Frugality: The Middle Ground Between Austerity and Excess

Frugality: The Middle Ground Between Austerity and Excess
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As the world struggles to regain economic stability, there seems little agreement on what is needed. While most decry unbridled corporate and consumer excesses there seems no agreement whether the solution is imposing austerity measures that seek to reduce deficits by lowering spending or by infusing cash into markets hoping to prime the pump of prosperity.

The public seems as unsure causing a back and forth in popular opinion and policy -- such as elections in France and Greece.

I believe that we are being asked to make a false choice between reducing benefits and public services on the one hand, or increasing debt in the hopes that jump-starting the economic engine will spark growth necessary to infuse additional cash into public coffers.

With neither extreme the likely victor, solutions may lie somewhere in the middle. I recently was fortunate enough to be given a copy of Bruce Piasecki's most recent book, the New York Times, USA Today and Wall Street Journal bestseller Doing More with Less: The New Way to Wealth.

A couple of themes resonate throughout the book, and perhaps one of the most interesting for me was the idea that frugality is not only a pathway to more wealth, but that it also provides a path to more freedom. I am fortunate that Dr. Piasecki serves with me on the board of director of the Sustainable Business Network of Washington, and so I asked him to offer some insights on the link between frugality and freedom.

One of the first things he pointed out was that compound interest -- the sustenance of credit card companies and the bane of many borrowers -- is a two-way street:

With compounded interest on your side at the age of 40 or so, most professionals, if they can control spending, can live with less work time. One is free when one is free from debt and financial obligations.

He extends the concept of frugality, which most of us associate with financial decisions, to include spending -- or wasting -- time. "If you are frugal with your time, you spend less time in wheel spinning, and less time in the pursuit of the wasteful." For governments this includes reducing the amount of time "wasted in the capitals of our world in 'positioning' to oppose, or lobbying on behalf of what does not matter in the long run."

Not wasting time frees one up for more meaningful pursuits.

Those that begin to appreciate the art of competitive frugality are free to accomplish more since their lives are not wasted. They do not waste time engaging in ideological wars, instead, focusing on how the sisters of frugality, diplomacy and inventiveness are all in the same family."

He also points out that waste extends to materials as well. Efficiency has been a core competency of many of the place where I have been fortunate to work, but not all. "Firms that are free from waste are often the quality firms," agrees Piasecki. "These firms do it by rewarding the whole organization for its frugal competitiveness. This is rare," he concedes, "but it works."

Conspicuous over-consumption, whether it be the exploitation and wasting of precious natural resources, wasting financial capital or undervaluing the human assets of the firm are all examples of egregious waste.

One of the paradoxes of the modern age seems to be that people are caught up in a cycle of almost desperate acquisitiveness, as if the latest gadget, a new car or a larger house will somehow provide happiness. And yet, at the same time, people talk about wanting to simplify, slow down and have a less stressful life without recognizing that chasing after those things is not only exhausting, it also results in higher credit card bills, auto loans and mortgage payments. The idea that physical possessions -- and the mad pursuit of them - -can be a drag isn't new. In 1966, The Beatles sang 'when your prized possessions start to wear you down' ("And Your Bird Can Sing").

Piasecki believes Doing More With Less owes its success in part because it resonated with so many different people, from change management and investing to general management and organizational development "because the ability to get off the treadmill is key."

For Piasecki, 'wealth' is not summed up by one's net worth, physical assets or possessions. "Wealth then becomes a question of bonds, relationships, and smart sharing. To be wealthy is to have worth, in the classical sense."

One important footnote to Ben Franklin's teachings, which form the basis of much of the book, is that he put them into practice, effectively retiring at the age of 42 (being free from the burden of needing to work) and spending the latter half of his life not in idle contemplation but in public service. A similar story can be found in the life of Millard Fuller, who made his first million before his 30th birthday and discovered that while he was technically 'rich' he was also miserable and had lost touch with what was important to him. He gave away his money, based on the 'theology of enough' founded Habitat for Humanity and dedicated himself to a life of service to others and was a much happier and more fulfilled person for having done so.

I don't believe that one has to give everything away and live in a yurt to be fulfilled or that wealth is a bad thing. Indeed one of the most fulfilling benefits of being wealthy is the ability to build relationships with one's family, friends, one's neighborhood, then ultimately to society regardless of how much money one has.

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