I occasionally hear arguments like:
There are lots of ways that one can spend money to gain more time (and therefore presumably be more effective): buying taxis instead of walking, getting takeout instead of cooking, renting an apartment closer to your workplace, etc. Therefore, even if you are perfectly altruistic and ignore the impact that spending more on yourself might have on your personal happiness, you should spend a large amount on yourself.[1]
This seems reasonable – there are ways to spend money to gain time – but I rarely hear the opposite argument, even though the opposite argument also seems reasonable.
Some ways in which being frugal makes you more productive:
- Low cost of living enables you to be more flexible: when I started my company, I went without an income for about two years, and it only took a few months of savings to build up that two-year runway. If I had a higher standard of living (e.g. because my apartment was close to work) I would have needed to plan much further in advance or take out a loan or something similar.
- It’s much easier to keep your nights and weekends free if your entertainment budget is zero. Many of the greatest opportunities I’ve had in my life came through something like my boss coming to me and saying “our senior engineer just quit right before the deadline, so even though you are too junior for this to normally be your responsibility, can you work through the weekend to get this done?” If I had had regular, significant weekend plans, I would’ve turned those down and accomplished much less.
- A lot of what distracts me from work is the opportunity cost of what I could do in my free time. Many people use distraction blockers during their work hours to keep them focused by preventing them from using “fun” things during work hours, and it’s fairly common for people to e.g. travel to an isolated cabin in the woods when they really want to focus. Living frugally is kind of like (metaphorically) living in an isolated cabin in the woods.
- Of course, cost and distracting-ness aren’t always correlated: social media is very distracting, despite being free.
I’m a little hesitant to publish this because I don’t think most people should prioritize frugality. I also agree that there are many legitimate ways in which spending money can make you more productive, and that we should take advantage of those. And I don’t think we should shame people for spending money on themselves, nor should we expect people to ignore their own happiness.
But it does seem like the “spending money to save time is effective” meme sometimes morphs into “spending money on yourself is effective”, which seems rather dubious to me.
1. I mostly hear this argument verbally. I'm not sure if there is a canonical written version of it; Critch's post might be the closest: http://acritch.com/pledging/
Argument 1 makes sense. Arguments 2 and 3 mostly seem like arguments against having a life outside of work - am I reading that right?
Yes, if you want to maintain flexibility to jump on new projects if exciting opportunities arise, you probably shouldn't have much of a life outside of work.
(Note: I personally do have a fairly involved life outside of work, and am fine with that trade-off. I'm just pushing back against the claim that no trade-off exists.)
[Disagreeing with my boss on the internet, but after chatting over lunch]
Inflexible life outside of work seems to be the problem. There are monetary and non-monetary examples of ways to become inflexible:
1. I spent $500 on my weekend plans. I can only that infrequently, so I really don't want to miss it.
2. I'm leading a group on a road trip this weekend. If I bail they'll be disappointed.
This echoes Gordon elsewhere in the comments, but I claim that non-frugality can be quite slack-constraining. This post has updated me towards keeping more slack in my budget. I'd like to not spend a significant portion of my spending money on any single adventure.
Follow-up thought 2: An expensive life outside of work would be worse than a frugal one if the increase of the temptation of one's time off outpaced the increase in relaxation.
For supporting evidence, see this study:
https://www.nber.org/papers/w26554
Which I'll quote Robin Hanson's quote of
That sounds right to me
Follow-up thought 1: This model implies that frugality is budget-dependent. A trader at a hedge fund is much less constrained by $500 weekend plans. In fact, thinking about this model might make the trader seem less frugal, as she wantonly cancels expensive trips. I'm tempted to say this means I should be paid more (Hi, boss! 😛) but I actually think it's income-neutral, and mostly about my budgeting.
Point 2 confuses me on an empirical level. I don't know many people whose social/leisure life largely consists of locked-in regular weekend/evening plans that they can't change if a work opportunity (or anything else) comes up. More importantly, whether the fun activities are flexible seems to be unrelated to their cost. In fact, the commitment/cost relationship is usually negative -- it's often cheaper to pay for, say, sport and exercise classes if you lock in a series of lessons rather than paying casual entry. Likewise, casual commitment-free leisure like drinking alcohol or going to a restaurant can be much more expensive per hour than a regular commitment like playing on a friendly soccer team.
I'm not disagreeing with the post's final paragraph -- I recently decided against picking up a particular sport largely because it seemed self-indulgently expensive. But I don't think that point 2, in particular, is factually true, even if you agree that you should reduce your leisure time to work more.
Also, there are many ways that frugality can boost productivity that aren't mentioned in this post. A major one would be that living in an apartment, rather than a large(r) house with a garden, substantially reduces the time spent on home cleaning and maintenance.