frugality

The Top 10 Reasons Frugality Is So Liberating

Picture this. You’re at the mall with your buddy, wife, creepy neighbor…whoever.

You see a brand new Microsoft Store that’s just opened up, and you want to check it out.

After all, there is a line of people waiting to play Xbox One on a 50-foot screen, so it must be cool.

As you’re walking around, you see a person who couldn’t be more than 20 years old at the register. They’re dressed in regular, everyday clothes and have all the makings of a student.

The next thing you see is the laptop this person is buying. It’s the hottest new laptop available, and it has a juicy price tag of over $2,000.

You immediately think how in the world is this kid going to afford that? One answer might be “daddy” but let’s not assume that for now.

You then see them pull out their wallet and sift through a stack of plastic cards until they find one that’s brightly colored. Oh, look! It’s a Microsoft Store card!

As they’re walking out with this brand new device, you overhear this person say something like “what a great deal this was…” and “…it’ll only cost me $54 a month!”

That’s one of my favorite marketing ploys – you know, the one that makes you feel better about what you’re buying because it’ll only set you back $54 each month?

The truth is, Americans are in loads of credit card debt. Despite this fact, we continue to buy things we think we can afford because we don’t have to pay for them now.

This is just one of the many reasons that you should commit to frugality right now.

“Frugality is one of the most beautiful and joyful words in the English language, and yet one that we are culturally cut off from understanding and enjoying. The consumption society has made us feel that happiness lies in having things, and has failed to teach us the happiness of not having things.” ― Elise Boulding

Let’s first define frugal living

What does being frugal mean to you? This might be where the disconnect is for many people, in that they don’t understand what being frugal is.

In my opinion, in its simplest form, being frugal means you’re living well below your means. Living below your means is a crucial element to being frugal and experiencing the satisfaction of the ten points below.

If you haven’t read David Bach’s The Automatic Millionaire, I strongly suggest you do. The advice he gives is advice you already know, but you’re just not putting it into practice.

In his book, he talks about the psychology of money just enough for the average person to connect with. The major focal point that stood out for me was that we don’t have to budget – in fact by budgeting we might be hurting ourselves.

He compares budgeting to counting calories. It might work for a short period, but eventually, human nature is going to kick in, and we are going to get sick and tired of doing it, then we’ll go on a binge.

Think about all the information we take in around personal finance, being frugal, retiring early, etc. Must of this stuff you already know!

But you keep reading it, don’t you? Why?

Maybe it’s because there’s a void in your life that you need to fill and reading this kind of information is the catalyst to kick you in the right direction. That’s my answer at least.

That’s why I keep reading. That’s why I keep writing, as well.

Before moving on, define what being frugal means to you, and keep that in the forefront of your mind as you read through the rest of this post.

1. You’ll retire earlier if you commit to frugality

This seems obvious, right? Then why aren’t we all retired yet?

It’s the same reason as I discussed above with David Bach’s book. This advice is common, and it’s everywhere, yet we aren’t taking it!

There’s something in the human brain that helps us prove why we do certain things. Let’s look at a quick example.

I know I should save money, but my friend is in town, and he wants to go to this new restaurant. Plus, since they’re visiting, I should probably pay for their meal as a courtesy. They’d do the same for me, right?

There’s the justification.

Now, let’s use this fake scenario to do a little math because I’m sure you haven’t seen this example laid out a million times. Here goes:

Let’s say in this case; the person spends $100 for themselves and their friend to eat. If instead they saved that money and made a home-cooked meal with ingredients they already have, they could invest the one-hundred bucks, right?

Let’s say this person plopped that $100 into an IRA and let it sit for 30 years without touching it or adding to it. Let’s assume that it grows at a rate of 6%, which is a fair estimate these days (half of what Mr. Dave Ramsey uses in his book, by the way).

Here’s what we’re looking at after 30 years:

time value of money

Okay, so $600 alone won’t help you retire early, but the point I’m making is that making small changes NOW will lead to bigger changes later. Again, advice that’s been given a million times by tons of “financial experts,” yet the median retirement savings for people under 35 is less than $12,000.

That’s disturbing.

2. You’ll get rich way faster

I’m having fun using this age-old concept of the time value of money, so let’s keep rolling. I remember when I first learned about the time value of money in college (yikes… we should be teaching our kids sooner).

It was in an introduction to finance course with a guy named Mario. I distinctly remember memorizing the definition for my test but not grasping the concept of what it meant – big mistake.

Understanding the time value of money is the most important foundation steps to becoming rich.

I’m going to use another concept that David Bach talks about in The Automatic Millionaire – and that’s his idea of the Latte Factor. Again, I strongly urge you to read about this in his book.

Let’s go back to the previous example I used with the friend who bought their friend dinner for $100. $100 on eating out isn’t crazy in today’s world.

Americans are now spending about the same in restaurants as they are on groceries (oh boy…). So let’s assume this person spends $100 a month eating out – whether it’s paying for friends, a collection of Chipotle runs, or getting breakfast every weekend.

I’ll be conservative here and say our friend cuts their spending on eating out in half and only spends $50 per month and invests the other $50. Assuming the same rate of return, 6%, over 30 years, this person would have accumulated over $50,000!

time value of money

Now let’ get crazy… What if they instead cut out the $100 on eating out each month and invested all of that? Let’s look.

time value of money

Over $100,000 after 30 years just making this small adjustment. Wow. Think about what would happen if you started injecting more frugal behaviors to this concept? Let’s make up some other prudent changes, just for shits and giggles:

  • You cut out cable and only use Netflix, saving $80 per month
  • You refinance your mortgage to a lower rate, saving $100 per month
  • You start shopping at a grocery store like Aldi, saving $50 per month on groceries
  • You cut out Ipsy, Spotify, and reduce your cell phone data plan by 1 GB, saving $30 per month
  • You eat peanut butter and jelly for lunch at work each day, saving $2 per day, or $60 per month
  • You switch to buying clothes at Target and local thrift stores, saving $50 per month on clothes

I can go all day, but I’ll stop there.

These six adjustments add up to an extra savings of $370 per month! Man, that adds up fast – and these are all pretty modest changes, don’t you think

So with our monthly savings of $100 from not eating out, we have a total of $470 per month.

Holy crap.

Let’s put that into our fancy calculator (which by the way was provided by The Mutual Fund Store):

time value of money

That’s over $477,000 you will have in 30 years just by making these monthly adjustments.

So again, this is common, public information and was much more eloquently laid out by David Bach, but the point is – we know it. The question is – how will you act on it?

3. Being frugal will teach you how to want – responsibly

I want to stress again the importance of wanting.

First, it’s okay to want! You should want things, and it’ll drive you to be more successful in the long run.

By practicing and committing to a life of frugality, you’ll learn to become a master at wanting responsibly.

By not giving in to all of your impulses and buying things on the spot (and instead actually thinking about purchases) you’re going to develop a more frugal mindset. You’ll force yourself to decide whether now is the right time to buy something, if at all.

In doing this, you’ll save money and create a wish to want something.

When you want something, you set up a goal. When you set up a goal, you drive yourself to exceed – whatever that goal is.

The other side of this is that it’s okay to spend money. Like Mr. Bach says, pay yourself first, then live on the rest.

If you can afford something you want by paying for it with cash, and it won’t compromise your other financial responsibilities, go for it. If you never give in to any wants, you’ll go crazy.

4. It will allow you to teach others

As most of you know, I’m incredibly passionate about teaching kids about money (or teaching anyone about money for that matter). I had some experiences growing up that taught me about money, but it shouldn’t have to come by way of bankruptcy for everyone.

We should be teaching our kids and each other about money from an early age.

Think about all the life lessons you’ll earn by living a frugal life. Hell, that’s why some people have even started a blog – to share those life experiences.

If I knew the concept of frugality, living below my means, thinking about purchases before making them, paying myself first, the “Latte Factor,” or any other personal finance concept at an earlier age I’d probably be retired now too.

Think how powerful our experiences can be when shared with others. So why not do that?

If you’re living a frugal life but haven’t shared your wisdom with friends, family, or some form of community (the internet, local, etc.) I’ll ask you to think about what stops you. If you’re already basking in the glory of saving money, spending less, and creating a path to early retirement, why wouldn’t you share that story?

If you haven’t already, I will urge you to start a blog to write about it. If you do, I’ll read it – just post it in the comments here.

Get on Twitter, share your story. Get the word out, because the less we do this, the less our world is going to change.

So if I haven’t been clear enough, get off your ass and share your story of frugality with someone!

5. You’ll discover new interests and passions

Let’s again pick up the concept of the time value of money. Understanding this topic has gotten me to save more money and live a more frugal lifestyle.

Also during this period, I started getting more and more interested on the subjects of money and minimalism. These things are all connected to the idea of being frugal.

Once I started living this way, I started doing more research on money. I learned new things, like how to invest, how to pay off debt faster, and how to live with less.

Sometimes in life, we move so quickly we don’t stop to enjoy the moment. Through frugal living, you will begin to learn and try new things, all because of money.

Money makes us do crazy shit.

Let’s talk about landscaping. Previously, I laid out some ways you can landscape frugally – one of which includes doing the work yourself.

If you aren’t living with the idea of frugality, you might just pay someone to do the job for you. So what are you doing instead?

You might be out driving your leased car, shopping, or working. All the while, you’ll never know whether you a) are capable of doing the landscaping or b) if you enjoy it.

Personally, I never even considered the thought of doing my landscaping. Working 50 hours a week and being too exhausted, I guess I figured I could hire someone to make my yard look great.

I never realized how expensive it was to have someone do it for you, though. It was at that point I decided to give it a try myself, and I ended up enjoying it.

6. You’ll think more strategically

It’s proven that money has a ton of weird effects on your brain, and causes you to act ways you normally wouldn’t. Just open one of those gossip magazines next time you’re in line at the grocery store.

I guarantee there’s at least one celebrity who got busted doing something stupid. Having more money means we have less wants, meaning we lose motivation, meaning we get BORED.

If you trick your brain into thinking you don’t have the money (like paying yourself first), you become frugal and start to think more strategically. Here are a just a few examples of what I mean:

  • You plan your grocery shopping – what you buy as well as where you shop
  • You start to do things yourself that other known-frugalistas would pay someone for, thus teaching you new skills
  • You understand money, budgeting, and the value of a dollar – so you’ll know when to buy something and when not to
  • You organize vacations in a way that nobody else does – you find a way to do it cheaply, and you avoid travel mistakes

The one that stands out to me is learning new skills. A frugal person naturally will read and research more, because they will want to do and fix things themselves.

You millennials may connect with this example more, but remember in The Sims when you had to train your character to learn new skills? You’d force them to sit down on the couch you bought for them and read books so they could become more self-sufficient.

Same concept here – so imagine you’re a Sim:

[youtube id=”T3jbP0JyLLs” width=”560″ height=”315″ position=”center”]

7. You’ll have a better relationship

This isn’t to say that you have to be frugal to have a good relationship – but being on the same page with money will help yours. If you’re both big spenders, eventually you’ll realize you’re not building wealth, so someone has to be frugal right?

It’s no secret that money causes issues in relationships. According to the American Psychological Association, 31% of adults with partners said that money is a primary source of conflict in their relationship.

If you’re frugal with money and your partner spends to the nines, I can’t imagine there wouldn’t be an argument about money at some point.

That leaves one option – both committed to being frugal. And there are varying degrees of frugality – so you can still have different views on money, but still be frugal.

If you pay yourself first and live off the rest, you might still buy nice things that you enjoy – but you’re still getting your frugality on. You might also be incredibly cheap and never buy anything – and you’re frugal to a different degree.

Commit to frugality as a lifestyle together, and you’ll both learn to live with less, be happier, be less stressed out, and retire early – all while still being able to enjoy the things you love.

8. You’ll have lower stress levels

Money is the #1 leading cause of stress for Americans. Think about that for a moment.

Why is this?

Read the article I’ve linked above, and you’ll find a few interesting facts…

  • 64% of Americans have financial worries as a significant part of their stress
  • Many people still feel “squeezed” financially
  • Two factors contributing to the fear are inflation and wage stagnation
  • 20% of Americans think starting a conversation about money is taboo
  • Over 33% of Americans say talking to family about money is uncomfortable
  • We deal with this stress by doing things like watching TV, listening to music, or exercising

What the hell?

Do you get a little sick to your stomach looking at those 6 points? I do.

Let’s break it down a bit further…Here’s the way I’m reading this:

More than half of Americans are anxious and stressed by money, and many of us are still living paycheck to paycheck. Wages aren’t going up, so we’re not making any more money, and we don’t even want to talk about. Instead of addressing it, we chill out by running, watching Seinfeld, and listening to Bob Marley.

If we just learned to cut back on our spending, pay ourselves first, stop using credit cards, and live below our means – we’d start going all frugality on ourselves.

At that point, we probably wouldn’t be “squeezed” financially, we might be more open to talking about finances, and we wouldn’t have to worry about whether our wages were increasing – because no matter what, we’re living below our means.

All these things, in turn, would cut our stress and solve this problem.

Now if we could just solve world hunger through frugality… Maybe we can? (note… new post idea…)

9. You’ll enjoy things longer

Do you get a new phone every two years when your contract is up? Frugal people don’t.

Why in the hell would you get a new phone if your current one is working just fine? The only reason is… Well, there isn’t one.

Being frugal, you don’t need the latest technology and the newest things all the time – because you’re impermeable to marketing.

Every time we get a new piece of technology, a thinner, faster, sleeker, sexier, and more powerful one comes out shortly after. Then companies like Apple market the hell out of it so you feel like you have to buy it.

Here’s a secret – YOU DON’T.

If you do, you aren’t living frugally. With frugal living, you’ll find ways to get the most out of your devices – such as cell phones, tablets, and computers.

When it’s on its last legs, you’ll find a way to reinvent it to still get use out of it instead of trading it in for something newer and better.

Here’s a scary statistic – most children have a cell phone before they turn seven years old. Yikes.

If we’re buying our kids phones that young, then buying new ones every two years – that’s a lot of dough you’re wasting.

That’s $100 per year when you divide it out – so look at that example above to see what saving a hundred bucks a month can do for you.

Another example is clothes. They are a necessity – but when do they become an accessory?

Frugality will teach you to make the most out of your clothes and wear them until they can’t be worn anymore. Why would you buy new pants when the six pairs you already have are fine?

As a frugal dude/dudette, you’ll also find incredible deals on clothes and places to buy them for dirt cheap.

I can go on with hundreds of examples of ways you’ll enjoy things longer by being frugal, but I’ll skip that and get straight to the point.

Being frugal means you watch your money, you think strategically and live below your means. This means you’ll end up buying less – yet you’ll buy right.

You’ll find great deals on high-quality products that last a long time. When they break or wear down, you’ll get creative and find ways to keep them alive.

This is what frugal people do – they make the most of what they have.

10. Experiences matter more than material possessions

So you’re living frugal, right? This means you don’t need to buy material things because the ones you have are just fine.

You’ve probably figured out how to pay yourself first and live off the rest. You’ve also probably begun amassing some wealth.

Hell, you may even have a bucket of cash left over because you’ve gotten so good at controlling your wants and instead of putting that money aside.

So what do you do with that money?

Because you’re a smart frugal, you know that buying more things will just build more clutter in your home and will ultimately cause you stress. You’ve already taken care of your savings goals, too.

So what the eff do you spend your money on?

EXPERIENCES. And sometimes that doesn’t even cost a dime.

Let’s compare two things that you’d spend your money on for a moment, and I’ll do the best job to estimate the cost of each to make it even.

Let’s say you have $5,000 to spend (for the sake of argument saving isn’t an option). You can either buy:

  1. A Mac laptop
  2. A 70-inch LED TV
  3. An iPad
  4. A PlayStation 4
  5. AND a wireless BOSE Bluetooth speaker

OR

  1. Take a trip to Turks & Caicos

Which would you choose? Those gadgets do seem pretty nice.

Let’s say you go with the devices.

You now can do all kinds of cool stuff on your new Mac and play music from it to your Bluetooth speaker, all while playing the latest Madden game on a 70-inch, bad-ass TV.

Fast forward five years.

How do you feel about that stuff now?

What about ten years?

In 10 years all of those gadgets will be completely obsolete.

Let’s say you took the prize behind door number two and chose a trip to Turks & Caicos, which features the number two beach in the entire world, according to Trip Advisor.

You get to spend a week there, lounging on the beach, swimming in the crystal-clear turquoise water, eating local foods, and taking a shit-load of selfies (please, no selfie-sticks).

Initially, the lifespan of enjoyment on this is shorter (one week), but I’ll pose the same question as above.

Fast-forward five years. How do you feel about that trip now?

What about ten years?

You’ll look back at that trip as one of the best experiences of your life. You got to see one of the most beautiful beaches in the world, a journey that most people would envy.

Look at your neighbor who went and blew his wad on all those cool gadgets five or ten years ago.

Who’s laughing now?

Well, there you have it. My take on why frugal living is so liberating.

Again, most of this stuff is already known, but we need to commit to putting it into practice.

Question for you:

In what ways do you enjoy living frugally, and how is it liberating to you?

Last update on 2018-09-17 / Affiliate links / Images from Amazon Product Advertising API

8 thoughts on “The Top 10 Reasons Frugality Is So Liberating”

  1. This was a really interesting read. Enjoy your take on frugality. For me, this mindset equals FREEDOM!

  2. It is interesting how this lifestyle has gotten us to take a much more objective and honest look at where our money is going. When our spending lifestyle was more loose, as was the case in the past, coming home with extra stuff than we had anticipated was easy. It all just got lost in our monthly expenses and we didn’t really miss the money.

    Just yesterday my wife and I were in Home Depot looking for a propane hose for our grill, and we stumbled upon a beautiful looking plant. We stopped, played with the leaves for a couple minutes, talking about where this plant might fit within our home.

    Then, I said the magic words. “This feels like an impulse buy”. Then, my wife says, “Yeah, it does. Let’s go”.

    This happens a lot, whether we realize it or not. Subconsciously, we know when we’re about to be stupid with our money, and the more that we catch ourselves doing that BEFORE we actually make the purchase, the better.

    And it all starts with being frugal and governing our behavior with that state of mind.

    Do we need this? Most of the time, the answer is the same. No. 🙂

    1. Love it. That is what we need to be teaching ourselves and others – the willpower to say “this is an impulse buy”. The point you reached with the plant is as far as we go before actually slapping down the credit card and buying it.

      I can’t even imagine how difficult it is for you with a net worth over half a million (per your blog) to not think for a second “wait, I can totally afford this”. Obviously you can afford it, so that’s what makes it even cooler that you said no to such a relatively small purchase.

      Thanks again for reading Steve!

  3. It’s interesting — we never would have gotten to frugality on its own. We enjoy doing expensive things, frankly. So the idea of committing to frugality for its own sake would have been foreign to us if we didn’t start connecting it to larger goals. Once we realized we could just our careers short by 25+ years, though, we started to take notice, and that’s when the idea of living well below our means really clicked.

    Also funny — we don’t necessarily see spending most of what you have as stupid. It could be just a difference in priorities. Some people are fine to work til 65 or beyond, and if they’re willing to do that to support their spending, good for them. But thank goodness we’ve found the alternate path, since working that long is SO not for us.

    1. I won’t disagree with the concept of ‘to each his own’ and I know some people really love to work. My dad is one – he works retail and will even go in on his day off (and he’s close to 70). The big difference is whether or not you control your own destiny. If you are working at 65 because you HAVE to, that’s not control. If you’re working at 65 because you are financially free and want to, then that’s a different story.

      I really like your concept of connecting frugality to bigger goals. Without goals we’re just floating through in this game called life. I sincerely appreciate you taking the time to read the post, and thank you for sharing your thoughts 🙂

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