A successful entrepreneur shares her thoughts on business success and failure.

Entrepreneurs: Is Extreme Frugality A Waste of Time?


One thing that consistently amazes me is the sheer number of inventive ways frugal bloggers reduce their expenditures. From making your own laundry detergent to sneaking candy into a movie theater, there are many options for those who want to make every dollar stretch farther.

What I haven’t seen, though, is a detailed breakdown of whether some of these activities are worth it for those of us who are not on a salary.

The Entrepreneur vs. the Salaried Worker

When you have a salaried job (assuming you are not running a side business), every hour that you do not work at your job is valued at $0. Therefore, practically anything you do to save money will be an effective use of your time — assuming it does not cost you more in resources (e.g. driving 10 miles to another grocery store to save less than a dollar.)

When you start a business, however, that equation changes considerably. Now, every hour you work may bring you more income, so frugality matters less. The question is: how much less does it matter?

Personal Frugality vs. Business Frugality

I break down frugality into two key components: personal frugality and business frugality. To be expertly frugal in your business, there’s really only one skill you need: negotiation. By becoming an expert negotiator, you will save more money in an hour than you can save in a year doing menial tasks.

Personal frugality is more hairy. There are two scales I use to determine the worthiness of a personal frugality project:

  1. What is this project’s hourly rate?
  2. How much do I enjoy this project?

Keep in mind that you must calculate your baseline hourly rate as an entrepreneur before the hourly rate scale works.

Which Personal Frugality Tasks Pass The Test?

Let’s use one of the two examples above. Putting a bottle of water into my purse and taking it into a movie costs me about 1 minute in time and saves me $4.00. Its hourly rate, then, is $240.00. I’ve set my baseline hourly rate at $50, so it passes my frugality test.

Washing my own car (an example I tried after reading about it on frugality blogs) costs me 30 minutes of time and saves me about $10. I am also not as effective as the high-pressure wash. Its hourly rate is $18 (optimistically, since I will need to wash my car more often this way since a hose does not get off all the grime.) It does not pass my frugality test.

What about enjoyment? Sometimes, the enjoyment of a project is worth more than its cost. J.D. over at Get Rich Slowly, for instance, recently planted a garden. He is meticulously tracking how much money and time he has spent on it.

Due to his excellent tracking, you can quickly see that the garden is a loss for him. He has spent 39 hours and $318.43 on supplies, and only harvested $174.51 of produce. However, it’s also clear that he and his wife greatly enjoy tending the garden.

There’s nothing wrong with these sorts of activities. However, be careful of labeling them “frugal”. They are simply hobbies — not unlike any other recreational activity. In this case, the true frugal choice would be going to a local farmer’s market and buying the food.

Where Should You Draw The Line?

Once you have set your baseline hourly rate, consider outsourcing both personal and business tasks that you do not enjoy that fall below that rate. This is where many business owners — including me, for many years — fall short. Even after hiring an office manager at Simpli, I still did not have anyone to help me out with the tasks I hated doing at home. I would come home after a long day to a dirty house, filled with dishes and laundry, and I would feel even more exhausted.

Your business will grow faster, and you will be much less susceptible to burnout, if you use frugality sensibly: cut down on material expenses. With the money you save, hire someone to do the tasks you don’t enjoy doing. Then, invest your new free time into growing your business.

Having hired an assistant who helps me 8 hours a week with anything from my personal laundry/dishes to email to letters to forms, and having understood how much time this frees up in my life… I would “trade down” my living situation in every way to keep having an assistant. I would trade in my beloved LIL ZOOM. I would move to a tiny apartment. I would move to a cheaper part of the country.

Why? Because I value my time, and my sanity, more than any material object.

I want to hear from you! How has frugality helped or hurt your business? How do you balance your time vs. your money? Please leave a comment below.



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After selling my online business at age 26 for over $1 million, I created this blog to help you grow your own business quickly.

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