What Does It Mean to Be Frugal When You’re Wealthy?

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I’ve been thinking about this question a lot lately. I don’t plan on being a starving law student for the rest of my life. My goal is to one day become wealthy. But what happens to my frugality when I get there? I’ve come up with three possible responses.

Frugal born, frugal bred, when I die I’ll be frugal dead.

One response to a frugal person finding themselves with lots of wealth is to not change their lifestyle at all. For me that would mean, I would still live with my in laws, I would buy new clothes once every 3-4 years, I eat out only once a week, I don’t buy CD’s, books, or video games, only have one care between me and my wife, ect. There’s other stuff, but you get the point. I don’t know if I could do this. What’s the point of having all that money if you’re not going to use it? I can see someone doing this if they gave their money to charity. Then maybe there would be a point to having all that money.

I’m frugal… for a rich person.

This response would entail making more splurges. You might go on more exotic vacations and have another car, but you would still use coupons, by generic brand, still not buy expensive clothes, ect. If the Millionaire Next Door is right, this seems to be the way most Americans become millionaires. This probably would be my response if I were to ever become wealthy.

Frugality? What’s frugality?

This scenario would entail ditching any frugal habits that you developed on your path to get wealthy. You buy new gizmos every time they come out without comparison shopping, new clothes all the time, you don’t care of the stuff you have, you buy new cars all the time, ect. This response is a quick way to bankruptcy. I don’t think there are too many frugal people who become wealthy who would respond in this way. Habits are a hard thing to break.

What do you all think? How would you respond if you were plunged into wealth?

[tags]frugal, wealth, shopping, personal finance[/tags]

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14 Comments

1. Helen on 09.04.2007 at 06:54 (Reply)

   I’ve thought about this…help my children,help my brothers and sisters, pay bills off, buy new car (have a 10 year old one now) fix up my house, invest a little, go on a couple of trips, and then give the rest away. I don’t need or would want a lot of money, I would rather see other people happy with what I could share with them.

2. Mike on 09.04.2007 at 07:38 (Reply)

   I think the biggest thing is to avoid conspicuous consumption. You can’t really even say “only buy things you need” because that’s extremely subjective.

   I don’t think being frugal when you are rich even requires using coupons or comparison searching ad nauseum. Sometimes when you are making quite a bit of money I think you need to look at the value of your time. Spending hours cutting coupons or comparison shopping probably isn’t cost effective. You could spend that on a billable hour and be that much closer to your bonus and have it monetarily be worth much more than what you save. Or you could spend it with your kids or other people you love.

   But you could also still make sure your purchases are smart ones (don’t give up the consumer reports subscription) continue to buy a car that’s a couple of years old rather than brand new and drive a honda or toyota instead of a lexus or mercedes.

   I think the biggest part of being frugal is living well within your means.

3. The Ad-Free Personal Finance Blogs Aggregator on 09.04.2007 at 08:17

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4. K on 09.04.2007 at 09:16 (Reply)

   Regardless of one’s financial situation, I think it is imperative to be at least a little frugal.
   There’s nothing wrong with traveling, buying the latest technological gadget or a designer handbag… and I think it’s fine to buy a CD the day it comes out.
   But I think we should only buy what we can afford.
   I’m not in favor of outrageous credit card balances, and I think it’s smart to save for what one wants instead of being impulsive.
   People seem to live beyond their means to keep up with those around them, and that’s a big mistake.
   It can be tough to save, and in law school it’s even harder. It’s expensive wherever you go. But I agree with Mike, we need to know what it means, personally, to live within our means then just do it.

5. Suzana on 09.04.2007 at 12:44 (Reply)

   I absolutely agree with Mike. I think the meaning of frugal can be vary from person to person. If you are poor the only way to keep you survive is by being frugal. But when you are rich the meaning of frugal can change. It doesn’t means you can just buy anything without thinking. Frugal also means to be wise and smart, no matter poor or rich. Because frugal is the attitude of life.
   For example you want to buy an Cannon SLR camera. There are 3 different stores which offers 3 different price for the same quality and model. For sure you will choose the cheapest one instead of the expensive one. That’s I called smart. I want to be rich and smart at the same time. If I were rich, I would want to enjoy my money as smart as possible. Go places I want to go. I wouldn’t be stinggy, or really cheap in life. Starving myself to death and keep saving and saving my money until I’m 90. Because when I die, I will never enjoy my money but other person/family or whoever get the will. So what’s the benefit of your hard work if you never enjoy it.

   Our life is NOW, but if you have a chance to be rich, enjoy it in wise and smart way. That’s FRUGAL means to me. Anyway…I want to be rich too oneday

   For me, If I was reach, I would buy thing in

6. The Frugal Law Student on 09.04.2007 at 12:57 (Reply)

   Great comments, everybody. The consensus seems to be that what frugality means depends on your current financial situation. I agree. I think part of the problem with personal finance books on frugality is that they just offer a one size fits all definition of frugality. Basically its “If you want to be frugal, you have to do ‘x’.” I think this can cause some people who are doing perfectly well financially to feel guilty for not being frugal. Of course, they shouldn’t care what someone else thinks, but often this is easier said than done.

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9. ispf on 11.04.2007 at 13:46 (Reply)

   Nice post and comments! I think of what I practice as “relatively-frugal” lifestyle (equivalent to your “I’m frugal… for a rich person” category, just that I am not rich yet :). I can probably have a more lavish lifestyle than I lead, but on a day-to-day basis, I am content with what I have and don’t see the need to be more lavish. This allows me to splurge once in a while, especially on vacations and when I am with friends, without worrying about upsetting my savings goals.

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