In life most things simply aren’t black and white. Still, people like to attach labels to others – labels that are often absolutes with no middle ground.
In the case of personal finance, the label that people commonly toss around is the notion of being frugal or cheap.
If someone is frugal though, do they constantly maintain that mindset? Some people might be disciplined enough to keep it up, but I think most people still occasionally splurge.
The difference with frugal people is that they usually recognize the splurging and try to compensate. Essentially they trigger the phenomenon of guilty induced frugality.
Here are some situations where this phenomenon is all too common:
So you’ve committed to some exotic vacation, traveled halfway around the world and then you realize you’re just not comfortable with how much money you’re spending.
The less frugal would just shrug their shoulders and carry on with no regard to how much they’re spending. They are on vacation and it’s time to have a good time after all. They can just worry about the cost afterwards.
Frugal people tend to have a much tougher time ignoring the costs that are rapidly piling up. Then their frugality really gets put to the test. Do they cut back to eating at less expensive restaurants for the rest of the trip? Do they modify their plans to limit additional spending? Or do they just vow to go into hardcore frugal mode when they get home?
Now what do you do when you go out to a restaurant only to realize that it’s going to cost more than you expected?
If you’re not too careful with your money, you wouldn’t think twice about going for the lobster, ordering an appetizer and maybe even dessert. Go big or go home, right?
Then there’s the people who suddenly aren’t feeling too hungry. They decide if they’re spending that much on a meal, it better stretch out to leftovers too. Forget about having some drinks or even a $3 soda. Nope, they’re going to stick to water. It’s likely going to be a little while before they dine out again.
Car Buyer’s Remorse
This is probably one situation that most truly frugal people wouldn’t get themselves into. With a purchase as big as a car, they’re bound to take the time to find a vehicle that easily fits into their budget. In my case, my financial situation changed shortly after getting my car and my frugal side started to take over.
So what’s a guy or girl to do after getting into that mess? The Dave Ramsey faithful would say it’s as simple as selling the car and downgrading. Who’s really willing to take that kind of hit and settle for a less desirable car? Instead it’s more tempting to make other sacrifices to be able to afford that nice car.
To balance it out we drive that car much longer than we may have originally anticipated. Potential upgrades fall to the wayside. If the car is particularly expensive, it carries over to cutting back on things like vacations, dining out, housing and more.
Personally I’ve experienced all of these situations. Initially the situation might stress you out a bit, but once you find ways to balance it out, it isn’t so bad. You need to decide if that splurge is really going to be worth it or if you can take some measures to ease the pressure on your wallet. Ideally you also realize the need to avoid the situations that make you feel guilty before you get committed.
How many of you have ended up in these situations? Is there anywhere else that lead you to guilt induced frugality?
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