Extreme Frugality vs. Relative Frugality

Extreme Frugality Is For The Birds

Gen Y Finance Guy Words To Live By 12 Comments

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It’s no secret that this blog has nothing to do with extreme frugality. If anything, compared to my peer bloggers, I’m probably categorized as a spendthrift. I have even been accused of leading a rather lavish lifestyle, which I think is complete bollocks.

Relative to my income I am “frugal” but that is not because I have crafted some master plan to live on as little money as possible. Instead, I have chosen to take the road less traveled to increase our household’s top line (income) to a point where saving 50% happens automatically, rather than obsessing over every little expense.

I think that extreme frugality is for the birds!

For The Birds

As I wrote in this post, there is a natural floor when it comes to cutting expenses, but when it comes to income there is no ceiling (the sky is the limit). I know extreme frugality works for some, but for most, I believe it tends to lead many to acquire a scarcity mindset. I personally prefer to live in a state of ABUNDANCE.

I want to have my cake and eat it too!

I tried extreme frugality and found that it wasn’t for me. I wasn’t fun to be around. I avoided having fun at all costs (see what I just did there 😉 ). I suppressed my desire for the finer things in life. It wasn’t working for me! So, I decided to adopt a new approach, and that is when I channeled my inner Einstein and came up with the Theory of Relative Frugality. Who knows, maybe one day I will win a Nobel prize for the 60 seconds it took me to fine tune the theory.

Here is a copy of my original work (completed in Microsoft Paint):

Relative Frugality

Relative Frugality Is The Shiznit!


I realized that frugality was relative to the amount of income that you brought home. And if you’re like me and enjoy the finer (more expensive) things in life, all you have to do is increase your income to a point where you effortlessly reach your savings goal (in my case it’s 50%), while also living your desired lifestyle. I also realized that by focusing on the income side of the equation that any time I wanted to live a bigger lifestyle, all I had to do was increase my income. So, relative frugality permits you (and me) a free pass to lifestyle inflation, until you reach that point where increased spending no longer brings you joy.

Why I Prefer Relative Frugality to Extreme Frugality

(1) Food, dining, and booze – Not only do Mr. and Mrs. GYFG like to eat out, we like to eat out often and sometimes at very pricey restaurants. Don’t get me wrong – we love to cook at home, and we love to cook for guests in our home. However, it is not uncommon for us to spend $2,200+ on food and dining in any given month. That’s a lot of money to spend to feed two people. Ok, it’s not always for two people as we also enjoy picking up the tab every once in a while. Here are a few recent examples:

(a) The other night we went to our favorite restaurant in Laguna Beach and spent $420 on dinner for two. But it was more than dinner, it was a three hour experience. We sat at the Chef’s counter and enjoyed a prix fixe five course meal and each course was paired with excellent wine.

(b) Mrs. GYFG recently had a birthday in September, so we took her to a fancy restaurant and the final bill was just shy of $1,500 for nine people. We did get a 42oz Wagyu beef ribeye for the table, which was the best steak any of us had ever had (and was $425 just for the steak).

(c) We get quarterly shipments of wine (no one should ever risk going thirsty on a Friday night).

(2) Our ability to give – When you focus on the income side of the equation it is much easier finding that balance between living well and giving well, and we want to do both.

(a) We sponsor a kid in Africa so that he has a roof over his head, food in his belly, and is able to get an education.

(b) My wife is part of an organization called the Impact Club. Every quarter they get together and choose one organization to donate to and then everyone in a room writes a check. This typically results in $10,000 to $20,000 being sent to a single organization every quarter.

(c) When a friend needed a short-term loan, we had more than enough to provide it, and we didn’t charge him a dime of interest.

(d) When my brother totaled his car and couldn’t get a new one on his own, I was more than happy to help by co-signing for him. Because we earn far more than we spend, I knew that if for some reason I got stuck making the payment, it would have no impact on our 50% savings goal.

(e) When my other brother found himself at his lowest point in life, we didn’t hesitate to invest $33,000 to get him the help he needed to save his life.

(3) The ability to spend without much deliberation – This list could get very long, but I will cut to the chase. At the end of the day, the practice of relative frugality allows us to spend without worry. We don’t step over dollar bills to pick up pennies.

At the end of the day, I’m not here to tell you how to live your life. Neither will I judge you for how you ultimately choose to do that. All I want to do is present a perspective and philosophy that works well for us and it might work well for you.

The end goal whether you choose to practice extreme frugality or relative frugality is to find that sweet spot that allows you to live well and give well (whatever that means to you).

– Gen Y Finance Guy

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Comments 12

  1. I love this! I think relative frugality is something that nearly everyone can accomplish. I do think we can learn lessons from people who practice extreme frugality. After all, Mr. Money Mustache whipped me into shape with his extremity. I think that’s what inspired me to find what works in my own life, and ignoring any “get rid of your car and live in a A/C-free yurt” advice.

    It’s all about living on your own terms, and living well. Learning how to NOT blow all my money on useless crap was one of the bets gifts I’ve given myself.

  2. I much enjoyed this too (but $2000+ on food?!). You might just get that nobel prize. That means once my debt is paid off I would be great with my current salary to practice Relative Frugality. Something to look forward too. 🙂

  3. I agree that it’s all relative. If you have the income (and the savings & investing rates) to get you where you want to go financially, then I think you are entitled to enjoy your discretionary income. I’ve struggled through one or two periods of self-inflicted extreme frugality and now I actually have to remind myself to live a little!

  4. Very nice piece! Especially enjoy the judicious use of ‘bollocks’ and ‘shiznit’, both walk right up to the ‘edge’ and yet both meet network broadcast Standards & Practices.:-)

    Also, am in awe of the Einstein-inspired ‘Theory of Relative Frugality.’ Myself, I have channeled my inner-Freud, and come up with a ‘Theory of Passive-Aggressive Investing.’ I keep promising to explain it, but never do.

  5. Completely agree with all of this and it was a fun read too! I’ve got a pretty good brain (humble I know), I look forward to using it daily to amass the greatest income I can and to enjoy my life to the fullest. I personally would feel as though I’m wasting my natural born gifts if I were to simply work harder to not spend money rather than earn it. No money isn’t everything, but it sure does go a very long way in this world. Like you said, none of this is one size fits all by any means, this is just how I feel on the subject.

  6. LOL – interesting way of looking at things! I agree with your thoughts on “extreme frugality”, It’s not for me as well. I try to live within a budget and if need be, I adjust it as required along the way. In summary, I find that increasing my income (and as such my ability to save) is the strategy that works best for me.

  7. I can agree that extreme frugality can be not only stressful, but leave you with less than you wanted. The key, as you mentioned, is to save smartly. To accomplish that growth strategy that you want, using finance apps can help you achieve your goal. Practicing relative frugality seems like the best way to go.

  8. Using a system of relative frugality is a lot more realistic than using a system of extreme frugality. Business owners that are taking steps to a relatively frugal system are utilizing a smart growth strategy. Everyone has a different sweet spot in the realm of spending.

  9. Pingback: Saving 50% of After-Tax Income - The Rule That Now Governs Our Financial Life - Gen Y Finance Guy

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