Monday, 14 November 2011

Take less than you can get

Defending poverty as virtue lacks credibility unless the preacher himself is destitute, healthy, and happy. That phenomenon is so rare that few men attempt to imitate it. Monks living in monasteries in Italy or France do live in relative poverty, although their situation cannot be compared to the extreme indigence of the population in some African countries.

While poverty seems an unattractive lifestyle to most individuals, frugality is increasingly gaining ground. The idea of making more with less resources appeals to those concerned with ethical questions. The personal freedom that ensues from thoughtful consumption possesses the charms of a sound philosophy and the practicality of immediate benefits.

It is unfortunate that the issue of cost reduction does not cross the mind of most people when times are good. Frugality, as a lifestyle choice, generates its greatest advantages precisely during favourable periods when saving seems superfluous, worry unnecessary, and modesty redundant.

Indeed, one should ask, what is the point of being frugal? Why should you waste any opportunity to enjoy yourself to the maximum extent? A man only lives once. Does he not owe to himself to have as much fun as he can?

Should you not devote all your resources to pleasurable activities? As long as you can afford it, why should you not savour your days travelling around the world and staying at the best hotels? What is the purpose of making money if you cannot spend it on doing what you love?

Those questions are, to an important extent, unfair and unrealistic. A man who complains about not being able to exhaust his possibilities lacks proper perspective. Every choice implies renunciation to an infinite number of alternatives. Every expenditure consumes resources that can be employed otherwise.

The cult of uncompromising and immediate pleasure rests on three mistaken beliefs. If you choose to think only short-term, these three convictions possess irresistible appeal.

However, if you expand your range of vision, you will easily discover the dark side of an easy life. Watch out, since the following three ideas may wipe out your career, health, and material resources:
  • The delusion of stability: the belief that the future will be similar to the present and that little change is to be expected.
  • The delusion of invulnerability: the conviction that a man can cover all his risks through insurance and social security.
  • The delusion of moral neutrality: the idea that all lifestyle choices are fundamentally equal, that there are no superior or inferior ethical values, and that anything you may decide is perfectly fine.
Those three deceptions have induced the exaggerated consumption that is burying thousands of men under heavy debts that could have easily been avoided. Those dangerous ideas permeate our culture and dominate our conversations. The time has come to face them with courage and assert the truth.

[1] The delusion of stability: If you still have some decades to live, chances are that your complete existence will go through a major upheaval. Such disruption might be of a nature that you cannot imagine at present. New technology may render your job obsolete. Global competition could devalue your education. A major economic shift might put you out of business.

Reducing your present cost of living can be achieved in many ways, for example, by spending less money on food, lodging, transportation, energy, travel, entertainment, or insurance. The resulting subtraction from your present enjoyment will be more than compensated by gains in long-term security. Commit yourself to save regularly in order to create a margin of safety. Accumulated resources will allow you to face calmly any disaster that the future may bring.

A man who feels confident and serene makes more of his days than an anxious short-term thinker. Too many are those who live under the threat of a mounting pile of debt. They are paying a high price for giving away their independence in exchange for momentary pleasure.

Do not fall prey to the delusion of stability. Reduce your current cost of living and create a financial reserve for difficult times because, sooner or later, they will come. If you are undecided about what expenditures to cut, make a linear reduction of 5% in all your budgets and take it from there.

[2] The delusion of invulnerability: no matter how good your health insurance is, its coverage won't be universal. Similarly, your protection in the field of liability indemnity might be less than you think. What would happen if, due to some unfortunate event, you were to lose your protection altogether? Do you have a back-up plan?

Overspending is frequently caused by overconfidence. People feel sure that nothing bad can happen to them. They overestimate their strengths and underestimate their risks. They place their future at jeopardy in order to enjoy transient advantages that will be quickly forgotten.

You will be better off if you reduce your current costs. Aim at creating an emergency fund to which you can resort in times of need. Even a modest financial reserve can do wonders to alleviate misfortune or adversity. Discard the delusion of invulnerability and assess your risks objectively. Make the commitment to save at least 5% of your net income every month.

[3] The delusion of moral neutrality: do you believe that all ethical decisions are equally valid? Are individuals who save to buy a home morally equivalent to those who gamble away their salary? Would you take a loan to finance your medical studies in the same spirit as you would borrow cash to purchase a recreational boat?

Rational values align decisions with reality, leading man to certainty and prosperity. In contrast, relativism wears man down by trying to justify arbitrary choices. Happiness needs to be sustained by facts, not by excuses. Personal well-being cannot be maintained by means of inconsistent behaviour.

Frugality goes hand in hand with logic and realism. You will enjoy life more if you reduce your living costs and create financial safety for yourself. Pick up pen and paper and make a list of ten items of expenditure that you can cut without any negative impact on your lifestyle.

Make more with less by adopting an entrepreneurial approach to life. If you are committed to search for better alternatives, you will find them. If you remain alert to better opportunities, you will seize them. Give priority to safety over short-term pleasure. Serenity and self-confidence will be the result. Reduce your costs and enjoy life more.


[Image by mavur under Creative Commons Attribution License. See the license terms under]