Frugality is an endearing element of saving money and living the good life. But interestingly, the recent discourse in personal finance circles has seemingly shifted to embrace spending over saving. What is going on, how did this happen, and why should we care?
Listen to the Podcast
Roots of the Alternative Living Philosophies
As we know it today, the early days of the FIRE movement began in the late aughts and early 2010s. That narrow version of history paints a stereotypical picture of young and frugal white-collar knowledge workers saving and investing aggressively in pursuit of early retirement. But the roots run much deeper.
In 1845, Henry David Thoreau embarked on a two-year experiment with simple living on the shores of Walden Pond. He lived alone in a small cabin he constructed on land owned by Ralph Waldo Emerson. The experience was captured in the literary classic, Walden.
Around 1910, Ralph Borsodi, having lived his first 22 years in Manhattan, began experimenting with a practice of simple living and agrarianism, embracing a back-to-the-land philosophy. So too did Scott Nearing and his wife, Helen Knothe Nearing. The couple fled New York in 1934 for a homesteading life in Vermont, eventually settling in Maine. Borsodi and the Nearings became influential during the burgeoning back-to-the-land movement of the early 1970s. This was a time of rampant consumerism, the Vietnam War, the Watergate scandal, the energy crisis, rising inflation, environmental degradation, and perceived urban deterioration.
These are just a few examples of North American thought leaders who questioned the day’s social, economic, political, and lifestyle norms. These movements were based just as much on what these leaders rejected as much as what they hoped to gain or achieve.
A Return to Frugality
It should be no surprise, then, that following the long economic boom years of the 1990s—when many claimed “the end of history”—so many would once again embrace alternative simple living philosophies in the turbulent times of the new century: the Dot Com crash, 9/11 and the prolonged and entrenched war in the Middle East, and finally, the financial crisis of 2008.
With blogging on the rise, old ideas on the tradeoff between time and money—ala Your Money or Your Life—began to circulate widely on the web, reaching a new generation of early-career readers navigating the charred economic landscape in the aftermath of the Great Recession.
The concept was simple: trading too much time for money is a losing game. And the game is perpetuated by consumeristic ideals at odds with what it takes for human flourishing. To address this dichotomy, readers were encouraged to embrace a spartan existence, cutting spending to the bone and eschewing modern conveniences and luxuries. Saving more meant more freedom. Frugality was once again in vogue.
The raging bull market of the 2010s allowed savers to compound their savings through simple investment strategies, creating hordes of what Thomas Stanley and William Danko describe as The Millionaire Next Door. The internet threw gasoline on the kindling of the financial independence concept. And it garnered a catchy acronym: the FIRE movement, or Financial Independence/Retire Early.
Instead of doubling down on thriftiness and austerity in the face of tough economic times, many began advocating the value of spending more.
The Good Times End But Spending Increases
By the close of the decade, the historic bull market of the 2010s was losing steam. With the arrival of the Covid pandemic in early 2020, global financial markets iced over. Businesses shuttered and supply chains snarled throughout the world, literally overnight in some cases. The stock market sputtered and roared back to life in late 2020 and 2021, but faltered against sluggish economic growth, crushing inflation, and restricted housing supply.
Curiously, as markets faced downward pressure and inflation raged, many FIRE bloggers began taking an unexpected stance. Instead of doubling down on thriftiness and austerity in the face of tough economic times, many began advocating the value of spending more.
How the Narrative on Frugality Changed
Maybe it all began with a 2018 feature by the Wall Street Journal of a young Seattle lawyer saving for early retirement by shopping for brown bananas and borrowing Netflix passwords from friends. After all, it was easy to point the finger at a movement that appeared to embrace deprivation in favor of building wealth. What is the point of having money if it can’t be enjoyed?
Die with Zero and a Challenge to Frugality
Bill Perkins’ book, Die with Zero has likely been most influential in changing the narrative around frugality. Perkins, a likely billionaire, advocates the value of spending freely, early, and often, as opposed to saving miserly for early or traditional retirement in hopes of living then. We are encouraged to put a high value on experiences, relationships, and health. He advises us to never hesitate in spending freely to make these areas of our lives flourish. In essence, we should quit living scarcely and aim to die with zero instead.
It may seem that many are already well-primed to die with zero, but for different reasons. But this book isn’t for those who struggle with saving or building a financial foundation. This book is for those who have money and scrounge away life in the preservation of an insatiable sense of security. Perkins is at his best when he argues that we are too consumed with future rainy days and black swans.
Want to leave something for your kids? Do it now. Want to leave a windfall to charity when you die? Do it now. Want to retire and one day travel the globe? Do it now. And the message is surprisingly effective, even if the book is laden with cringy examples of generous spending more characteristic of the super-rich. One such example is the story of Perkins’ 45th birthday in St. Barts. He booked an entire hotel, paid for all expenses for his friends and family, and hired the singer Natalie Merchant for a private concert.
I told you this book isn’t for everyone.
Many in the FIRE movement have critiqued Perkin’s work, calling into question the recommended financial tactics to die with zero. I agree that his methods are sometimes vague at best and questionable at worst, but it’s unfair to toss out the entire baby with the bath water. After all, he has a point on the scarcity mindset.
The FIRE movement does have a problem with scarcity.
The Problem with Frugality and Scarcity
The FIRE movement does have a problem with scarcity. In my (admittedly anecdotal) interactions with many in this community, I’ve noted a tendency toward saving over spending. By working to optimize their finances, some might be addressing perceived weaknesses, or relative weaknesses within their strengths. Perhaps a larger portfolio isn’t what’s keeping us from being our best selves.
Instead of saving hundreds of thousands of dollars by moving to a place that’s cheap for a reason, maybe it is best to face the discomfort of spending more to live in a place that makes life better.
Maybe it is worth paying that 400% up-charge on a beer to enjoy it at the brewery with friends and the ambiance of a greater community instead of at home. Perkins addresses these dilemmas effectively and convincingly. And we’ve seen the results in recent discourse: Once hard-core frugality advocates are now setting up new life challenges, creating goals on how to spend more.
It might not feel all that useful to read a blog post about an author’s courageous purchase of a fancy expensive car if struggling with debt from a fancy expensive car.
Is the “Spend More” Narrative Effective?
I’m torn on what to think of this shift in discourse. After all, there’s usually fat to trim if you are just getting started on your financial journey. It might not feel all that useful to read a blog post about an author’s courageous purchase of a fancy expensive car if struggling with debt from a fancy expensive car.
The timing too has been odd. In the stock market boom years of roughly 2009-2020, the message was simple: save, save, save. And then save some more. However, as things started heading south, carving away portfolio principles, the message changed: get uncomfortable and start spending.
It should be noted that many of today’s influential financial writers and thinkers are doing just fine. They amassed wealth via the methods you will read on this blog. But they’ve also continued generating very sizable incomes through the monetization of these messages. And I want to be clear: I’m not against reasonable monetization of content that improves people’s lives. It’s just that we should make no mistake about their financial standing. They have income that you probably won’t if you quit your job. They’re not subsisting off an investment portfolio, and for that matter, neither are we.
It’s Still About Discomfort
Perhaps the broader lesson is that we must engage discomfort. For the financial blogger with a growing net worth, these individuals probably are leaning into discomfort by spending more. My wife and I fall into that personality quadrant. We’ve pushed ourselves to spend more freely to improve our lives. We’ve relocated back to a high-cost-of-living environment. We are learning, albeit slowly, to spend freely on the things that make life good: food, travel, and time together with friends and family.
But if spending comes easier than saving, the lean needs to be toward frugality. But not too much. After all, one need not borrow Netflix passwords and sit at home alone with limp bananas to improve their financial situation. When I once turned down beers at a brewery with friends to save $5 – $10, I wasn’t improving my life. I was damaging my social connection with the people I hold dear.
Maybe Bill Perkins has a point. Maybe that big and scary something that looms over the horizon will never come. And maybe it’s time to employ dollars to increase value in our lives, even if that means trading out a longer path to financial independence. Because after all, it was never about the money. It’s about the life.
Affiliate links are used on this page. If you choose to purchase a linked product, you will incur no extra charges, but we will receive a tiny-baby portion of the sale. Those very small proceeds help us keep the digital lights on around here. We wouldn’t link to a product we wouldn’t buy ourselves. Tis all!
I’ve noticed a similar thread with the bigger FIRE blogs. There’s more emphasis on spending than hardcore savings. The shift in the FIRE movement came from external pressures (media calling us weirdos) and internal ones (don’t be miserable on the way to FIRE). The spending message is popular because people like to be told they can spend more and still be FI.
An important point to make is that the big FIRE bloggers are already well past fat FIRE. As you pointed out, many of them were living very frugally during the massive bull market of the 2010’s and are now multi-millionaires. Of course they can afford to give themselves extra luxuries now. And they’ve earned it, since they aren’t hurting themselves financially. For people who are just starting out though, they aren’t seeing the journey that got the FIRE bloggers to this point. You can’t spend your way to financial independence. That being said, having a strong savings rate but spending on things that greatly improve your life is a more sustainable path than the OG Mr. Money Mustache/early retirement extreme brand of FIRE. Enjoy those craft beers with friends!
Thanks for providing written form! I don’t do podcasts.
IMO, unless you’ve are able to FATfire (e.g. $3M+ in investable assets and a paid off house), the “spending problem” these bloggers are writing about may have a much different inpact on a reader’s personal situation vs these bloggers. The bloggers I read who write on this “I need to spend more” issue are all multi-millionaires.