Wednesday, May 26, 2010

What leads to frugality?

I have heard this so many times that being rich people generally are miser and very conscious about spending money. And I have also heard lots of people commenting on someone's frugality like, "he was poor when growing up, he is a compulsive frugal now even if he can afford it."

The latest comment really provoked my thoughts if that is true. Looking around me I don't actually agree with any such characterization. I have seen all kind of frugal people, those who were always rich, those who were poor once, and those who were middle class once. I have actually seen lots of frugal people in all the above categories. (As a side note: I guess that’s why people say Indians are Miser, Indians are actually very very frugal, I dare not say miser. P.S. I am an Indian Too.)

Why Rich can be Frugal?
I have already written a post about my thoughts on this. Read it here.

Why "one-time-poor" are frugal?
When you are poor you just have to struggle more then any one else. Even necessities are tough to get in such circumstances. Hence, they need to watch every penny they spend, because even a penny waste might mean that you won't be able to pay some bill.

When they get any extra money, they tend to save it, so that it can be used to pay some future bill. In the process, after working very hard and saving all the extra bucks rather then spending them on wants, they never realize that they are above the threshold now. They never realize that they can actually now pay all the bills even if they splurge some part of their money. They don't know how to put a full stop at the attitude of save-for-future. It's just like a law of Newton, A body in motion will always be in motion until some external force is applied. In their case that external force is just not there.

Why "middle-class" people can be frugal?
I think for two primary reasons, one they are scared that if they won't they will go to poor category and second they want to be in first category of being rich. I am now in middle class and both these reasons are personal. I am scared of first and my DH thinks latter way.

What do you think? Any special people are frugal or it is more to do with an individual rather then class you belong to?

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