Extremes in Personal Finance and the Conventional Approach

This post started as a study of frugality and free spending and turned into something else entirely. Follow along as I navigate through how psychology and society influence the world of personal finance.

The world is full of extremes and the extremists that create them. The personal finance community is no stranger to this. While most people find a comfortable spot in the gray area, the black-and-white-ers take it all the way to the edge.

This may not be such a bad thing, as we’ll soon discover.

The Classic Debates

Consider the following standard personal finance debates that creep up again and again:

  • Extreme frugality vs. Buying what I want
  • Saving all your money vs. Spending all your money
  • Individual accounts vs. Joint accounts
  • Paying down debt vs. Saving as much as possible
  • Leave everything for your kids vs. Leave nothing for your kids
  • Prepare for the future vs. Live ‘in the now’

You get my point…


Mainstream and widely accepted frugality is a fairly recent development due to the recession, and it’s brought its share of extremes which make for a good example.

The hyper-frugal camp opposes any needless spending to the point of obsessiveness, and the freedom camp believes they’ve earned the right spend as they wish and don’t care what it costs them.

Each side tries to unsuccessfully convince the other that they’re right.

The Conventional Approach

Whether they realize it or not, each side of the debate actually helps to keep the grey area established. If the frugal camp pushes harder, the gray area shifts to frugality, until the freedom camp pushes back. Whoever can make the best case for their option at any one point in time pulls in more followers.

The result is the “conventional approach” to doing something – a balance between each extreme, and the widely accepted method by the majority.

A Shifting Target

If you stay alert, you can actually see the sentiment (conventional approach) changing, and especially quickly now as the economy pinches down and everyone is focused on money issues.

It happened most notably and recently with debt. “Pay down your debt as fast as possible in the most efficient manner” is steadily but quickly changing to “Save as much money as possible right now because cash is king.” It’s not a clean and complete shift, but it’s happening.

It doesn’t matter what you think is right – what I’m after here is most people’s perception of the best approach.

The Grey Area

What’s interesting is that I don’t notice either extreme in the mentality of people I interact with every day. It’s because each of them is stuck somewhere in the middle, shifting to either side based on the news they digest and the sentiment they pick up.

This is the ‘They’ in the often-overused “They say that…(insert sentiment).”

Listen. You’ll hear it all day long. Based on the types of media someone is exposed to, it will bounce and shift, and people can shift it further by talking with others.

“Bob, they’re saying that car insurance is going to sky-rocket and we should probably buy used cars…”

“Nonsense, Jim, they’re saying that now’s the best time to buy a new car. You should trade in your clunker!”


The rise of blogs and social media have exponentially accelerated this amazing phenomenon. The advice that’s best, most useful, most relevant and most in line with what we think is right rises to the top.

Sooner or later, more people hear about it. They respond with their own arguments. Extremes are established. The gray area is born. The conventional approach is established, for now.

Weigh In

How do you challenge the status quo? What forms your own opinions? What are your influencers and how do you influence others?

Photo by Cyron

6 thoughts on “Extremes in Personal Finance and the Conventional Approach

  1. Pingback: Personal Finance Buzz
  2. Great way to think about it. As for influence, it’s obviously best to diversify and seek several opinions from those who presumably know more than you do or more than you can reasonably find out yourself. Problem is the time of everyday life, so people probably just settle for 1-2 main sources that they like for a variety of reasons that may have nothing to do with the quality or veracity of the information. But I think it’s very interesting to pay attention to public sentiment via the mainstream media. When everyone started publicly talking about “the economy” when there hadn’t been any of that kind of talk (or much of it) before – that was a huge shift. Now I’m hearing from second and third hand sources of frugal being “the new trend.” The public deserves better and should push themselves harder to not just internalize what’s supposedly the case as presented by the mainstream media.

    1. Great point – limiting yourself to only a few sources of information forces you into a fairly narrow point of view. I think blogs and word-of-mouth communication are more powerful than people give them credit, with more trust placed in them at times than even mainstream media.

  3. One area where I challenge the conventional wisdom of the personal finance community is the buy versus lease a car question. For anyone who cannot own the same car for more than 7 years, I think that leasing is a good option. In fact, if you lease an economy car like a Honda Civic, I think the leasing option comes out way ahead. I have done the math on the lease versus buy and the math favors the lease if you won’t be holding the car for over 7 years.

    1. You’ve touched on another classic debate, and one that I’ve had many times with co-workers. 🙂 Although we may not always agree, it’s people like you who continue to show others that leasing is a viable option, which is a very good thing to do. A singular point of view on anything doesn’t give people any options, while presenting each side logically does. Thanks!

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