In a down economy, there is always focus on low cost. Job cutting, project re-definition, scaling back expenses, finding new sources of parts, all of these actions can lead to lower costs and help businesses stay alive in crappy economic climates. I think that the average (electrical) engineer can’t but help to let this mentality creep into other parts of their lives. In fact, I think the best engineers enter the profession and excel with this mindset. This revelation about engineering penny pinchers may have been stumbled upon by myself after being accused of being overly-thrifty a time or two. I don’t mind it though; I think maintaining a mindset of low cost is good for my work life and my personal life.
I have been on my own personal finance journey ever since I bought a house in the middle of a recession. I have been a regular reader of Get Rich Slowly, a fantastic blog about personal money issues, getting out of debt, smart money planning and tips on living a simple and frugal life. One of my favorite books suggested by JD has been The Ultimate Cheapskate’s Road Map to True Riches. It is full of interesting ideas to save money in non-traditional areas and generally living a simple and fulfilling life. If you’ve never read it, I highly suggest it. I also suggest to my engineering friends out there to consider how you can refocus your engineering efforts to match these principles. In his writing Jeff Yeager lists “6 golden rules for ruling your gold”, but I think they have everyday practical implications in engineering. Here is how I translate them for a thrifty engineer:
- Live within your means at thirty, and stay there. — I translate this idea as staying on budget for a project. A simple idea but many projects fail to do so. However, this also assumes you have a realistic budget in the first place. Allotting $10 for test equipment when you don’t have any and you plan to work on high speed signals is not a realistic way to start a project.
- Never underestimate the power of not spending. — Again, this is my translation but I would say this would be to cut out extraneous costs in a project. True, this sounds a bit scrooge-like, but I feel if I was bootstrapping my own company, this would be the only way I would operate. Ten years down the road you will remember the feeling of accomplishing your goal of releasing a product more than you will remember the t-shirt and mug you got commemorating it.
- Discretion is the better part of shopping. — I’ll speak more on this later, but the idea is to understand when you are buying a valuable product or service and when you are just being “sold” on something. It also means you have to understand the intricacies of what you are buying. From an analog engineering perspective, I think of this as buying a switching converter or something similar. Sure, you know you need to change the voltage supplied to a part of a circuit, but unless you know why you do or don’t need the latest and greatest buck converter, you might end up paying too much (for something you won’t necessarily need…could a linear regulator do the trick?).
- Do for yourself what you could have others do for you. — Design services are available for just about any task in engineering.If you were desperate enough, you could farm out every task in a project to a separate engineering firm that would piecemeal put together your project for you (READ: outsourcing). While it’s nice to use this service every once in a while to help speed up a portion of a project you are not an expert with, the time it takes to learn what has been done for you will often outstrip the time you save. Then if something breaks later no one knows how to fix it and you must pay the same design firm to help you again.
- Anyone can negotiate anything. — This is my favorite of the six golden rules and the one I have been taking most seriously lately. My attitude has been, “What is the downside to asking for a discount from a vendor?” If you are the customer, the most they will tell you is that they cannot swing any discount; at that point I thank them for their time and tell them I will get back to them after talking to some competitors. In a recession, people are eager to make a sale and are willing to lose some of their margin to do so. Don’t think of it as costing them money, think of it as gracing them with your business in a down time.
- Pinch the dollars, and the pennies will pinch themselves. — Paying $0.10 more per resistor when you are only buying 100 may have huge dividends. It could reduce the error in a circuit by orders of magnitudes. This is a small expense. Paying $100,000 for an oscilloscope that can measure 80 GHz when you really only need 10 GHz (still a little too RF-y for my tastes) could save you a significant amount of money and raise your overall margin for a product. Making money decisions based on need instead of “ooo-look-at-this-ery” can help project teams, companies and individuals have more rewarding payoffs at the end of a project.
Adding to the cheapskate stew and something briefly mentioned in point 3 above is discretion when buying a new product. I believe engineers are well suited for this mindset and that it stems from a slight mistrust of marketers and salesman. This is neither vituperation against engineers or any salesmen or marketers I have known, just that it is a general trend I have seen. I believe it is the result of encountering both sides of the sale. From the product designer perspective, there is often tension with marketers and salesmen when there is lack of communication. If the salesman talks to a customer and tells them that a new product can jiggle a widget 3x faster than the competition, the customer may purchase the product thinking it will always be jiggling at 3x of FluxCorp‘s latest product. But if the product can only sometimes and under the correct conditions jiggle that fast, well, there will be some problems; when the salesman relays back to the engineer that the customer is unhappy with their new product, arguments and finger pointing may ensue. On the other side of the sale, engineers often encounter sales forces descending upon them to encourage using their sub-widget in the new widget jiggler. If the salesman can supply a portion of the design to your new product then they will share in your success, because every new product made is a sale for them (albeit only a fraction of your product’s final sale price). However, engineers sometimes encounter marketers and salesman (on the “being sold to” side of things) that may provide some “stretching” of the truth of a sub-widget’s ability. In either case, I believe that being a part of selling to others and being sold to helps hone engineers’ ability to sniff out when they are being sold something (as opposed to buying something because they want/need it). This is both something learned in engineering and a quality that some of the best engineers possess.
Yet another thing that drives engineers towards thriftiness is the nature of their jobs. If you look at an engineer and compare them to a scientist, there are some interesting distinctions. First, engineers are responsible for bringing products to market. This means that whatever technology they are using (oftentimes first discovered by scientists) must be viable on a large scale and must be done efficiently. If a scientist determines that a capacitor can hold more energy if you tap on it with your finger 1000 times before applying a voltage across it, that might be a brilliant (albeit completely fake) discovery. The engineer has to worry about how that capacitor can be sold at a reasonable price (in relation to the demand of the marketplace) and how to possibly produce millions of finger-tapped capacitors as fast as possible. Most importantly, the engineer and the company he/she works for is judged on the difference of the cost and the selling price (margin). More often than not the marketplace will be the one determining the price, so the only option for making more money is to reduce the costs in producing the product. A scientist may have external funding which allows for time to discover the newest technologies that will be later implemented; there is less direct influence on the success of the technology by near-term funding (though I know grant-writing is no picnic). The direct payoff and re-investment of profit from a successful product introduction influences how engineers operate. The thrifty engineers are successful because they can have the money they save go directly back into their next product.
A counter argument to being a (true) cheapskate is when it comes to quality. Many times in work and in life there can be significant savings from buying a quality product the first time. An example might be buying a high quality, variable temperature soldering iron (maybe even with an auto shut down). Compare that to buying a piece of junk Radio Shack soldering iron that you happen to leave on after working on your Wurlitzer. The former can last you many years and will perform well and help you solder many different products throughout its lifetime. The RS soldering iron burns out in less than a year (perhaps due to negligence, we’ll never know) and is not capable of soldering even the largest components properly. In this example there is money saved by not having to purchase another RS soldering iron and there is time saved while working on a project. So while I say that I am a cheapskate, I try to take all costs–including time–into account when purchasing something.
So answer the question Chris. Are engineers naturally cheapskates? After looking at the facts here it is pretty obvious that no, engineers are not naturally cheapskates; rather, they are often in a position to pick up money-saving skills while working on engineering issues and are well liked by management if they succeed in saving money. Also, if you happen to have some innate cheapness you will be at an advantage when starting out in engineering. Some of the people I have encountered in engineering have shown me the benefits of reducing costs in their personal lives and always knowing as much as possible about what they are buying so they can make make the best possible decision.
How about you? Are you a cheapskate? You definitely don’t have to be an engineer to be one. Do you find that engineers are naturally more thrifty? Please let me know in the comments or take the poll below!
Photo by MacQ