Ramit Sethi: How Strict Frugality Can Disrupt Your Financial Goals
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Angela Mae
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Zuri Anderson
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You might not think it, considering the high cost of living and the importance of having a financial buffer in case of emergency, but it’s possible to save too much.
In a recent talk with a couple who’s lived a super frugal lifestyle, wealth expert Ramit Sethi discussed this very matter and how strict frugality might disrupt your financial goals — and make you unhappy.
One Couple’s Story of Strict Frugality
Sethi spoke with a couple, Noor (32) and Jibran (34), about their frugal lifestyle and how it’s impacted their lives. As a household, Noor and Jibran earn $250,000 gross each year and have a $919,000 net worth. While incredible discipline has led to this financial success, they’re also stressed out.
“We’re making all this extra money, missing out on life, for you to hoard money that we’re not even going to spend,” said Noor to Jibran in the interview.
The couple has sacrificed a lot to get to where they are today. Jibran’s dedication to his event services companies has meant missing out on holidays and weekends. Because of Jibran’s long hours, Noor has assumed primary responsibility for raising their children. This has enabled them to save an estimated $30,000 in child care. But it’s also left Noor exhausted.
As Sethi pointed out, the couple could alleviate some of that stress by simply hiring some helpers — whether it’s a cleaning service or opting for food delivery every now and again. Because of Jibran’s extreme financial restraint, however, this hasn’t been an option.
According to Noor, Jibran is “laser-focused on the long-term goal, which I don’t even know what that is because he doesn’t want to retire early; he loves working. So I’m like, ‘What are we doing this for?'”
The problem with not having a clear objective is that it can lead to greater issues like mental health concerns or the risk of burnout. According to Sethi, this level of obsessive frugality can also strain familial relationships — as is the case for Jibran and Noor.
“It works for a while, but ultimately the idea that you can just simply grind it out eventually causes problems,” said Sethi.
The money expert’s solution is for the couple to have an open conversation about their perspectives on finances and rebalance their relationship in ways that more evenly distribute both leisure and work. According to him, dealing with shifts in family dynamics and finances is a common issue amongst couples, but one that needs to be addressed.
“It’s really hard to re-calibrate a relationship whether it be like, ‘Hey, I’m doing 75% of the household tasks’ or ‘I don’t want to be the only one managing the money’ or ‘I don’t like the way that we spend money; we spend too much or we save too much,'” said Sethi. “To recalibrate is really hard.”
Strict Frugality Often Means Missing Out
Ultimately, it’s possible to be too frugal — to the point where you’re missing out on other opportunities or the freedom to live the way you want to.
“When you focus so much on pinching pennies, it can lead to missed opportunities that make life richer — like spending quality time with your spouse and kids or investing in experiences that build stronger relationships,” said Taylor Kovar, certified financial planner (CFP), and founder and CEO at 11 Financial.
“If you’re saying ‘no’ to date nights with your partner or skipping fun activities with your kids to save a few bucks, you might end up with more than just financial issues,” Kovar continued. “Over time, it can lead to resentment and emotional disconnect, which harms your relationships and, ultimately, your happiness.”
Living Too Frugally Can Also Disrupt Your Other Goals
When you live with strict frugality, you can end up hurting your long-term financial goals in ways you don’t even realize.
“While saving is important, when it’s at the expense of your relationships and personal happiness, it becomes counterproductive,” said Kovar.
For example, skipping important life experiences like vacations or hobbies because you’re trying to save every dollar can lead to burnout. Over time, it’s easy to feel unfulfilled, which can undermine your motivation to achieve your financial goals.”
Annette Harris, owner, accredited financial counselor (AFC®) and financial fitness coach (FFC®) at Harris Financial Coaching, gave the example of buying a house or going on vacation and how extreme frugality can prevent that from happening.
“Someone may want to go on vacation or purchase a home but hesitate to take action due to the financial commitments involved. Buying a home requires a down payment, monthly payments and a 30-year commitment,” she said. “Similarly, vacation trips can also represent a significant financial commitment, and a frugal person might think such a once-in-a-lifetime opportunity is not worth the expense.
“They may have the money but ultimately miss out on the chance for homeownership and an enjoyable travel experience.”
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