Are you trying to be more frugal? If so, you probably feel overwhelmed with all the advice about it. A good way to start is to look at how you think about spending and shopping, and about how much ‘stuff’ you actually want.

The ancients knew a thing or two about budgeting. There’s an age-old concept that can help you make that change the way you think about spending. It’s called the golden mean.

It’s not just the advertisers and retailers themselves who urge us to buy. Governments do it too. In 2006, with fears of recession looming, President George W. Bush urged Americans to ‘go shopping more’ to keep the economy ticking over. To head off a recession following the Global Financial Crisis, ALP Prime Minister Kevin Rudd simply handed out money – and much of it went to big retailers like Harvey Norman. But we don’t have to be obedient over-consumers. We can take control.

What is the golden mean?

Forget the traditional sense of the word mean. The golden mean simply refers to the middle way between two extremes. Aristotle praised the golden mean, but a similar idea can be found in Confucius as well as Buddhist philosophy.

How does the golden mean work?

I discovered the golden mean for myself by accident. It was the first time I’d sold anything on eBay. I was selling a Victorian white-painted cane ‘what-not’ (a silly name for decorative shelving).

The person who eventually bought it had recently purchased a holiday house and was looking for quaint ‘pieces’ for it. My piece suited her perfectly.

I can remember watching the amount increasing as the bidding began. In the end I think the final price was about fifty bucks. This felt like a fair price for both of us. It was enough for me to feel that I’d made a nice little profit on something that I loved but had no place for – there were just no convenient corners in my flat for this piece, and it was impractical because the shelving didn’t hold much. And it was a low enough price for the buyer to feel that she was getting a slightly battered antique for a reasonably cheap price.

In other words we were both happy. Neither of us felt ripped off.

This was a revelation to me – it was possible for both buyer and seller to be happy with the deal. This is the golden mean at work.

This point came up again a few years later when I was discussing apartment rental prices with my brother-in-law (family members are great for refining views in this way :)). Tax arrangements in Australia favour property investors over first home buyers, and there are no restrictions on rent increases. In a tight market, this makes most landlords profiteers by default.

From our discussion it soon became clear that my brother-in-law’s only conception of fairness was a landlord asking the maximum amount that the market would bear. For him, there was no grey area between making a killing from a rental property and offering rent so low that it was basically charity.

But of course there is a place in between. This is where a landlord offers a middling rent because he or she values a happy, long-term tenant who will look after the property, and presumably doesn’t want to make the tenant’s life so miserable that they move somewhere cheaper. This isn’t charity, it is fair dealing. It is also the golden mean at work.

How do you incorporate the golden mean?

The golden mean can be applied to all areas of buying, selling, and preparing your budget. Here are some tips for incorporating this classic idea into your life.

Reduce your spending. If you spend excessively, rein it in, but don’t go overboard. Find a middle way between splurging and being so strict you buy no treats at all. If you’re on a strict budget for financial reasons, make sure you include regular small treats.

Reduce the time you spend shopping. If you spend too much time shopping (as opposed to too much money), reduce the time and use it to develop hobbies or to improve your health and wellbeing.

Don’t be too focused on money. We all have to survive, and getting your finances sorted is essential for your long-term wellbeing. But money is not the main point of life. A sole focus on money making is a short cut to a poor quality of life. Strive to add balance to your life with some fun and healthy activities.

Become a good time manager. It’s hard to lead a balanced life when the world is set up to encourage us to run ourselves ragged with work. Learn to work smarter rather than harder.

Set a fair price. If you sell something, set a fair price rather than one that’s too high or too low.

Don’t always buy the cheapest product. There are many reasons not to always buy the cheapest product. Buying Fairtrade goods that provide a fair price to the people who produce them, and supporting small independent retailers are two ways to use the golden mean when choosing where and how much you spend.

Find the balance between too much stuff and no stuff at all. In recent years minimalism has become fashionable. This is an understandable reaction to our obsession with ‘stuff’. But there’s no need to throw things away that you might need in future – use your intuition to decide what you can let go of, aim to bring less stuff into your life in future, and make use of what you already have.

Never forget there is a golden mean, and that it does not make you mean at all. Instead it empowers you to spend in a way that is right for your purse, the environment and the person from whom you buy the product.

Until next time!

If you enjoyed this blog entry, you might also like Are Any of These Negative Beliefs about Money Holding You Back?

Be social - please share this blog entry using the social media buttons on your left.