Frugality
This post is to explain to the reader what I mean when I have used the term frugal. I think the reader may be surprised by some of my slightly alternative opinions on the matter:
I feel that in many of my recent posts I have referred to the idea that we can save money by being frugal. It has only recently occurred to me that I have not once stopped to explain the idea of frugality and have just assumed knowledge. In the classic phrase: "better late than never" and so now I shall try to convey my ideas on the subject.
Saving two pence (or cents) on a can of beans will not make a massive difference so going on a 20 mile car journey to find the cheapest beans in the country would be madness. If the answer to this question is yes then you might as well buy the good or service now so long as it is NEEDED and not wanted. NB. Measure the cost of time in terms of what else you could be doing with your time, e.g. your wage per hour.
Frugality and the key to success
I feel that in many of my recent posts I have referred to the idea that we can save money by being frugal. It has only recently occurred to me that I have not once stopped to explain the idea of frugality and have just assumed knowledge. In the classic phrase: "better late than never" and so now I shall try to convey my ideas on the subject.
Puzzle piece
I first referred to frugality in my Get Rich Plan, writing:"Frugality - this does not mean living off beans on toast for the next 30 years and then living off "turtle-duck soup served with a golden spoon" for the rest of my life. Everything in moderation, including moderation! There's nothing wrong with enjoying yourself from time to time but keep a record of everything you're spending. Open a 'note' on your phone and every time you spend write it down under a self-made category that you will understand. For example, money spent on eating food or drink out, I categorise as 'restaurant'. Make sure you update an excel spreadsheet every so often with your monthly income and outgoings. Furthermore frugality requires seeking the best deals on comparison websites for all kinds of goods and services, considering second hand and even changing things like your bank (regularly) to get the best current accounts."This was the first point in my get rich plan because the first thing to do to reach financial freedom is to reduce your spending. Frugality is a key piece in the puzzle that is the game of life if you want to be successful. As I wrote previously, this does not require you to live on very little, only that you don't over-indulge often. To put the idea as simply as possible, buy needs not wants.
Frugality: A not so simple definition
Wikipedia defines frugality as:"the quality of being frugal, sparing, thrifty, prudent or economical in the use of consumable resources such as food, time or money, and avoiding waste, lavishness or extravagance" (Wikipedia, Frugality)To this I would add two points:
- I believe that frugality also should be included in the consumption of services such as haircuts and insurance etc
- Frugality should not interfere with comfort. EVER. If you are uncomfortable in any way (physical or mental) and it is by consumption choices that you make, then you are not being frugal, you are being stupid (sorry). You have one life to live. Enjoy it. This does not mean that you should be unhappy for the first half of it and live in luxary for the second half. Much like how a diet should be frugality is a life decision, and should not be something to be switched on or off.
Frugal implementation
Living in a frugal way is quite easy. All you need to do is ask yourself three questions. The first two are:- Do I need to pay this price?
- Do I need this now?
If the answer to either of these questions is no then you do not need to buy the good or service now. However you must also ask yourself a third question:
3. Would it cost too much time to wait to buy the good or service at a later date or to shop around?
Saving two pence (or cents) on a can of beans will not make a massive difference so going on a 20 mile car journey to find the cheapest beans in the country would be madness. If the answer to this question is yes then you might as well buy the good or service now so long as it is NEEDED and not wanted. NB. Measure the cost of time in terms of what else you could be doing with your time, e.g. your wage per hour.
Fitting in the Plan
Frugality fits into the plan in a particular combination with other things:- Frugality + increasing salary = increase savings,
- increasing savings + paying off debt = increase cashflow,
- Increase cashflow + Investments = Financial Freedom
I'm interested to hear people's ideas about how to be frugal. I have many of my own that I intend to share of the next few posts but please feel free to comment any of your own below.
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Do you like what you've read? Tell your friends by sharing it with one of the buttons below. Please post this to Facebook or Tweet it to help your friends and family. Feel free to send me an email (mrmoneybanks<at>multimillionaireroad<dot>com), find me on twitter @millionairer0ad or comment. Whether good or bad, I want to hear from you all.
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