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Financial Moderation is key to Success

A confession, over much of the last year I paid someone to clean my house on a monthly basis. The more frugal members of the personal finance community are probably thinking that I’m a hypocrite. You know what? I actually believe that expenditure was justified.

Too often we see frugality presented as do not flush the toilet unless the water is brown, live like a monk with some smelly roommate or worse your parents, cut cable because you’re throwing money away, living in a van in a Walmart parking lot, or cut all eating out. I’ve heard of a tv show about extreme frugality that shows people dumpster diving and eating others’ leftovers from restaurants.  This level of frugality has made me cringe.  I’ve found that you don’t need to live like a monk to succeed financially and the presentation as such will prevent people from implementing simple life changes that will allow them to be financially independent. The reality is you could live like that monk to retire at 35, and then get hit by a car on your 35th birthday never to enjoy it, so you do need to enjoy the ride as well.  Instead you should practice financial moderation.

Reasonable Expenditures versus Inflation

So, how do you understand the difference between reasonable cost cuts and expenditures versus lifestyle inflation? Well, let’s return to my example of house cleaning. Every hour of your life has a value to it. An opportunity cost that equates to the value of your other options to spend it. In the case of the time when I viewed the expenditure justified, that opportunity cost was a weighted average of lost time spent with my kids, the value of the pay my wife made when working, and the need to have some time to unwind when the kids were not awake. The actual cost of the house cleaning was 100 dollars. If we assume the work took about 4 man hours, then if I valued the other things in my life at greater then 25 dollars an hour, it was worth it to pay someone else to do so. At the time I did so it was justified.

Not All Side Hustles are Worth It

You can also see this in side hustles. I hear all the time we should hustle for money and I even have an upcoming post on freebies and hustles I pursue. These hustles though are only worth doing if you get back more out of the time spent on them than the cost of the time. You can estimate your time cost by asking your self at what level of pay you would no longer be willing to work.  If the hustle pays less then that, then you’re better off doing something else.  There is one more important thing to understand, and that is that the benefit may not be purely monetary and the cost may not be pure exclusion. For example, in the case of some freebies, I do them in the background while watching tv, as such they don’t truly cost me the time they take.

Non Financial Benefits and Costs

In the case of this blog, which is a potential source of side hustle cash, if viewed purely financially it would make no sense at all. Even if it were to bring in 250 dollars a month at some point long in the future (as I write this, it currently brings in nothing as I have only haphazardly added a two ads), I probably spend at least 25 hours a month writing posts. 10 dollars an hour before taxes is well below my billable hourly rate. However, I derive great enjoyment from talking and writing about financial topics. Meanwhile my wife, while on board with my financial maneuvers, has no interest in listening to financial and economics topics ad nauseam. Thus, there is a benefit to the blog in letting me get it out of my system while also keeping my wife happy as she doesn’t have to listen to me. This is where writing this blog makes sense for me.

We all have slack in our lives, things we can remove that will save us money or make us more money. The key to financial independence is not deprivation. It’s understanding what you value and removing those you don’t from your expenditures.

Changing Decisions

The final thing to be aware of is that these decisions change over time. I say at the time with relation to house keeping because my wife recently made the decision to be a stay at home mom. In the context of this post, that changed the number of hours available for the other things such that the equation no longer balanced in favor of paying for cleaning. Thus, we no longer do so. That change in the value of those 4 hours of cleaning made the value of the service no longer exceed it’s cost. This is why you should track your spending over time. To allow you to cut out those things and continue to keep them out based on your current value.

Financial Moderation Begets Financial Independence

Personal finance writers often ignore their critics who cry “You Only Live Once”. The critics have a point. You do only live once. You should spend your money on the things you enjoy, but a little forethought can remove the things from your life that you don’t value. That removal is what will help you achieve your financial independence.
Are there expenditures you regularly make or is there pay that you forgo to benefit your life?


  1. Mustard Seed Money
    Mustard Seed Money October 26, 2016

    I am definitely in favor of spending money on things that you don’t want to do if it saves you time. I know it’s not the frugal answer but there are times that it’s worth it to outsource things that you don’t have time for. Life is definitely too short so I try to maximize it doing things that I actually enjoy. Thanks for the topical post!!!

    • October 26, 2016

      MSM, Exactly. Its been a struggle in my own life to realize that just because I can do it doesn’t mean it’s worth my time. Sometimes it’s worth it though.

  2. Finance Solver
    Finance Solver October 26, 2016

    You only live once has two meanings. It could be interpreted it as “you only live once so you should go and be crazy as much as possible” or “you only live once so you should live it safely, you don’t get a second life!” Those critics better know which one they are referring to!

    I agree, life doesn’t have to be diminished so much to the point where we have to go to our friend’s house to take a shower. Buying the necessities with a few splurges here and there is a great way to live. A life dominated by splurges with a few necessities here and there is a life destined to financially fail!

    • October 27, 2016

      I wonder if it always has a third meaning. Going crazy and and enjoying life aren’t necessarily synonyms in my case. I have what I want, so I don’t need more.

  3. Mrs. BITA
    Mrs. BITA October 28, 2016

    I couldn’t agree more. We use a cleaning service too, and have other expenses that are generally frowned upon e.g. we have a pool guy. We tried not having a pool guy for a while. Mr. BITA did our pool for eight months. Then we stepped back and did the math and it made no sense for us financially. Mr. BITA spending that time on his work was immensely more beneficial financially, and him spending that time with Toddler BITA was immensely more satisfying personally. The trick is to find the optimal point for your expenses. You don’t get to yell YOLO and go on a spending spree. What you do is have a plan for saving, a plan to get to where you want to be _and_ a plan to enjoy the journey there.

    • October 28, 2016

      Very true, the plan and understanding of where you want to go is ultimately the key to success.

  4. Casper
    Casper October 28, 2016

    Doesn’t some of it just boil down to I am saving X% a month and if I want to have someone clean the house then it is ok. I have some friends that question me paying someone $100 to clean my condo every other week and I go to them I save 50% of my income so am I not entitled to a few splurges in life. To me it is all relative and if you are saving what you feel appropriate then why not I say

    • October 29, 2016

      So I guess you could say you value that 100 dollars more then saving X% more of your income above 50%. You also view it greater then spending it on say a night out of the town right? Nothing wrong with that choice. Everything has a marginal utility as well. IE adding an extra percent to 50% may not has of high a value to you as adding an extra percent to 10%.

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