A couple years ago I was in need of an audiobook to listen to during a long drive, so I picked up聽Money Secrets of the Amish: Finding True Abundance in Simplicity, Sharing, and Saving
.
To say the least, it was an interesting “read.”
In case you were thinking about reading this book, I’ll save you the time and give a quick summary.
Here’s why the book says the Amish do well financially:
- They are extremely frugal at all times.
- Not kinda frugal. Not somewhat frugal. EXTREMELY frugal.
- Not frugal now and then. Not frugal most of the time. Frugal AT ALL TIMES.
The book says that their general mantra is:
Use it up, wear it out, make do or do without.
Mostly Good
This is generally a good philosophy IMO and a key part of almost any successful financial plan. After all, spending less than you earn is a key step in growing your net worth 聽while over-spending is one of the worst money mistakes a person can make. But the Amish make this otherwise commendable practice unpleasing by going a bit overboard (assuming the book is accurate, which I’m not sure it is.)
How? They are painfully frugal. I can’t recall the exact examples the author used, but I do know that they were so bad that I could only listen to one of the five CDs before I gave up. (They didn’t re-use toilet paper, but some of the tips were in a similar category — the kind where you say, “No matter how bad it gets, I’m not doing that.”)
It probably comes as no surprise to you that I consider myself on the frugal side of the spend/save scale. But these tips even gave me pause. Add to this that the Amish weren’t frugal in just one area of their lives, but they were frugal in every area of spending. Painfully frugal in every area of life. It was brutal to listen to.
But then I wondered, why am I having this reaction? I believe in frugality, right? I believe in spending less than you earn, right? Isn’t that simply what they are doing?
Yes and no. They are certainly frugal and obviously are spending less than they earn, but I thought to myself that they weren’t practicing “my kind” of frugality.
This, of course, made me stop and wonder — are there different kinds of frugality? There must be if the Amish were frugal and so was I and yet I didn’t like their degree of frugality. This obviously led to the question, “what is ‘my kind’ of frugality?”
My Kind of Frugality
After thinking about it a bit, I came up with what I think is an accurate description of my kind of frugality. I call it “moderate and selective frugality.”
Here’s what I mean by that:
- Moderate means that I like to be frugal to a point, but I won’t go so far as to buy something cheap simply because it’s the best price. Instead I look for value — considering both cost and benefit. This means that sometimes I pay a higher price but I then get something worth more too. The Amish seem to go for “cheapest” almost no matter what. They equate “lowest price” with “best.” (I’m not sure this is the case or is even what the author was saying they do, but it sure seemed that way to me.)
- Selective means that I am not frugal in every single area of my life. While I am “generally” frugal, I make purchases that most people would consider were not frugal. Some examples: new cars, cruises, and cable TV. That said, even when I purchase items like these I work on getting them as inexpensively as possible.
In addition, there’s another area where I differ from the Amish: I put time and effort into growing my income.
This is not to say that Amish ignore this. In fact, many Amish have great businesses (I grew up in Iowa where nearby Amish families had all sorts of successful companies.) But they don’t focus on the income side of wealth creation as much as I do and, on average, they don’t have the potential of earning as much as I do. As a result I end up with more leeway and options when it comes to spending. In short, I can afford to splurge a bit here and there and still have a good cash flow to fund my savings and investments.
To summarize, my frugality is based on:
- Getting the best product/service for the price (i.e. shopping for value instead of just price)
- Spending on some things I enjoy that may or may not make pure economic sense. After all, we have to enjoy life, right? We just can’t be over-the-top spenders on everything — we need to be selective — or we’ll spend way too much.
- Having as large a gap as possible between earning and spending so I have more freedom to spend if I choose to.
Thinking all of this through was actually an interesting process for me. It revealed some things about my spending philosophy that I hadn’t consciously considered and helped me connect the dots in a way I hadn’t previously. So for that reason, I “liked” the book. It’s just those bare-bones spending practices I wasn’t fond of. 馃檪
The notion of what is too frugal or too wasteful is going to be relative to the audience’s experience. This is partially because comfort is adaptive and partially because skill can substitute for spending. Jacob of ERE says it well:
“I think relative perceptions follow the Wheaton scale in that anyone who spends 25% less than their subjective peer group will consider themselves lean, whereas they would probably consider anyone who spends 50% less to be too extreme; 75% less is just crazy. Whereas someone who spends 25% more would be thought of as wasteful and 50% would just be reckless and out of control.”
I used to think I wanted to be Amish, but the fact is, I like a little luxury (even if it’s just basic like home Internet service or a high-powered blender).
Agree…Couldn’t live without my Vitamix.
There is a difference in being frugal and being cheap and knowing what you are able to do. Changing your windshield wipers on your car yourself instead of having the quick oil change place do it is furgal. You can select the quality yourself and I usually go with the better or best if it is on sale and it is still cheaper than the quality you would get and possibly a lesser cost.
Doing your taxes yourself can be easy or it can be hard. A frugal person could do there own taxes but if it is too complex then maybe you should not so don’t be cheap.
I find that there are areas where I am frugal in life and where I am not and I am OK with me. I grew up with a father who grew up in the depression and he always did it the cheapest way and sometimes it ended up costing him more in the long run if he had done it right the first time instead of the cheapest way.
I think the average reader of your blog is more sophisticated than this post. 馃檪
I was excited, but this post left me wanting. I want to hear how you have applied these principles in a specific situation in your life with lots of exact details and calculations. Especially for something hard to buy like a kitchen table or car tires where the functional difference between the most and least expensive is very narrow, but the difference in price is extreme.
Ha! Maybe…
I will discuss situations in future posts, but maybe not in the detail you’ll like. I can’t get too excited about a post on buying one kitchen table versus another. And I certainly won’t post on things like “making your own toothpaste to save money” like some blogs do.
If you want a post on tires, someone has done that already:
http://www.freemoneyfinance.com/2006/11/how_i_bought_ne.html
I will address the BIG costs (homes, cars, etc.) but won’t get into smaller purchases more than what I have above. Why? Two reasons:
1) It doesn’t interest me
2) as long as the purchase is handled as noted in this post, it really won’t matter much to the reader’s net worth.
Low interest + low impact = not worth anyone’s time
In reality, I used to spend much more time and effort on the cost side of the equation. Now I focus more on the income side (without ignoring costs, of course). It’s been a change that has happened slightly over many years as my net worth has climbed and time has become more valuable than money.
Now that’s a topic (time/money trade-offs) that I just might take up…
Cole – I agree with you. I was looking for a little more “meat” here. We all know we should spend less and save more, but was looking for more examples.
https://esimoney.com/52-best-ways-save-money-part-1/
I grew up with frugal parents on a dairy farm and they were depression babies. They made soap, canned fruit and vegetables, did all the repairs such as plumbing, electrical, woodworking, made furniture, welded broken metal farm machinery, repaired car brakes with new parts, replaced tires, etc, But my mom always said “only rich people can afford cheap things”, because cheap items has to be replaced or don’t work as well. Buy good quality clothes, shoes, tools, food, etc,
Frugality is based upon what amount of money you have saved. We don’t fly first class or spend $400 a night on hotels, but we will spend a ton on nice restaurants. We have had to decide to spend money on things that we think are more fun. Suites on a cruise ship or charity events that are unique. If I only had $250K in retirement, we would have to be frugal.
I amend this to say we are flying Business Class to South Africa in August 2020. One is paid, one is on Points/Miles. $4,400 flight. Well worth it for a 36 hour journey.
This really resonated with me – I am moderate and selectively frugal as well!
There are things I’m willing to spend on (after I research them to get a good deal and find the product that best suits my needs) and things I’m not like, dinner out 2-3 times a week + drinks and ubers. I’m planning my wedding that will cost $3,000-4,000 ALL IN. My fiance and I are not willing to go into debt to start our married life and have a lot of financial goals – paying $20,000-30,000 for one day or a weekend celebration does not support those goals so we’re not giving in to societal pressure. I found my dress on ASOS for <$250 and I couldn't be happier with it!! On the other hand, I love to cook and try new recipes, so it's worth it to me to buy fresh organic produce and a more expensive specialty ingredient if needed. It also helps that cooking from home is much less expensive and I utilize store sales – so we're definitely still saving even if we're buying more expensive items at the store than frozen meals.
It works for us, but I know other's would feel differently; that's why the 'selective' part of the title is so important! Everyone can determine what it means for them.