I have earned a lot of money in my life. But I have never had an extravagant life. I don't own a house. I've never bought a new car. I've never bought a new piece of living room furniture, and I do not own a single piece of real jewelry. What I have spent money on was always intended to help me with my career. That was so I know that I can always earn money doing something I love.

I leased a BMW when it was clear that that mattered when it came to making deals in LA. I hired a stylist when I realized my clothes were holding me back in NYC. In Madison I have tons of household help so my kids don't have a crazy schedule because of my work schedule.

I am convinced that frugality is a key quality for a successful career. Here is why frugality helps your career:

1. Spending money is generally a distraction.
We know this. That people use it as therapy. People use it to fill holes they perceive in their lives. But the psychic energy it takes to spend money actually distracts us from what matters to us. Pay Pal reports that people wish their significant other would spend less money on Valentine's Day. This encapsulates the whole problem to me.

2. Spending money is a vehicle for overcommitting.
The biggest example of this is graduate school. The people who do best in a bad economy are those who are flexible about the types of jobs they can take and the types of careers they can move into, according to Philip Oreopoulos, professor of economics at University of Toronto. This flexibility is specifically limited if you go to graduate school — you commit two, three, four years to a given career whether or not it's going to pan out for you in the long run. And you commit to paying back school loans, which means you need to take a job that earns enough to pay those loans.

3. Spending money limits possibilities.
If you invest in an expensive bicycle because you're going to do triathlons then you limit your ability to take off more time from work to actually train for the triathlon. In most cases, renting a house is better for you than buying one: If you buy a house, you cannot easily downsize, you cannot as easily relocate, and you end up limiting your earning power. (That link is to my brother’s blog. This is dinner table conversation in my family.)

4. Entrepreneurship is a safety net if you’re frugal in your home life.
Careers today are unstable, and while companies used to provide safety nets for employees, today we have to create our own safety nets. The best way to do that is with entrepreneurship. But starting your own company is nearly impossible if you have high income requirements. Startups don't provide high incomes at the beginning.

As I write this, I think about my friends who spend a lot more money than I do. I have friends with really nice houses, friends who take super fun vacations, and I have friends who would not be caught dead in the clothes I wear to work (for example, plastic rain boots because I don't want to pay for snow boots.)

My friends would say there's a compromise: You don’t need to invest everything in your career. You don't need to give up all the creature comforts of life. You can still have a good situation with both.

Maybe it's my obsessive nature. I'm willing to make extreme tradeoffs. I wrote earlier about wanting to be an expert. About how it takes a singular, daily focus. And I think I have had that with writing. But in order to do it, I have given up a lot. I'm not sure if that's right.

Do we hear about Mozart playing kickball? I know, there wasn't kickball. But if there had been, he wouldn't have played it. Because you give up stuff.

So I guess what I'm saying is that being an expert in something requires frugality. It's not just a spending frugality. It's a focus frugality. It's the recognition that spending money is actually a distraction from the passion at hand. So the less you spend, the less you're distracted.

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  1. Vicki
    Vicki says:

    Frugality, to me, is not spending less on one thing (a bed) so you can spend more on something else (a house manager.) Frugality means spending less on everything so that you can afford everything in small doses and having enough to fall back on in cases of emergency in spite of income (the electricity outage you experienced.)

    So, while the five points you make are insightful, what you write about (the rain boots, the BMW) are more examples of tradeoffs rather than true frugality, which is what you alluded to in your Brazillian wax comment.

  2. Amelia
    Amelia says:

    Hi there,
    firstly I want to say thank you for your thoughtful comment on my blog over at: http://www.101birdtales.blogspot.com – and wow – over here you are right, a lot of thought provoking going on and I love things that make me think.

    And the funny thing is I am not a big earner, but I don’t really like ‘shopping’ for consumerable’s – like others here – I much prefer shopping (at goodwill!) to equip me with items that support me in what I love doing the MOST – creating, creating art-work that is – (hopefully thought provoking art-work ;) AND, I was a student that got into debt doing a specialised degree (my first degree) but fortunately I paid it back as quickly as I could and getting a second degree in FINE ART taught me far more than painting. The whole process of ‘creating’ with no ‘right’ or ‘wrong’ answers taught me about ‘lateral thinking’ and operating outside the box. This has come in so handy as an entrepeneur and self-starter. And with no big overheads too, I have been able to do this.

    Mindfulness over how we spend our time and money and doing something that fulfils one and makes us happy, I feel, is very underestimated. I work with so many unhappy, suffering people who have subscribed to the notion that education – in the first instance – is a measure of your worth and then your job is the second. The people who I meet who are the happiest, are those who live frugally, and/or do what they love with a passion and earn money from it and it is usually a creative labour of love.

    Wow, what would the world be like if more people lived like this?

    Thanks again,


  3. kelley
    kelley says:

    I am curious whether people get more value from the learning that comes from grad school or from the (actual or perceived) benefit of having the degree on their resume. Is it naive to think that the things you learn in grad school might lead you to greater career (and financial) success down the road regardless of whether you receive the degree itself?

  4. In Demand Careers
    In Demand Careers says:

    I agree when you spend money it makes you happy, if you pursue a career a lot of the times its because when you graduate you think you will be compensated well, not true, that’s why people spend money to cover that aspect.

  5. Al Lee
    Al Lee says:

    Penelope was/is willing to spend money:

    * on appearances for work advancement – e.g. the BMW
    * on her relationship with her children – e.g., household help
    * on her relationship with a partner – e.g., the brazillian

    None of these is atypical of an American consumer.

    What is atypical is that Penelope is unwilling to spend money to impress the “Jones” – no bedroom furniture, no fancy house, no “prestigious” degree.

    This is very atypical. A huge fraction of the typical American’s spending is not even for things that will make them happy, but for things they feel they must have to keep up with societal expectations.

    The most fun I have had in my life is playing pick-up soccer in a local park. This is basically free.

    Consumers buy things to project a level of status to people they don’t really know and don’t even care about.

    The only “status” that matters is the one that comes from within, and from the people you love.

    Learning to distinguish purchases that support your happiness from ones mostly for status is hard to do, but worth it. Penelope seems to be able to do this, and that is true frugality, in the sense of “not wasteful.”

    Whether this frugality helps you career, I don’t know, but it does make your life better :-)

    – Al

    • Lola
      Lola says:

      How come a leased BMW is for career advancement, but a graduate degree, is ‘keeping with the joneses’? That logic is weird.

      • Al Lee
        Al Lee says:

        I wanted to keep my comment short, so I didn’t explain what I meant by “prestigious” degrees.

        If you are getting a graduate degree because your mother always wanted to say, “my son, the doctor,” or someone at a party said you weren’t smart enough to get a law degree (this happened), or you don’t know what you want from life and *feel* having a graduate degree will make you more valuable, then you are pursuing a “prestigious” degree for status purposes.

        There are non-status reasons to pursue a graduate degree. For example, you deeply enjoy the subject (e.g., masters in philosophy of science), or the course of study is required for a career you want to pursue (e.g., MD).

        If people only pursued graduate studies for non-status reasons, a lot of grad schools would have to close :-)

        – Al

    • Judy
      Judy says:

      “. . . things they feel they must have to keep up with societal expectations.”
      What’s the difference between societal and business expectations? It still requires fulfilling someone else’s beliefs about how you should look and act.

      • Lola
        Lola says:

        @ Al Lee,
        You could replace “graduate studies” for “leased BMWs”, and would get the same conclusion. Check it out:

        If people only “leased BMWs” dies for non-status reasons, a lot of “car dealers” would have to close

        I really hope this lack of reasoning is not contagious…

  6. Michael Alexander
    Michael Alexander says:

    Your reference to marriage and stable relationships is a sure bet. Having a partner who cares enough to talk about what,when and how to purchase is really,really an important part of being frugal. President Obama missed this in his speech. A great opportunity to explain to the nation that what he is trying to do is what good partnerships,family, marriages and relationships have done consistantly well over time- join together to survive, to create contentment, to invent, to produce, to create.

  7. Mike
    Mike says:

    I totally agree with #4. I am reading a book on JPMorgan. He lived at home and worked like a dog for 7 years before striking it on his own. Today society is obsessed with easy money and making it big early like with Microsoft and Facebook. Success rarely comes that easy. You need to maximize your chances of getting there and being frugal is one great way of doing it.

  8. Pen
    Pen says:

    I just Googled “Brazilian.”

    Not that there’s anything wrong with a prospective partner appreciating one, but a potential spouse who would not be interested *unless* you had a Brazilian?

    My shallow-meter would be pegged. This just wouldn’t strike me as a life-partner who’s going to be there through thick and thin (so to speak).

  9. Lasse
    Lasse says:

    Actually I think its pretty sad that money has such a big role in this world. Ppl often get something because of the money they are having, nevermind if they deserve it or not. Sometimes ppl are getting specials rights because of their money in the bank. Nevermind if they deserve it or not. Money rules the world and thats sad.

  10. Kathy Holiday
    Kathy Holiday says:

    Is being frugal a sin? I hope not. I have a friend who dislikes thrifty people. She said, you cannot bring the money in the grave. So spend as if there’s no tomorrow. I didn’t argue with her not because i agree with her statement but because i didn’t want an argument. Frugality is very important not just for career advancement or a tool but also for emergency purposes. But as for me, i’m 50-50. :)

  11. Michael Felberbaum
    Michael Felberbaum says:

    I see your point as to why spending money leads to overcommitment, etc. I think it’s an important point to make because if we’re purposeful and careful with money it allows us to take risks in other areas of life.

    However, I think your use of the idea of “frugality” is misleading. I object to the idea that hiring a stylist, hiring help, leasing a beamer, etc. is frugal. I think you’re confounding frugality with “purposeful, simplifying, principled” spending. As a general rule I agree with you that spending money in a purposeful way that makes life easier, especially for entrepreneurs. However, purposeful spending does not enter into the “luxury vs. necessity” debate, which the word frugality implies, i.e. suggesting that one is only spending on necessities. I encourage the spending debate for entrepreneurs (internally and externally) to be about why to spend, what it accomplishes, how it simplifies, what’s the return, etc. This encourages a debate of “reckless vs. careful” and I think that’s what you’re really getting at.

    I would sum up your injunction as “care about what you spend, and spend it on things that simplify your life.” This, I believe, is a helpful rule of thumb, but I believe it has little to do with frugality.

    • Judy
      Judy says:

      Michael was right – misleading.
      Same with the happiness/satisfaction debate. You too often interchange disparate words in your assertions that completely muddle your point and make it sound like you really haven’t thought it through.

  12. Sarah
    Sarah says:

    The things Penelope has been spending money on is all about keeping up with the Joneses. Car? Looks? Household help? Those are all very status oriented things. Whether or not they help advance your career is open for debate, but I would not consider it at all frugal.

  13. Chandlee Bryan
    Chandlee Bryan says:

    I tend towards frugality in my expenses and expansiveness in my adventures. I’ll be saving this post as well as Jamie Beckland’s comment that knocks it out of the park for me: “Most people think of frugality as sacrificing things you want, but it’s really focusing on things you want. It doesn’t mean you don’t spend – €“ it means you spend on what’s important to you.”

    What gems. Thanks, as always, for sparking a discussion.

  14. Celine
    Celine says:

    I can’t believe you actually wrote this. Do you expect any of your readers will believe you? $50k on household help? Flying to LA and New York for hair styling and brow waxing? Leasing a Bmer? Relocating to Madison from NYC? (Yes, relocating costs money). In fact, everything you do has been the LEAST frugal things I can think of: travel for frivolous reasons, hiring a stylist (very good decision), traveling to SXSW yearly, the list goes on. In this economy, some of us are unemployed or underemployed, especially since our jobs and/or businesses have taken a hit, which results in missed mortgage payments, lower credit scores, the inability to get loans and the credit card companies acting like loan sharks (you can get better loans and rates in north Jersey). So please spare us the BS: we aren’t buying it. My father lived through the Great Depression. Now HE was the model of frugality. Leave your bad advice, from your difficulties at work that you blame on Aspergers, your not so great sex life, reckless comments and your bad behaviour about businesses who actually give you a shot at radio and video (I’ll bet BBC won’t anymore) and useless tweets. How many people tweet about a miscarriage? That was completely inappropriate and in bad taste. Twitter is worse than text messaging about nothing and you’re hosting a video conference about it? Good thing Ryan will be there in case you have a meltdown and can’t finish what you started. Penelope, you’re so full of yourself in your own mind that it’s comical and that you actually have a job, that is, if you really do. I wouldn’t hire you if my career depended on it. You could sink a business faster than I could sink a sailboat. Oh, that’s right: I can’t sink a sailboat unless I sail it through a tornado!

    • Anna
      Anna says:

      She probably has a lot of flyer miles, and the rest is silly. But why not buy in Madison–you can rent the place every year to incoming grad students/faculty, etc.

  15. K Hurst
    K Hurst says:

    While there are good points within the post, the post itself is intellectually inconsistent. Don’t buy a house because it’s too limiting; don’t go to graduate school because it’s too limiting – you can only get certain types of jobs. And yet, your “frugality” is in service of your goal of becoming an expert. Becoming an expert is even more limiting than graduate school – you’re an expert on this narrow band of stuff. What if there are better experts? What if the field of expertise becomes irrelevant, passe or antiquated?
    “Frugal” was a bad word choice. Because even beyond the inconsistencies with a leased luxury car and expensive beauty treatments, you’ve decided to forego traditional expenditures (house, car, bed) on HUGE gambles (albeit often bolstered by other people’s money) like starting businesses. As you’ve shown, starting and running your own business takes extraordinary sacrifice – living almost hand-to-mouth at times. How can this properly be described as frugal?
    It can’t. It’s simply dedicated, prioritized and focused.
    Your drive and your sacrifices are admirable, but they are your choices, and I’d also proffer that they are not the only way.
    Since graduate school, I have tried to live my life in a balance so that if I were hit by a bus tomorrow, I would have lived my life in a full way with relatively few regrets and that if I died in 70 years, I would have more than appropriately prepared my career and finances for success in the long haul. Not every day/week/year will be a perfect balance, but I can’t live every day sacrificing entirely for a goal that might never materialize or that might change. This isn’t about being a fiddling cricket, playing all autumn until the snow falls, or about being an industrious little ant, saving all year round without pause. It’s about making the decisions that make the most sense for you. Sometimes that will be buckling down and making tremendous sacrifices for a worthy goal. And sometimes that will be taking the vacation you need because you only get one go-round at this life.

  16. Anna Lee Moriss
    Anna Lee Moriss says:

    So okay to I had a job interview and omg this lady was a PSYCHO not to mention what a terrible taste in fashion she has wow crazy!!!!!!

  17. Stanley Lee
    Stanley Lee says:

    I like the family dinner talk that you have brought up on point #3. Totally tough to relocate, start over, and wipe the slate clean when owning a house. But what about owning a house that is rented to other legit tenants (e.g. college students in college towns, but you personally don’t live in it)?

  18. Kat Wilder
    Kat Wilder says:

    I’m pretty convinced that, after all my happiness research, the only thing that matters is being married. Married people are so much happier than non-marrried people that people should just shut up about career stuff and focus on getting married.

    And, if you are dating, looking to get married, I am 100% positive you will have more options if you get a Brazilian. Quote me on this.

    OK, I am!

    I have a Brazilian now, as a divorcee, but not when I was married. Didn’t have the money/time for it then, or so I believed (but I make it a priority now).

    I’m happier now. But it has nothing to to with the Brazilian, but everything to do with making sure I take care of myself the way I want to care for myself (priorities, right?)

    Marriage in and of itself can’t make people happy, but I’d be a fool to say that most of us don’t want a partner; of course we do! But we have to create that happiness – whether we’re married or not. And that happiness comes from making sure we put our needs in the same category as the needs of our partner, kids and career. A happy mom generally means a happy husband and a happy family.

    Having a Brazilian as a single gal won’t make you any happier than having a Brazilian as a Mrs. All it means is that we are valuing ourselves as much as we value everything else.

    And when we value ourselves, it’s funny – other people do, too …

  19. Michael
    Michael says:


    Seriously I never had credit card debt until I started my education in IM make money online buy my stuff because I know what I’m doing and you don’t.

    This is my year!

    You heard it hear folks!

    What do I do?

    I know if your website or blog sucks, do you?

    I know how you can get an American Made website or a not so American made website but one will suck the other will not.

    Anyway, I will be frugal in 2010 and beyond because I probably have that PDF somewhere repurposed with someone else’s name and title on but it will tell me the same thing.

    You have to be the expert, sacrifice and be.

  20. Buck
    Buck says:

    Almost any Masters is a waste of time and money. Unless it’s an MBA from a top 10 school, or leads directly to a PhD in science of engineering, forget about it. Social science graduate studies are one big Ponzi scheme. I just met someone getting an “Environmental MBA” online. What a rip-off.

  21. Cindi @ Moomette's Magnificents
    Cindi @ Moomette's Magnificents says:

    My grandmom, who lived to be 101, was born in 1901. She grew up during the Great Depression and never owned a credit card. She lived frugally, but always had money for whatever she needed or wanted. I think it’s important that we all try to get away from the immediacy of our “wants” and focus on what we actually need, and can live without.

  22. finance girl
    finance girl says:

    Owning a home isn’t quite as clear cut as ‘rent instead of own’ in the long haul.

    It still makes outrageously good sense to buy a home you can afford (mortgage, insurance, taxes, and maintenance should be below 28% of your net income) because it still holds true that you are able to build equity and when you retire you have the option of selling it (by then you should have the mortgage long paid off) and having many options available to you to move, downsize, or just have an asset for worst case scenario if you screwed up other assets.

    Owning one’s primary residence is still very smart for most people who can meet that 28% metric.

  23. Chris Baskind
    Chris Baskind says:

    So I write a blog about minimalism, which — as a friend of mine is fond of pointing out — is really something of a hipster term for being frugal and getting your priorities straight.

    One of the things I harp on is that minimalism isn’t reductionism. People consume. The idea is that being smart about what you don’t really need, you can better enjoy what you do. Maybe you’ll even save enough resources to afford something of quality, whether it’s nicely made shoes, some extra education, or a fancy haircut.

    The value in those things is up to the person purchasing them. Me? I’d feel guilty flying across the country for a cut and style. But that’s because I don’t value the end result. On the other hand, I’d think nothing of dropping a similar amount of surplus money on a bicycle part nobody reading here would appreciate.

    Priorities are relative to the actor. Those who see tension in Penelope’s choices have a narrow view of what it is to be frugal.

  24. Dr. G
    Dr. G says:

    Yes, frugality is a virtue as is the ability to have fun without worrying about it. To rent a house, when I’d rather own one (I’m Taurean) just to maintain some flexibility because I might need it next year in my career is ridiculous. The sky might fall on my head too. What is not frugal is to buy a house you can’t afford.

  25. Ramesh Bapat
    Ramesh Bapat says:

    Hi Penelope,
    I am from India and I completely agree with your views which are the same as mine. Your article appeared in Economic Times Corporate Dosier and I have had this pasted in my scrap book and I also readt it out to my Wife & 2 sons.
    Good keep It up it is very easy to identify with your thoughts

  26. Steve Williams
    Steve Williams says:

    Hi Penelope,

    Your views are very much on track and funny…almost exactly what my wife and I have discussed in the last week. We both in the past have had very luxurious tastes but have realized over time that those are unnecessary and at times almost wasteful. It seems everyone needs to be frugal these days!

  27. Steve Williams
    Steve Williams says:

    One more thing…I personally think that earning your masters right out of college without having time to work in between is a waste of money. I worry that a lot of people have fallen into the trap of if they have nothing to do…go back and rack up more student loans!

    • Zach Winsett
      Zach Winsett says:

      In today’s economy I would have to agree with you. Unemployment has flooded the job market with workers that are less qualified but cheaper to hire. If you have a Masters degree then you could be classified as “over qualified”.

  28. Katina Blue
    Katina Blue says:

    Penelope, I think you hit on some very good points, things that I discuss with my friends all the time. When trying to live frugally, it seems that somehow you become a victim of what other people require for you to make it in their idea of the world. The fact that you had to buy an expensive status symbol vehicle is proof of this. I also try to live a frugal life, without getting caught up in the stuff that the Amercian dream is supposedly made of. I find that I am better able to complete my goals when one of the goals does not include spending unecessarily.

  29. Ranjeet Kapoor
    Ranjeet Kapoor says:

    “…It's a focus frugality. It's the recognition that spending money is actually a distraction from the passion at hand..”
    Very true. When we are dedicated to a higher aim in our life, what matters is spending time wisely and that is were someone of big ideas like you ‘Lives life king size’.

  30. Mike
    Mike says:

    It all boils down to differentiating between needs and wants, doesn’t it? And I do believe that the global recession has made many people open their eyes and make this distinction even when they weren’t aware of it before.

  31. mm
    mm says:

    I just relocated to Madison. I assume you are talking WI, as that’s the biggest Madison I know.

    It is a darn expensive place to live. Homes are not reasonably priced. Rental homes run well over $1000/month. The few apartments I looked at in town were $500 a month for the upstairs of a house one of the seven dwarfs would have felt was too small…and when I asked the landlord why there were small boards nailed at odd places on the walls, he told me they were “access points” to the pipes when they froze…nice.

    Madison sucks when it comes to finding a place to live.

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