A Financial Frame of Mind: Drawing the Line Between Frugal and Obsessively Cheap

Michael Jackson was known for the lavish shopping sprees that he went on for his own amusement. According to unauthorized biographies by Randy J. Tarraborelli and others, though, Jackson could be grasping when it came to compensating the music producers, attorneys, managers, security agents and other professionals whose skills he depended on.

Michael Jackson’s life carries an important moral lesson on the line between frugality and cheapness, generosity and flash. ┬áIf your particular brand of financial philosophy hurts anyone — you or others in any way, you’re probably doing something wrong.

What are some of the other tests to apply to yourself?

What is your bottom line — price or value? It’s an important test to apply. If you find yourself picking a cheap, low-capacity computer solely for the price savings to be had and don’t feel like thinking about how you lose out on productivity, you could be crossing the line from frugality to cheapness.

Do you want to save to spend, or just save to save? Those who are frugal love to spend, but only on the things that they personally consider important. They may not shop for clothes or gadgets, but may spend on a college course or a great vacation. The frugal person does want to spend, but wants to do it on their own terms. A person who is cheap saves for no good reason.

Is there any elective spending that makes you happy? If you tend to lean towards cheapness, there is probably no kind of spending that does. Every elective expense leaves you with a feeling of guilt and dread. If you have a healthy attitude to money, though, there are likely to be plenty of things that you can think of, that you would spend on without feeling bad.

Are your choices short-sighted ones? Would you buy a cheaper home for the saving right now, even if it means a poor long-term investment? The inability to loosen up for a better investment is a hallmark of obsessive thrift. When it comes to investments, it’s important to take the long view.

Is your thrift more about smartness or brute force? People who tend towards frugality spend less money by being smart about their shopping. They might always buy quality brands, but choose the previous year’s model to save money. They might spend some time couponing, and always be careful never to pay credit card interest. When you’re cheap, you usually go all out, and simply shut down your spending. Your purchases will tend towards unreliable, low-cost brands, or not buying anything, at all.

Do you like spending to make others happy? Frugal people usually do. They find their careworn minds loosening up when it comes to an opportunity to spend a little money to make someone happy. If you find that you’re unable to happily spend for any reason, there’s a problem.

Finding the will to change

Whether you hold on to your money or blow everything to impress others, you basically value money itself, rather than the power to create happiness that it represents. While being tight-fisted can make you happy in a narrow sense, it can have devastating consequences on your life and the lives of those who depend on you. It’s important to step back, take a look at what your relationship with money does, and gradually develop the will to change. If you’re willing to give yourself enough time, and to begin a careful move towards moderation, you’ll find that it leaves everyone far happier.

Start by spending on others

Buy the best gifts for your loved ones on birthdays and on holidays, going as far as you can afford. Look for good charities to give to, and don’t claim a tax break. Tip well, and be generous when you pay people who work for you.

Certainly, you shouldn’t spend any more than you can actually afford. It’s important when you begin to loosen up, that you are aware of exactly where you’re headed financially. If you aren’t used to being free with your money, it could end in overreach.

Make solid, logically defensible choices

One of the best ways to make the change is to carefully begin paying for greater quality in every purchase. Whether it’s a car where you get greater protection or better quality foods that are more nutritious, upgrades where you can easily calculate the value that you’re getting for your money are an excellent way to begin.

Look for the irrationality

A careful look at your motivations for not wanting to spend money is usually the ultimate way to change. It can take a painful look at yourself to be successful. In the end, though, it’s worth it.

Sheldon Roberson came across frugal living a few years ago, and was instantly hooked as she realized how it could assist her as an investor. She encourages others to learn about these lesser-known ideas and writes on the topic for a small number of blogs.

3 Important Actions To Take Before Trading Online

When it comes to trading online, there are many different brokers and websites that specialize in helping people to trade stocks, commodities, or even currencies. This even goes above and beyond the ability of many individuals to manage their own 401(k) or Roth IRA accounts from the comfort of their own computer or home office. Technology has allowed for some amazing advances, however even with all of these opportunities it is important to take 3 major actions before you start even your very first trade online.

3 Trading Online Steps

Action #1: Do Your Homework/Research

One of the first steps you need to take is to slow down and make sure you do some serious research before committing to any specific company for trading online. The terms of an IRA account from one company to another are not the same. The cut certain Forex brokers take off each trade is not the same. While some of these differences can seem extremely small, sometimes being just a dollar or two, or a single percent, over the course of 30 or 40 years of investing that can lead to massive differences in the final amount.

The entire responsibility of using the best providers for your online trading fall squarely on your shoulders and it is always worth taking a next or week or few weeks to do your research to make absolutely sure you are only doing business with the absolute best of the best.

Action #2: Find Broker Software You Like

Online trading can be tricky even in the best of circumstances. Whether you are looking at trading stocks, speculating on commodities, or trading on the ever volatile Forex market, having the best broker software is critical to success. No matter which of these markets you’re dabbling in you want to make sure you are using an online program that is accurate, extremely fast (preferably real time), and very easy for you to read a lot of information in a single glance.

While every single person is going to have their own preference, the most important thing here is that your information is accurate and up to date and that you are absolutely comfortable with being able to use that software. If you can find a broker software that you are comfortable with, and that will definitely give you better results.

Action #3: Understand How Markets Are Different

When you are looking at trading online you also need to make sure you don’t make the mistake of thinking all markets are the same. Stock markets are the most stable by far and are driven much more by information and fundamental reports as opposed to technical chart patterns. Commodity trading requires much more knowledge of how speculation and technical chart analysis works in order to consistently profit.

The Forex market, where currency pairs are traded, is by far and away the most volatile and risky of all of the markets and should only be traded by professionals or after you have spent a great deal of time taking advantage of practice software to make sure you have it down.

In Conclusion

There’s no question that trading online has its own risks, but the opportunities are amazing and by following the 3 basic actions in this article you will be truly ready to go.