PERSONAL SPECIAL .....Be frugal, but not stingy

Be frugal, but not stingy



The stingy end up denying themselves small pleasures to hoard money

We have heard enough strictures about living within our means. Every lesson on personal fi nance begins with the nance begins with the need to spend less, save more, and trade current pleasures for future comfort.Focus on the goals, we are told. But where does one draw the line between being frugal and being stingy?
We may not know if we are being virtuously frugal or abhorrently cheap, but everyone else can tell. Misers hardly have friends, and typically dislike most people around them too. A frugal person would reciprocate the dinner invitation of friends, but a miser would take advantage of others' invitations but almost never call anyone over for a meal he would host. The unwillingness to spend is different from unwillingness to waste, and society tends to identify the difference quite well.

Many of us have friends and relatives who will always converse with warmth and invite us to their homes, except that they would not firm up a date or time, ever. When an occasion to act on their professed intent arises, we will find them making excuses. They are the stingy and cheap lot who have no intention of spending their money on others. They are likely to be keeping accounts even with their siblings and making a virtue out of it. We also have friends who would create a lavish spread when we go over to dine at their homes, only to impress us with their wealth. These are the spendthrifts who put their spending ahead of their ability to do so. The frugal are the realists who stand between these two extremes.

Frugal people find ways to get creative about spending, while the stingy would focus on the price, and be willing to buy something only because it is cheap. You will typically find them compromising quality for price, only because they feel good about saving some money and getting themselves a good deal, over everything else.

The objective behind being careful with spending is quite clear to the frugal minded. They have a goal in mind and they know why they are sacrificing a pleasure in the present. They motivate themselves and their families in pursuit of frugality, given the need to allocate money to the goal, which is a shared aspiration. Mothers who urge children to eat at home, rather than buy food outside, so that money is available for higher education, are inculcating careful spending habits, so that the limited money in the household can go farther.The stingy save for the sake of saving.To them, setting money aside is a goal in itself. The frugal are generous and give within their means. The stingy are wily takers, and their giving is a calculation of underlying future benefit.

Those who choose a frugal lifestyle are not too worried about how they may be perceived by society or how they may fall short in the eyes of their friends or relatives. There is an inevitable pride in the decisions they make, and they end up being strong advocates of their choices, the honour in being minimalistic, the virtues of reducing consumption, and the ability to differentiate between need and want. The stingy , on the other hand, are quite aware of their tendency to be cheap and therefore work hard to cover it up. They put up an act of generosity in words, tend to be dishonest in their preferences and choices, and do not like to own up to their tendency to be cheap.They extract the benefits out of a situation rather shamelessly, telling themselves that they are smart to be doing so.

Even those who choose frugality do not push the envelope so much that it compromises the quality of their lives.They do not deny themselves things that they enjoy, only to be able to save some money . They take their time to make the decision, they consider the choices, they seek information, but they are willing to spend where it matters.

On the other hand, the stingy are fully aware that the expenditure on hand is an important one, or that it can bring them joy . But they are unwilling to spend and instead settle for a lower quality of experience instead. They begin with `no' when it comes to spending and it is rare for them to find a consistent line of reasoning to make that a `yes'.

When frugal people choose a simple lunch, they are satisfied that their choice meets their need. The stingy would go hungry and make a virtue out of skipping lunch, but end up piling their plate in a buffet hosted by someone else.

The choices we make and the lessons we teach our children about money reveal our attitude about allocating that money . Being a cheapstake reduces the quality of our life as we deny ourselves things that we enjoy doing, and suffer needlessly . Being frugal means we value what money can buy and use it optimally and we remain proud of those decisions. If our focus remains on the money in an absolute sense, no amount would be enough to make us comfortable. Instead, if our focus is on what we like our money to do, viewing it as a means to an end, we may have better money lives.

UMA SHASHIKANT



The author is Chairperson, Centre for Investment Education and Learning