Frugality can be like going to the gym in January. After ignoring your money (or your body) for a few months, you decide that things are going to change. Your are serious this time! However, frugality often fails for the same reason that gyms clear out in February—it is really hard to stay disciplined. So, how can you make the process of being frugal easy…and I would dare say fun? It all starts with identifying your core values.
I learned how to identify my core values from David Walker. At the time, Walker was the Comptroller General of the United States— the nation’s top accountant. Why was I interacting with an uber accountant? Prior to business school, I was a specialist with the United States Environmental Protection Agency in Washington, DC. Walker came to speak to EPA about the nation’s ballooning deficit and what he thought we should do about it. As fascinating as this speech sounds, the big take-away for me was his message about values. When Walker took over the Government Accountability Office, it was unclear what the agency stood for. As a result, he convened a series of meeting with management and staff to clarify the three values which defined the agency. The result: accountability, integrity and reliability.
At the conclusion of his speech, Walker challenged the audience to state what there three core values were. I thought to myself, “Listen Mr. Accountant, I know exactly what I stand for. I do not need a silly exercise to find that out.” Yet, I struggled tremendously to write down what my core values actally were. Over the ensuing weeks, I thought a great deal about Walker’s question. Over time, I determined that my three values were: fellowship, exploration and stewardship. Fellowship represents the importance of my relationships with family and friends. Exploration is about my desire to explore new places and ideas. Finally, stewardship represents my desire to leave the world a better place than I found it.
What do these values have to do with frugality? Everything! Decisions about how to spend your money are really though. These decisions become even more challenging once you enter an MBA program and are cut off from the wage spigot. Without a compass to guide you, it is really easy to determine that everything is important, and, therefore, deserving of your loan money.
Core values act as a filter to make tough trade-offs throughout school. As I stated in my initial post, frugality does not mean sacrificing your MBA experience, it just means making smart decisions about maximizing your limited resources. A case in point, Haas has a gloriously long winter break—roughly five weeks. Early in the semester I had to decide whether or not to spend money on a trip with friends. Using my core values, I determined that the expense was definitely worthwhile because it would reinforce both exploration and fellowship. In contrast, a few weeks later an opportunity to go to Vegas came up. Now, I like Vegas as much as the next guy, but filtering it through my values helped me realize that there were far more reasonably priced ways to hang with friends.
So, before you do anything else, figure out what your core values are. Like many things, I think three is a sweet spot. Once you have these in your hip pocket, many of your budget decisions will become much easier. Unfortunately, I cannot guarantee that identifying your values will help get you to the gym!
Frugal folks know what they want. Then they buy it when it's cheap as chips.
