| Real Life Strategies for Building Wealth

Not many who have managed to bring their finances under control will seriously dispute that frugality is an important part of the equation. One of my major AHAs when my financial awakening (read ‘obsession’) began was that there it doesn’t really matter how much one earns or how much one spends; what matters if the difference between these two. As Jeremy at Zero Passive Income put it, people have to pinpoint their problem: is it a problem of income, expenditure or debt negative wealth.

Extreme frugality, however, is something else. Often this means eating badly, not looking after oneself, living in bad conditions and staying cold. Sometimes this is necessary – if one has an income problem. Sometimes it is temporary – people are enslaved by circumstance and past misjudgements. When people have to live in bad conditions, cannot afford to go to the dentist and have to ration their heating out of necessity, it is understandable – and usually people are doing their darned hardest to get out of this. This is frugality by necessity!

The extreme frugality I mind is when all comfort and joy are postponed in the name of a life of relative luxury in the future. Often, in such cases frugality is in the way of achieving such life goals rather than supporting these. Extreme frugality can easily degenerate into extreme waste – of life, of opportunity and experience.

Recently I was ‘advised’, as part of changing my money blueprint, to give up my professionally done and rather pricey haircut and cut my own hair. Now this makes absolutely no sense to me. I am an academic, it is true. It is also true that academics generally get away with much higher level of eccentricity in dress and behaviour than most other professionals: I know several mathematicians and physicists who do cut their own hair as a lifestyle choice. In my case, though, cutting my hair means that I’ll lose work opportunities – I do have to talk to politicians, funders of research and generally members of the public. Could I expect them to take me seriously if I have a self-styled haircut (I am not very good at such stuff either)? Shallow as this may sound, I would say ‘no’. We people are shallow beings and do carry deeply rooted prejudices – appearance is one of these. In Bulgaria we have a saying that ‘people meet you according to your appearance and send you away according to your brains’.

I reckon cutting my own hair will save me £366 per year; but I will incur a loss of about £20,000 in earnings. Is it worth it?

Extreme frugality can be extremely wasteful. Frugality is not about minimising spending but about optimising it. Frugality as an art form is about reducing expenditure without loss of quality.

What do you think?