As a Scot, I’ve heard all the jokes about being tight-fisted, and of having deep pockets but short arms. It’s in my blood to be frugal, but I also don’t want friends to think I’m taking advantage of their generosity. So, how does one not lose friends and alienate people with FIRE?
In our quest for financial independence, having a reasonable budget and tracking expenses are great ways to identify surplus money to invest. Once you get started, you will no doubt find areas which you can cut back on even further.
But what level of cutting back is going too far?
Let us have a look at a few areas that are ‘going too far’ with cutting back, and will have you labelled a skin-flint! (Skinflint is an old expression, probably from thieves slang, whose meaning suggested the idea that one would even skin a flint to save something of it.)
1. The Pub
Going to the pub is a British tradition. I spent my 20s and early 30s spending far too much time and money here. Cutting back on boozing is a great way to save money and improve your health. Those beers are about 200 calories a pint, and in London, they cost around £6. A good session will set you back a fair chunk of cash.
My tip: If you want to save money is don’t go. Simple.
If you go with some friends or colleagues and then try to save money, it isn’t going to end well for you. The social norm in the pub (in the UK) is to buy a round (buy everyone present a drink). So you have no choice but to spend say, £25 on some beverages if you’re going to the pub with say, 4-5 people.
The alternative is to sit out the first few rounds and then disappear sheepishly. You’ll get away with that a couple of times, but people will start to notice you aren’t playing the game and you will be labelled a cheapskate! (The meaning of “skate” in “cheapskate” seems to come from British slang and refers to “chap, fellow.” It is based on the Scottish term “skyte” which means “a contemptible person” and this, in turn, comes from an older term that means “excrement”.)
I’m a great believer in pub round-karma. If you buy the first round, subconsciously people will remember you as being generous. If you buy the 4th round, everyone is too pissed (drunk in UK!) to care or remember you purchased the beers. So even if you don’t skimp on the round, you might still be labelled a skinflint! Of course, there may be times when you buy the first round, and then the round may come back to you which you buy. Then everyone goes home. Don’t feel hard done by as the next time you are out; you can be the 2nd or 3rd guy to buy the round, and you will have it paid back. Round-Karma works.
My advice is if you are going to go to the pub you have to accept this is not a frugal activity, and you should budget it in. Try going fewer times to save money, but don’t be the guy that makes everyone else pay for your beer.
Restaurants are lovely places where we pay to sit in a pleasant environment with friends or family and enjoy good food cooked by experts. I love eating out, but I know that doing so is a sure way to burning through the cash.
Again, like the pub, if you choose to go, you are accepting certain social norms and have waivered your ability to save money. However, there are a couple of things you can do which are socially acceptable.
Unlike the pub, you can choose to go to a cheaper restaurant. There are many excellent neighbourhood restaurants which are significantly cheaper to those in the centre of town. It’s worth seeking out these places for the price and the food. You can invite friends there and take Kudos for living in a great area with good restaurants.
Don’t drink alcohol. I’ve found that if you want to save money and eat out, don’t drink. The wine and beer is the most expensive part of the meal. It also allows you to say that you will pay less when the bill comes, and generally, most people will accept that.
Do not be the guy who orders the most expensive dishes, two bottles of wine, drinking one for himself and then suggests that everyone splits the bill. People hate that guy, and they will mentally label him a cheapskate.
Having said that, I’ve found that in 15-20 years of eating out that the difference between splitting the bill between all and each paying for what they had rarely pays dividends. When I went back to being a student a couple of years ago (pre-FIRE enlightenment) I’d occasionally eat out and would insist on only paying for what I ate. I had an excuse and wasn’t shunned. It was usually only about £3-4 less than the ‘split’ bill, which is hardly worth the social shame of being that guy insisting on paying their own way. It also negates the point of going for the cheapest dish.
The only way to save money when dining out is to go to a cheap restaurant or don’t eat out!
3. Being inconsistent
Consistency is key. If you’re on holiday with friends and spending a vast amount drinking only to then quibble over going into a museum which costs €8 the next day on the grounds you are skint is inconsistent (if it’s a crappy museum then that’s another matter!).
Doing this annoys people because you are first, happy to spend when it suits you, and secondly, you can’t be that broke as you are on holiday in a foreign land! It doesn’t matter whether you are broke or not; people will make their own conclusions so its best not to put yourself in that situation.
Personally, I don’t worry about spending money on holiday. It’s a holiday after all which for me means a break from normal life (including FIRE) so I cut loose a bit and enjoy the experience. After all you are not spending money on what you’d spend on at home (petrol, train fare etc) so you can probably afford it more than you think. Plus, going anywhere not London where I live, is generally cheaper!
4. Free-spending friends.
Doing FIRE is a very niche area. Lots of your friends would probably not understand or even, for some reason, feel threatened by your accumulation of wealth. Usually, you are friends with people whom you work with, went to Uni with or to school. They are likely to earn a similar amount to you, but unlikely to be saving 50%+ of their income. So they will want to spend it with you.
This can lead to any number of problems. They will want to go to a really good (expensive) place for dinner. They want to go and stay in a fancy hotel on holiday. Or buy that really expensive bottle of wine.
I have a friend that I know will want to spend heavily when I meet up. If I go to a restaurant with him, I’m going to drop £60+ and I don’t want to spend that much, but that’s how he rolls. Hell, I enjoy eating at the places he takes me too as he has excellent taste. I just have to accept that I like his company and want to meet up, but don’t want to come across like a friggin cheapskate. So what do I do about it?
If you start avoiding that friend because of their spending, that’s sad and can lead to resentment. They might think you are avoiding them as a person. They might think you aren’t any fun to be around and stop calling you.
I try to suggest meeting somewhere cheaper before he suggests somewhere, like a pub where a meal only costs £15-20. It’s a compromise for both, but we both get to meet up and have a laugh. Or I invite him and his wife to my house and buy some beers and cook dinner.
As long as you don’t give in to this level of spending frequently, you will be fine. You’ll end up saving 52% instead of 54% that month. It’s not a big deal. I don’t think FIRE is worth sacrificing long-standing friendships to achieve, but if you aren’t careful, it could happen.
Conclusion on how not to lose friends and alienate people with FIRE.
You can go extreme with FIRE and try and save every penny you have. I believe that it is going too far and it’s better to strike a balance. It’s one thing to be frugal, but if your friends and family feel you are taking advantage of them, and you are accumulating vast wealth, you are not going to be popular. In fact, if your money-saving is going that far, you deserve to be labelled a cheapskate!
Do you have any experiences where FIRE has created awkward situations with money?