Extreme Saving is one of the four approaches to achieving financial independence that I wrote about in my book Job Free. The idea is to save the majority of your income (ideally more than 75%) so that you can retire early within 10 years. Some blogs advocating this approach are Early Retirement Extreme, Mr Money Mustache, Go Curry Cracker, and Root of Good.
The modern extreme saving movement started with Joe Dominguez and Vicki Robin’s influential 1990s book, “Your Money Or Your Life”. However, the concept of extreme saving much older. In fact, there were extreme savers in Victorian times.
Samuel Smiles was a bestselling Victorian author whose books encouraged ordinary people to live frugally and save, in order to secure a better future. In the nineteenth century, saving was the main way that ordinary people could free themselves from poverty and live a better life. Smiles did not come from a wealthy family, he was a self-made man. This is how he wrote about saving in 1875:
There is a dignity in the very effort to save with a worthy purpose… It produces a well-regulated mind; it gives prudence a triumph over extravagance; it gives virtue the mastery over vice; it puts the passions under control; it drives away care; it secures comfort. Saved money, however little, will serve to dry up many a tear—will ward off many sorrows and heartburnings, which otherwise might prey upon us. Possessed of a little store of capital, a man walks with a lighter step—his heart beats more cheerily. When interruption of work or adversity happens, he can meet them; he can recline on his capital, which will either break his fall, or prevent it altogether.
Samuel Smiles not only considered saving the best way for individuals to better themselves, he also saw it as a social good. A saver not only helps themselves but, through their actions, leads to the betterment of society as a whole. Smiles outlined the positive social role that savers play:
It is clear that man would have continued uncivilized but for the accumulations of savings made by his forefathers,—the savings of skill, of art, of invention, and of intellectual culture. It is the savings of the world that have made the civilization of the world. Savings are the result of labour; and it is only when labourers begin to save, that the results of civilization accumulate. We have said that thrift began with civilization: we might almost have said that thrift produced civilization. Thrift produces capital; and capital is the conserved result of labour. The capitalist is merely a man who does not spend all that is earned by work.
Modern day extreme savers emphasise that achieving financial independence is not easy. It requires significant lifestyle changes and the right mindset. Samuel Smiles told his readers the same thing back in Victorian times. As he put it:
Thrift is not a natural instinct. It is an acquired principle of conduct. It involves self-denial—the denial of present enjoyment for future good—the subordination of animal appetite to reason, forethought, and prudence. It works for today, but also provides for tomorrow. It invests the capital it has saved, and makes provision for the future.
Smiles was writing for the growing literate working class, not for rich people. He was a bestselling author, so his ideas were adopted by many and considered mainstream. Yet his recommendations about saving were far more ambitious than you might expect. He cites a recommendation that coal workers should be saving 40% of their income. He discusses whether the general advice save half your income is “perhaps” too ambitious. Half your income!
This was in the nineteenth century, when real incomes were a tiny fraction of what they are today. Yet how many people today achieve anywhere near the levels of extreme saving that Smiles advocated? People took saving a lot more seriously back then.
Samuel Smiles’ book, Thrift, outlines his whole approach and is easily available online in kindle format. If you want an explanation of the modern extreme saver movement, check out my own book Job Free.