Is it good or bad to be a Penny pincher?
“Wealth consists not in having great possessions, but in having few wants.”
On certain occasions, frugality is considered a negative characteristic because of the extent that some will go not spend money. But is there more to why some people are more frugal than others?
Sometimes, an individual’s circumstances or events that happen to us and society can impact our relationship with money. For instance, covid-19 has affected the UK’s spending habits, with people spending less during the pandemic because of the extra financial constraints caused by the pandemic. According to the Office for Statistics (ONS), in the UK during the COVID-19 pandemic, there was a decrease in spending by households with an average of £109.10 (or 19%) a week. Throughout the year to March 2021, households spent less on supplies and services when restrictions were in place to manage the spread of coronavirus. During the peak of the lockdown of Spring 2020, figures showed that more than one-fifth of typical household spending was prevented.
Furthermore, people from younger age groups reported more financial constraints than those of older age groups, with (9%) of under 35-year-olds experiencing hardship on paying bills a significant burden. Labour market figures have revealed that younger groups were increasingly more likely to be laid off during financial year-end, with 16–24-year-olds most likely to be affected by a decrease in employment rate than 25 and over. Situations such as these can increase a person’s frugality as they try to avoid being unprepared for the more difficult times.
However, during the period of (April to June 2021), there was a sharper increase in employment rates for young people; this may be because lockdown restrictions were lifting during this time, which meant that the economy could be restarted, meaning that young people could either return from furlough or seek new employment.
In addition, individuals can also be frugal because they are bought up in a penny-pinching household and become accustomed to this way of living. For instance, Jackie Lam, an author, wrote an article on growing up in a frugal environment as her mum was a single parent who was quite economical to the point of wearing hand me downs from her cousins. This contributed to her growing up to be a penny pincher herself.
Moreover, others save because they want to enter early retirement in their 40s, such as Alvar Damen, 26, who, according to the Guardian, is saving £1,500 a month for his retirement and would like to save even more. His objective is to earn as much as he can, spend the least amount possible, and save the highest amount from being financially free at a younger age. The current retirement age in the UK is 66 for both men and women.
Furthermore, Intellisaving also asked individuals about their attitudes towards money and whether they felt they were frugal or not. Ricardo Garcia, a computer technician, says, “I am frugal with money because I am thinking about the future, like losing my job and being unable to work for reasons such as falling ill. Therefore, I save as much as possible so that if I am ever unable to work, I will have the savings that I saved until that point to see me through the financial hardships”. My frugality means that I avoid going on holiday going out for excursions”. Mr Garcia sometimes sacrifices pampering himself to prepare for his future.
We also asked Mr Garcia whether there was something in his upbringing or an event in his life that caused him to be frugal with money. He responded with “I would say that I am frugal because I started working at a young age, so I understand the value of money because I could not depend on my parents and knew I could not spend too much as I needed the money for expenses and needed to ensure that I had enough to cover my living costs”. This shows the connection between past experiences and frugality; as he learnt to be self-reliant at a young age, he learnt to be frugal to keep afloat and has continued with this money pinching lifestyle.
IntelliSaving is an app for saving that supports multiple saving and interest-bearing accounts. This smart saving account application is the best app for finance management as it enables users to access and compare numerous saving products that banks/financial institutes currently have, such as Cash ISA, to see which accounts are the best value for money. IntelliSaving also has other features, such as a watchlist to add accounts that have appealed to you during your comparison of products.
In reflection, being frugal with money is not always bad because sometimes circumstances that have presented themselves in an individual’s life can contribute to their decisions regarding money. However, frugality can sometimes become obsessive to the point of not even spending money on interests for fear of spending and saving on every single thing in your life.
Nevertheless, saving is essential, and with a decent saving strategy of saving before spending, such as setting automatic monthly transfers to your saving account on payday, will enable most people to save for the future while also being able to spend some of it on your interests such as taking part in dance classes and attending museums.
Remember to save with the future in mind and enjoy the fruits of your labour and also because you never know if you will still be here tomorrow.