To me, the theory behind frugality is this: The more money you spend, the lower the impact of that money on your happiness. Therefore, be mindful of your spending to be sure you are getting good value from it.
An example with beer:
Going from no beer to one beer is pretty awesome, and can cost as little as $0.50. If I’m having a 5/10 kind of day, a cold beer after work might really hit the spot and bump it up to an 7/10 day. That’s a big swing for only $0.50.
Upgrading to craft beer, a six-pack costs about $9, or $1.50 per beer. Now, craft beer is better, but does each bottle improve your life by 3x as much as a canned beer? It depends, probably. Certain beer connoisseurs probably experience enjoyment that far surpasses the cold refreshment and mild buzz provided by a can. But most, I think, just want something that tastes better and feels fancier. Now, a canned beer brings a 5/10 day to a 7/10 day. And maybe having a craft beer makes it an 8/10 instead of a 7/10. You’ll notice, though, that the difference between craft and canned is smaller than the difference between “no beer” and “some beer,” despite costing 3x as much. Clearly, canned beer is the better value.
Now, I’m not saying, “don’t drink craft beer.” In fact, craft beer might actually be one of the best ways of spending money when it comes to maximizing your enjoyment of life. But keep in mind the point I’m trying to make, “not all dollars are created equal.” Some will make a big difference in your life, while others provide minimal or negative value.
Both the cases I described above assume you buy the beer in a store. Now consider what it costs to drink in a bar. Here in Oregon, beers go for around $4-6. Even a Rainier or Coors Light, either of which you can buy in a store for $0.50 costs about $3 in a bar. Still, some aspects of a bar are kind of nice (although, for me, they in no way justify their price-tag): There’s usually a wider selection of beers, there’s someone to wait on you, there’s music (sometimes live), it’s a more energetic atmosphere, you might meet some new people, they often have the more expensive sports channels, and it’s nice to get out of the house. Even assuming you enjoy all of these things (which I don’t and/or could recreate better & cheaper in my own home), it costs way more. A craft beer in a bar costs as much as 8-12 cans of Coors at home (or 10-14 cans after tip). In other words, you could have 3 friends over for a game night, and offer them 3 canned beers each for a similar cost to buying one beer for yourself in a bar. Be mindful of what your “drinking beer in a bar” is.
And again, the moral of the story isn’t, “never go out to bars.” It’s, “be mindful of how much you’re enjoying the money you spend.” My goal isn’t to convince people to spend less money, it’s to help them enjoy their money more and enjoy life more.
For the next steps, I’ll outline everyone needs to do their own work, because they are the ones who best understand their own priorities, and who have to live with their decisions.