During a recent interview with a reporter, I mentioned the importance of living on what you earn. To me, this is a no-brainer. It’s the most basic of financial precepts and the foundation of financial health.
Her response was both fascinating and frightening. She said something along these lines: “Our popular culture no longer supports the idea of living within your means. At least among celebrities, sports stars, TV shows, and music intended to appeal to the younger generations, living on what you spend isn’t something to admire. It’s geeky.”
In one way, I suppose, this attitude makes a certain amount of sense. “Living large” may seem to be one way of expressing a sense of optimism about your future. Go ahead, put it on your credit card. You’re on the way up; you can afford it—or at least you expect to be able to afford it next month or next year. Yet all too often, living large for a season can set the stage for subsisting small for the rest of your life.
I suspect this kind of pseudo-optimism is based as much on fear as on genuine confidence. Many of us have probably had the experience of feeling pressured to spend more than we could afford.
This might be as simple as a one-time incident of going out to eat with other people and ending up at a restaurant too expensive for our budget. We 
aren’t going to say “Sorry, I can’t afford that,” because it would set us apart from the group in a tremendously uncomfortable way.
On a larger scale, our society has spent so heavily on perishable pleasures in recent decades that many of us have developed a distorted sense of what “average” or “normal” should be. We feel a strong need to have the right clothes, cars, and lifestyle so we fit into a group that appears to be increasingly affluent. Saying no to that pressure may feel the same as admitting, “I’m not good enough. I don’t belong.”
Neuro-physiologists tell us one of the quickest ways to trigger our reptilian brains (meaning logic and reasoning go out the window) is to feel a lack of belonging, or being thrown out of the group. In that state, we may find ourselves driven to spend more than we have in order to maintain that sense of belonging.
Confidence in yourself and your future is certainly an important component of success. An exaggerated and unrealistic sense of confidence, however, can lead to trouble. Research done by behavioral economists shows we tend to be over-confident about both our abilities and the future. Buying today what you expect to be able to afford tomorrow can leave you hanging miserably if the ladder gets yanked out from under you while you’re on the way up. The current economy is driving that lesson home in a particularly harsh way.
This renewed awareness that up and down cycles are a fact of economic life may be the silver lining in the black clouds of frightening economic news. All at once the news media is full of articles on how to spend less and save more. It’s even possible that frugality may become the new fashionable lifestyle.
I hope so. I’ve been frugal all my life. I’ve always believed that spending less than I made was a sign of wisdom. If that’s “geeky,” maybe it’s time we developed a little more appreciation for geeks. Maybe they’re the ones who have genuine confidence, with enough faith in themselves to delay some of today’s pleasures in order to invest in their future.
