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Everyday Frugality vs Big Ticket Savings

By JLP | April 22, 2008

Some people are really good at every-day frugality. They minimize gas consumption, turn off electronics when they aren’t in use, spend shockingly little at the grocery store. They can go days without spending a dime, eschew everyday luxuries like Starbucks, and have their monthly budgets down to the bare bones.

My dad is like this. It pains him to spend $2 on a coffee – or water. He reuses everything. He comparison shops gas stations. He buys even grocery meats on sale. And may God be with you if you leave the front door open for more than 5 seconds at our house.

But on the other hand he has no problem spending money on big ticket items when he feels the desire. For instance, he bought a grand piano for his and my mom’s anniversary when I was little. Then a luxury auto when I was in high school (during what was surely a mid-life crisis). In retrospect I realize he was willing to splurge on family vacations too, making sure we saw places like Disney World and New York (even though he still never allowed us to buy bottled water on the road).

My mother, on the other hand, is uncomfortable with big expensive purchases. She hesitates to replace old cars, plans vacations based on what flights are cheapest, and rarely buys any major new piece of furniture or appliance. However, she can spend $150 at the grocery store every week (for 2 people!). She gets her nails done twice a month. She has no idea what the price of gas is and fills up her SUV indiscriminately.

Can you imagine how these two people have managed to stay married for the last 20+ years? Their financial habits make each other crazy, and as a team they don’t balance each other – rather they end up overspending as a couple in every area, big and small. But imagine they each had stayed single. Who would have come out ahead, theoretically speaking?

Is it more important to be vigilant with our money on a daily, weekly, and monthly basis; or do the big savings really come when you scale back on big purchases like a new car?
The answer will vary greatly based on the person, and of course it’s best to do both. But few people are willing to sacrificing big AND small for decades on end.

Which method do you prefer?

More from Meg at The World of Wealth

Topics: Uncategorized | 10 Comments »


10 Responses to “Everyday Frugality vs Big Ticket Savings”

  1. Will Says:
    April 22nd, 2008 at 11:55 am

    I’m definitely not the type that saves on an every day basis. Heck whenever I carry cash, I try to carry only $50 bills and up, otherwise the money just seems to disappear.

    On the other hand, when buying a big-ticket item, I will do my research and only purchase what is going to give me the best bang for my buck.

    I wish I could save more on little things, though… Those savings do add up!

  2. Moneymonk Says:
    April 22nd, 2008 at 12:06 pm

    I would say do both it won’t hurt. However, I am leaning more to the saving on big purchases.

    All my co workers have a car note and I find them skimpping on lunch sometimes. (they claim they are saving money)

    I rather eat lunch as I wish and have an average car

  3. sam Says:
    April 22nd, 2008 at 12:14 pm

    I am more like your father. I take my lunch to work to save money so I can lease a nicer car. I buy cheap clothing but spend a lot on electronics. I guess it is just a matter of what your spending priorities are.

  4. Megan Says:
    April 22nd, 2008 at 12:15 pm

    I think I do a little bit of both, though I’m more about being vigilant with the small purchases. I do still like big purchases, but I try to find good deals on them. For example, I’ve been pricing a new computer. I know exactly what I want, now I’m just trying to find the best deal on that particular machine. I’m still going to buy it and not sacrificing quality to save money. I guess for me, it’s about saving the little in order to be able to afford the big, in a way.

  5. Jaynee Says:
    April 22nd, 2008 at 1:16 pm

    I’m also in the middle.

    I like making big purchases, but I’ll get them for the least amoung of money I can (for instance, when I bought brand new living room furniture a couple years ago I got it through a friend of mine in the furniture manufacturing biz for a fraction of the cost I would have paid in a store).

    I only recently became better about my daily spending and always think “do I REALLY need this?” before I plunk down my hard-earned dollars.

    As for vacations, we have a timeshare that was gifted to us by my parents many years ago, and use that exclusively for vacations. The yearly dues are $400, and the week rental is $190. So for $590 we can house our entire family of four for seven days almost anywhere in the world.

    And in the past few months I’ve reduced our grocery bill by 50% by subscribing to Grocery Game and other coupon websites. I now feed our family of for for about $200 a month as opposed to the $400/month we were spending before I started paying more attention.

  6. JLP Says:
    April 22nd, 2008 at 1:30 pm

    I’m in the middle.

    I never buy the most expensive item when I purchase big ticket items but I don’t scrimp either. Before we bought our flat screen TV I did a lot of research and decided on a Samsung LCD, which was far from the cheapest but it also wasn’t the most expensive.

    I’m pretty much like that in all big ticket purchases. If I think the “best” is too expensive, I’ll go for something less expensive.

    I do tend to blow money on little things. I do a lot of the grocery shopping and I’m notorious for bringing home junk. I’ve been trying to do better but you know how that goes.

  7. Miguel Says:
    April 22nd, 2008 at 2:48 pm

    My in-laws are split a lot like your parents (FIL squeezes nickels on the little stuff but loves the big stuff (though he will search like crazy for the best prices); MIL hates the idea of spending on the big stuff, but splurges on the little beany baby type stuff). But, they have balanced each other out and have done pretty well in the savings department and have a very comfortable retirement lifestyle with 2 nice homes, nice cars, and more money in the bank than they really need.

    Wife and I are also different, but complimentary. Neither of us would be considered frugal by the standards of the PF community, but we try to focus our dollars only on the things that make a difference to us. Wife focuses on our everyday blocking and tackling (paying bills, tracking expenses), while I wrangle the big strategic issues (investing, estate planning, insurance, etc.).

    What we have in common is:

    1) We’re also both committed to not being pennywise and pound foolish, something we’ve often observed in some of our more frugal friends & family. For example, most people would be shocked at how much we spend on insurance (life, disability, liability, home, etc.). But, we’re confident that most of those same people are grossly under-insured. They can afford it, but they think its a waste (or they are practicing avoidance). We are the types that would rather do without the new flatscreen TV and know that we are covered in the event of a catastrophe.

    and

    2) We both search for lasting value in anything we purchase. We both hate the idea of spending money on depreciating assets. We both love the idea of putting money to work where it will grow.

    3) We’re both willign to spend for luxury experiences – travel, vacations, relaxation, etc., as long as we feel we’re getting value.

    We’re fortunate to have a great deal of flexibility in how we conduct our finances. We can take the long view.

    Strangely I have found that delayed gratification is much easier when you know you have choices – that the delay is a CHOICE not a NECESSITY.

  8. Yana Says:
    April 22nd, 2008 at 3:06 pm

    What’s most important to me is to keep basic living expenses to a minimum – the recurring ones. You can’t spend yourself rich, and it is the everyday expenses that can send you to the poorhouse. I refuse to pay interest, but had no problem when we purchased a new car for our anniversary outright. That is a justifiable expense, because we have to have a car – however, we have only ONE car, and that is the way we want it. We went without cable TV for years, and recently got it. It pains me to pay for it (basic, $49.99 + fees monthly), but it is also very painful to be unable to have reception on a TV.

  9. Jon Says:
    April 22nd, 2008 at 3:25 pm

    With big ticket purchases its all about making them last and maximizing their value. If you buy a $40,000 car but get 200,000 miles out of it, I’d say its safe to say you still had big ticket savings. Compare this to a $20,000 car but only drive it for 100,000 miles. Sure you can spend alot of money on a big flat panel TV but if you watch it 10 hours a week, 500 hours a year, the price per hour becomes pretty low after a few years. A Star Bucks coffee may only cost $5 but probably only gives you half an hour or so of enjoyment. The small things are the ones that cost you big over time but you get little out of, big things cost you big as well but you are far more likely to get value out of.

  10. No Debt Plan Says:
    April 23rd, 2008 at 11:08 am

    Not to be “that guy”, but what’s wrong with doing a little bit of both?

    We enjoy traveling and will, God willing, be up in NYC this time next year on a week long vacation. But we’re saved up for it.

    We also try to be frugal around the house. I think its the best of both worlds. I think frugality as an attitude is better simply because it develops that habit.

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