Being Frugal vs. More Income

Being Frugal 

Back in the late ’80s, I worked really hard, but I didn’t earn very much.  I was supporting a family of three on $21K per year, in very expensive San Clemente, California.  We had one old beater car and we didn’t get out much.  Since I grew up in tough middle class conditions in my childhood, I didn’t expect it would be much different raising my own family.

In fact, I was pretty creative in stretching a dollar.  I took pride in my frugal nature and all of things I was able to accomplish on very little income.  When other’s made fun of my car, I told them that I was taking care of my family first and one day, I would drive whatever I choose.  Long after I started making good money, I continued to live below my means.

More Income 

Everything changed when I tried to buy a house.  Despite having saved for 10 years and having a solid down payment, I couldn’t qualify for a house on my meager income.  In fact, some bankers were skeptical that I was able to save up the down payment with my income and expenses.  That’s when I finally realized that it’s OK to be frugal, but it wouldn’t be enough.  I needed to raise my income or risk trapping my family in poverty.

We got the house.  I went to my boss and explained the situation.  I also told him what I was worth in the market and asked for much less.  He rewarded me for my loyal service and I am forever grateful.  Soon after buying the house, another company offered me a 25% increase and I had to take it.  Despite qualifying for the house, I was barely keeping the lights turned on.  I’ve had to leave a couple of jobs that I loved for more money and it’s a very difficult decision.  But, I have always put my family first and I never regret that.

Looking Back

One of my biggest regrets is that I waited so long in my career to start demanding a fair income.  Because of stubbornness, loyalty, lack of a college education and a number of other factors, I spent about a decade being well underpaid.  Although I was able to offset the low income with sound financial planning, I often wonder where I would be today if I had focused on increasing my income, instead of focusing on being frugal.

I have no doubt that if I had wrapped up my college degree when I was younger and I had been more aggressive in seeking a higher income, that I would have made a lot more money in my career.  And, my family may have been better off because of it.  Yet, I am still amazed at how much I was able to accomplish by living a frugal lifestyle.  And, I have passed on to my kids that we don’t have to buy popular items that we can’t afford.

The Bottom Line

The bottom line is that you should pursue both to a reasonable degree.  Being overly frugal may not always make sense, when considering the value of your time.  And, earning more income may not pay off, if you never get to spend any time with your family.

Most important, is to save money and plan wisely for the future.  It makes no difference how much you save by being frugal or gain by increasing your income, if you spend more money than you earn.  You can save money at any level of income.  And, you can get ahead without making your own soap.  You simply need a plan and financial discipline.  My advice is to Pay Yourself First and then live joyously on the remaining amount.

Recommended Reading

Half way through writing this post, I read a similar post at The Digerati Life, titled 20 Ways to Earn More and Spend Less.  This post has great ideas for getting ahead by both means.  I strongly recommend it for anyone interested in more specific instructions.

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1 comment to Being Frugal vs. More Income

  • Thanks so much for the link, and for your personal accounts on saving and earning. I agree that you should consider how your time is spent when working on your finances — and that some balance between your time and money is something we all need to try to achieve.