I don’t often rant. Okay, that’s not entirely true, but most of my rants end up either bouncing around in the confines of my mind before settling down or are shared with a few friends as fodder for a vigorous debate. However, I just couldn’t let this go without putting this into written form (So much so that I put off watching the latest Game of Thrones episode to write this).
I happened to stumble on this article on frugal billionaires via my Facebook feed during my daily commute. While the article’s content is not noteworthy in itself, many of the comments I read made me cringe, and I quote a selection of them word for word (in roughly decreasing order of eloquence and grammatical correctness)
- “There’s actually a difference between valuing money and being a downright miser”
- “There is a thin line between cheap and thrifty I can see a lot of cheap people here. It doesn’t mean that they lived a life like common people”
- “what is use of his money then if he don’t use it“
- “Cheap ass miser”
- “Lol such ppls r called miser”
The irony is that many of these billionaires have donated to charity generously, in the range of millions to billions of dollars. Four of the names on this list (Buffett, Bloomberg, Caudwell and Premji) feature on the roster of the “Giving Pledge”, a commitment to dedicate the majority of their wealth to charity. The MacArthur foundation has over $6 billion in assets and disburses $260 million to charitable causes ever year. Their very ability to spew their drivel was made possible by two frugal billionaires (Bill Gates and Mark Zuckerburg)
However, apart from proving that the barrier to having an opinion on the internet has been set far, far too low, there is a more important takeaway here: this is the average attitude of today’s middle class towards money. The fallacy that if somebody isn’t spending money in proportion to his income, he clearly isn’t “living life”. The inner need to keep up with Joneses.
This category of people will never be rich, and will forever live in envy of those who are because they have three fatal flaws:
1. They would rather toss mud to prop up their fragile egos rather than think about the lessons they could learn from those who are more accomplished than they are.
2. They believe that spending money is the goal of life, and miss the point that money was a means to an end, not the end itself for these people
3. They don’t understand that even the rich need to live within their means, or they won’t stay rich very long. Many lottery winners and prodigal celebrities forget this lesson and slide the slippery slope down to pauperville.
On a related note, a recent article pointed out that credit card debt is on the rise in India. While this may well be an effect of a relatively low base, there is a case to be somewhat alarmed if we consider that many Indian households already stretch their means out of societal pressure to buy a house, and that over consumerism is exceedingly bad for a person’s financial well-being.
Think a “rich, developed country” like America is better off? Think again. A 2013 Federal Reserve survey asked respondents how they would pay for a $400 emergency. The answer: 47 percent of respondents said that either they would cover the expense by borrowing or selling something, or they would not be able to come up with the $400 at all. The average American’s financial well-being is precarious at best, and much like India, the average income numbers are skewed by the enormous disparity in the concentration of wealth, a disparity that only grows larger with time
Although consumerism is in many ways one of the engines that powers the world economy and benefits me greatly as an investor, that society chooses to glorify opulence while frowning on frugality is still a tragedy, much like intellectuals being bullied at school by the “cool kids”. We would all do well to remember the immortal words of the Greek, philosopher Plato, who centuries ago coined the simplest of truths: “The greatest wealth is to live content with little”