to see if I can afford something because I know I can. I rarely have to worry about money. That’s my definition of rich.

They say that women are always apologizing. Well, I’m not apologizing. To be polite, I can say I’m “upper middle class” but in my mind, I know I’m rich. And I’d rather just admit it.

What’s your definition of rich?