It’s amazing how few people even consider frugality as a financial strategy until their backs are against the wall and they have no choice. From Charles Hugh Smith at oftwominds.com:
Speaking of lean years, it took the NASDAQ stock market index almost 17 years to recover its March 2000 high of 5,048.
The core skill going forward–frugality–is largely a forgotten skillset. So let’s examine frugality.
Conspicuous waste is part and parcel of conspicuous consumption, which is a signifier of wealth and status. The more one wastes, the higher the status, as waste implies “I’m so rich, I can waste as much as I want.”
This reach for status by consuming (and wasting) more is the engine of the waste is growth Landfill Economy.
In good times, when jobs, stock market/real estate gains and credit are all plentiful, even those with average income earn enough to waste money, food, etc. Even though we complain about the high cost of food now, there is little evidence that we’re no longer wasting up to 40% of the food we buy / order out.
In a deep, prolonged recession, jobs, capital gains and credit become scarce, and so we have less to spend, and so frugality–eliminating waste and superfluous spending–is either incentivized or forced by necessity: forced frugality. TINA is the first source of frugality: there is no alternative.
(So you wanna be a writer? First take a vow of extreme poverty / frugality.)
Frugality has another source: the desire to save income to invest in long-term goals via careful planning. It’s well established that the difference between “rich” and “poor” in middle income brackets is deferred gratification, the ability to defer consumption today (instant gratification) to serve long-range goals, such as buying a house or saving for a child’s education.
