Frugality is personal – Spend based on your needs
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These last few years, we have not spent a lot of money. Both I and Mrs. The Poor Swiss have been quite frugal. We try to spend less to grow our wealth faster.
Every month we share our level of expenses. But this is not to show that people should spend as we do. We do this to keep us accountable. There is no reason for everybody to spend the same. Spending is a personal matter and will depend on many personal factors.
We would not be comfortable spending as much as some people. And many people would not be comfortable spending as little as we do! And this is fine!
In this article, I want to discuss different levels of spending and reasons why some people may spend less or more than others.
Personal Frugality
Many people think we are spending too little to be happy. But this is not true. Spending more money would not make us happier. We live in a nice house with nice things. We eat whatever we want (a lot of meat for me and many fruits for Mrs. The Poor Swiss).
Many other people think that they could not be happy by spending so little. And this could entirely be true. This is what is important here! We do not spend too little for our personal choice, but what we spend would be too little for many people.
As we will see in this article, there are many personal reasons to spend more money than we do. There is absolutely nothing wrong with spending more on things that matters to you.
On the other hand, I think it is wrong to spend too much money on things that do not matter much to you. And it is also not smart to spend more than you could on the same things.
I know many people that spend much more than us and are happy. And I also know many people that spend less than us and are happy as well. The important thing is to find your personal balance that works for you and your goals. If your chosen lifestyle requires you to spend a significant amount of money, it may take you longer to reach your financial goals. As long as you are aware of that and accept it, it is fine!
So, we will see some personal reasons why some people would spend more than others based on some concerns.
Spend more on ecological concerns
Many people want their personal spending to be aiding ecology. This is mainly seen in spending on organic food and ecological travel.
Many people believe that organic foods are more healthy and better for the environment than other foods. And they are willing to spend more by choosing these products.
Also, some people take special care as to the provenance of the products they buy. For instance, some people will never buy tomatoes in winter in Switzerland, but they are all imported. Or some people will entirely avoid products that have been flown.
I have to admit that I am more driven by economic than ecological reasons, especially in my grocery. But I have nothing against organic products. I do not think they are worth the price premium for me. And I often value my comfort over ecological factors. For instance, I always choose my travel means based on price and time rather than the ecological impact.
Once again, this is an entirely personal choice. I do not believe there is anything wrong with going either way. It was to be a conscious choice.
Spend more money for your comfort
Everybody has a different level of acceptable comfort. And different levels of comfort may come with different levels of spending.
If a meal in a restaurant once a week or more makes somebody happy, he should continue doing it. The important thing is to enjoy oneself.
If somebody likes to watch great movies, a nice home cinema system may also be an excellent expense. Or a great leather couch if you want to be super comfortable.
One area where we can see the level of comfort of people is on vacations. Many families enjoy having nothing to do on vacations. All-inclusive resorts are often great for these people. But some other people prefer to rent an apartment and cook themselves and explore the city.
Some people also like to be comforted by buying some things, like clothes or shoes. Again, if this makes them happy, it is a good thing. Like all things, it can get out of control. But if it stays in control, it is good.
Comfort is a very subjective measure. You have to find your level of comfort and stick to it. This can take some trial and error, of course.
Spend money to save time
One great reason to spend money is to save time.
Time is a very scarce resource. We all have a limited time on earth. And there comes a point where we should save time rather than money. You can often trade time for money. But it is important to realize that sometimes you can trade money for time!
For instance, getting a house cleaner to visit your house once a week may save a few hours each month. This is something I am considering in the future. This last year, I have realized I am using too much of my time on things I do not enjoy. If I can save time by spending more money, I should do it. Time is valuable, and I do not want to waste it anymore!
If you do not enjoy building furniture, hire somebody to do it the next time you buy furniture that takes more than an hour to build. This could save you a lot of time doing things you enjoy.
Suppose you hate doing the groceries. You could get them delivered to your house and do them online. Or you could hire someone, give them your grocery list, and deliver them home.
Of course, this will be a personal thing. For some people, cooking at home is not a hassle. But other people hate cooking, and they could consider a meal preparation service or take away food to save money.
Spend more for ethical reasons
Finally, many people are willing to spend more based on their ethical values. While I have separated ecology (and environment) from this section, it relates to personal ethics.
Some people choose not to use products from some companies because they do not align with their ethical values. For instance, many people boycott companies that probably use children for labor. And people are willing to spend more to avoid these companies that are often cheaper.
Another reason to change your spending is to avoid products that are being tested on animals. Many beauty products are being tested on animals. Often, these brands are cheaper than others. So users need to make a conscious personal choice of spending more money to avoid them.
Another way to be more ethical is to spend more locally. Many people are willing to spend more to support businesses from their local community. Often, these businesses cannot compete with large corporations and, as such, are more expensive. But the quality could be better, and it could support the personal ethics of many people.
The last example would be sustainable investing. Many people invest their money in sustainable funds or sustainable Robo-advisors to put their money at work only on companies that work towards a greener future. This is often significantly more expensive than simply investing in all companies.
These days, ethical spending has almost become a trend. Many people try to spend ethically not because of their personal ethics but because it is popular.
We could spend less
Regarding our expenses,s I would also add that we could spend even less than that if we wanted. There are many things in our lives that we could spend less on. But we keep these expenses by personal choice. Here are a few examples.
We could have bought an apartment instead of a house. We could save a significant amount of money by moving into an apartment with one less room and not on the ground floor. But we decided that we wanted the comfort of our own house with a nice backyard. And we took one more room than we needed, again for comfort.
I also spend between 1000 CHF and 2000 CHF per year on computer-related items. For instance, in 2021, I spent more than 1000 CHF getting three monitors for my office. My previous monitors were still working, but I wanted to refresh my setup, so I did. I value the comfort and technology of my monitors more than the money spent on them.
Even though our food budget is already quite low, we could go lower by sacrificing meat. But I would not enjoy doing that. I much prefer spending a little money and eating meat every day. But just because we want to eat does not mean we spend unreasonably on it. We still buy it in bulk when possible to save money.
Finally, one last example, I am still using Swisscom as my internet connection provider. For me, a good internet connection is extremely important. I rely on it for my work and this blog, and Mrs. The Poor Swiss uses it a lot. I have never had any significant issues with my internet connection with Swisscom. So, I prefer keeping something I know and like rather than saving money on something cheaper, which could cause trouble.
So, even with our limited spending, we could get further. But we make a conscious personal choice of not spending less.
Spending has a cost
Everybody has to find their personal level of spending. However, everybody also has to realize that spending has a cost on their financial goals.
Most people have (or should have) financial goals. For instance, that could be buying a house or retiring early, or even getting a huge vacation on a luxury island.
When you are spending more, you are also saving less. This sounds obvious, but many people always splurge and then complain that they cannot save enough money.
People must be conscious that all they spend is money they do not save. So, it is money that does not work towards your goals.
It is essential to find a good balance between a good quality of life and working towards your financial goals.
Conclusion
It is essential to realize that frugality is a personal matter. Some people will naturally live a lifestyle with minimal spending, while others must spend more to be comfortable. There is nothing wrong with spending money on things that improve your life.
We personally spend relatively little money compared to many people in Switzerland. And just because we share our spending on this blog does not mean we encourage our readers to spend as little as we do! We are comfortable with our level of spending. And contrary to what many people believe, we would not be happier if we were spending more.
But some people would not be comfortable with how little we spend. Some people would like to often go to the restaurant or do more expensive vacations. There is no point in spending too little money if this makes you miserable! Your level of spending is an entirely personal subject!
Now, you must realize that spending prevents you from saving money. So, if you have financial goals, it is important to also find a balance between spending for your life and saving for your goals. You cannot complain that you do not save money if you are splurging it all. It is a choice that everybody has to make.
Now, I think it is always a good idea to spend less on the things you need. If you can pay less for the same things, why wouldn’t you? Here a few tips on saving money. And if you do not want to spend less, you should focus on earning more.
Are you comfortable with your personal level of spending?
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I believe that for some people it’s hard to find the balance between “spending so that I’m happy” and not spending too much at the same time. But I think by checking your finances in detail every once in a while (doesn’t have to be very often!) you will often find you’re actually “wasting” money, e.g. for stuff you no longer want/need or some much better offers have come to market. And I agree that the comfortable level of spending is very individual.
Personally, I like optimizing my spending in the everyday life: I spend quite some time comparing the price/value tradeoffs for contracts or products that I will pay for or use regurlay in the future, because I don’t want to look at those things again soon while also knowing I’m getting the value I need at a reasonable price.
By not spending much normally, I can spend a little more on special occasions. E.g. vacations: I only have four weeks a year so I want to enjoy them. I will not waste 4h waiting at an airport somewhere to save 100 bucks on the flight, and I will pick a comfortable hotel where the stay is enjoyable even on a rainy day. Also some smaller things, like the occasional nice bottle of champagne with the GF or a night out with my friends (hopefully soon again) are occasions where I’d rather “optimize” for fun than for money. This doesn’t mean it’s super expensive, it just means enjoying the little moments that make life worth living.
I agree that it’s difficult to find a balance between short-term happiness and long-term happiness.
This is a great strategy to save where you do not care too much while allowing yourself to spend for comfort where you are going to enjoy it :)
“When you are spending more, you are also saving more”
I’m confused. Is one of the “more” a “less”?
Hi Marco,
Thanks for pointing that out, there is a typo indeed: it should read “When you are spending more, you are also saving less”!
It should be fixed now!
Thanks :)
“Spend money to save time”…
Here’s an idea for a future article. Calculate the value of your free time. I’m amazed sometimes at what time cost people are willing to save money. Waiting in a queue to get a cheaper product, etc. Or commuting vast distances to pay less rent.
In many cases people don’t have a choice. But if you do then you should calculate the value of one hour free time and compare it with the value you would give it.
That’s an excellent idea. I do not know how such an article would turn out, but this is definitely an important subject.
There is a point for everybody where time becomes (much) more valuable than money.
Some people also see it another way: if they could generate X CHF in working an hour, this is what is worth for their free time. For instance, if I can generate 70 CHF for an hour of coaching, I should not waste an hour of my time to save 20!
But yes, saving time is important.
I couldn‘t agree more. Too many people complain about not getting ahead financially. But most of them are not willing to compromise and cut back on their spending. I believe that saving is even more important than earning money. A very famous blogger demonstrated that once very nicely when he wrote about the „shockingly simple math of early retirement“.
Hi Mark,
I agree that not spending too much is important. Nevertheless, you can retire early and spend more, you will just need to accumulate significantly more money. It’s a tradeoff.
But it’s true that spending less has more effect on your retirement than earning more, even though earning more has higher limits.