Is frugality only important for poor people?

[Sherlock]

Seems to me like after you achieve a certain income level there's no point in being frugal.

If you're making 20k a year then clipping coupons can make a big difference. Savings 50 cents here and there can add up to a few hundred dollars a year which will be noticeable. But if you make 100k a year, is having a few hundred dollars less going to make any noticeable difference in your life?

Personally I make an attempt to be frugal (cheap even) because I don't make that much money and I have a fairly low net worth. But at my current savings rate, by 50 I should be a millionaire and have passive income of over 100k/yr, and at that point I doubt I'll be frugal.

Of course by not being frugal what I mean is things like not clipping coupons, not waiting for a sale to buy something, not avoiding eating out, etc. I'm not talking about things like buying a new Mercedes every year or a yacht.

At what income and/or net worth do you no longer need to worry about being frugal? Or should you clip coupons even if you're a billionaire?

What are people's thoughts on this?

[Just a Guy]

The easiest way to make a million dollars is to start with 10 million dollars...

While it's true that you may not clip coupons when you are rich, it doesn't mean you aren't frugal. Some things become a tradeoff between time/money/lifestyle. The time it takes to find a coupon, clip it and buy the product may not be worth it once you have a higher income. It was once calculated that it Bill Gates made more money in the time it would take to pick up a hundred dollar bill than the bill itself. In that case though, he made an extra $100 in that time...as long as he wan't putting together a 100 billion dollar deal at the time, then he'd probably pick it up...if picking it up delayed him from submitting a time sensitive document for the deal, he'd probably ignore it.

I think the level of frugallity will change, just like the level of spending changes in your life. When you were a kid, $5 was a lot of money, as a teen a $100, as an Adult you begin to wish you had $5 again...

What you haggle over are larger ticket items, mortgage points, closing prices, etc. In the time some people use to save 50 cents, you save 1000's. You're still frugal, just at a different level.

"I've been rich and I've been poor. Believe me, honey, rich is better." - Sophie Tucker

[Dmoney]

The funny thing is that it's possible to survive on $30K/year, yet people are struggling on $100K+/year.
Frugality is important to anyone who is spending more than they are earning.

Be it the family earning $40K/year and spending $45K, or the family earning $150K/year and spending $155K, both need to be more frugal.

Guy earning $200K/year doesn't need to be as frugal as the guy making $30K/year, but it's still easy to run through $200K/year. There's always going to be someone earning more, so until you can lose the "keeping up with the Jones" mentalily, your finances will suffer.

[Spidey]

To me being frugal means getting the maximum enjoyment out of available dollars. So being frugal should never stop regardless of income but how one practices frugality should change as income increases. Clipping coupons only makes sense if the value it provides in enhanced future spending ability and enjoyment is worthy of the time sacrificed. This would not be the case for a billionaire.

[brad]

Waste is waste, there's no point in wasting money regardless of how wealthy you are. To me, frugality is about avoiding waste; it's about using your money wisely.

[Causalien]

I think most of us forget why we were frugal. It is because the money saved up can in turn earn money as investments.

To start off with nothing, you have to exchange your time for money so that the money can roll into more money.
As an example. Once your money rolls more than $10 per hour without you doing anything, it is an easy decision (and more efficient) to overlook/ignore anything where the difference is around $10.

So when you get richer, you exchange money for time.

If you look at money at time as two different assets. Time is more valuable as you age as it becomes rarer while money is more valuable at the beginning due to compounding.

[dubmac]

As the only wage earner in our family (2 adults, 2 kids), frugality has more to do with putting more away to derive an income from investments. I see it as a way to increase investment income in my wife's investment acount to maximize to get as much as possible before that income is taxed (10,300 I think).

What's more evident however, is the fact that both of our parents were, like many in southern Ontario - GTA area in the 1960's, quite frugal to begin with. Frugaility is perhaps something that one inherits. But there is a difference between being frugal and being cheap. I make about 88K per year, bought a small place in an expensive city (Vancouver), and hope to move to a larger house/property within 4-5 years. I think I'll always be frugal - I see it as a kind of competition, to get the best value for the lowest cost.

[OhGreatGuru]

If I may make some generalizations:
Most poor people are frugal because they have to be;
Some rich people are frugal because they want to become richer, or at least not become poorer;
Of those in between, the smart ones are frugal because they don't want to become like their debt-ridden cohorts.

[thebomb]

If I may make some generalizations:
Most poor people are frugal because they have to be;
Some rich people are frugal because they want to become richer, or at least not become poorer;
Of those in between, the smart ones are frugal because they don't want to become like their debt-ridden cohorts.

Yup- I like to think I am the one in between. I internally struggle regularily to avoid keeping up with the Joneses. I am winning mind you but I never take my eye off the ball. I can confidantly say that I am the only one of my friends with a mortgage that will be paid off before I am 40 and no credit card debt. But hey- they go on alot of fancy vacations- so they must be happy.

I admit I have my vices (expensive cheese as one) but they are hardly budget busting. Otherwise I think I am frugal because I mostly want to be.

[PMREdmonton]

I certainly don't clip coupons now. But then again, I do use the odd Groupon which is kind of like a digital coupon. Maybe I use coupons more now then.

I think that I still have some frugality about me in that I don't like to buy things we don't need, I don't like to buy things that are needlessly expensive for what they do (God, I hate my wife's iphone plan but that was her money and her decision) and I still try to buy things on sale or wait for them to go on sale. I have also realized there are lots of things that I have bought that I could just as easily have rented instead and I try to do that more now with books and movies.

I will say that I don't worry much about say losing $100 on something or if something break that costs a couple of hundred dollars - that is probably the most enjoyable thing about having some savings now and a higher salary. I still worry some about my investments but not the same way when I just graduated from residency and have $195K on my $200K LOC and no ability to get anymore credit at all - maxed out basically. It was tight for a month but then the cashflow started to gush and breathing space was achieved.