Let’s start with one of the most common misconceptions about living Frugal:
When you hear the work “frugal” what is the first thing that pops in your mind? Is it not buying that $7 Starbucks coffee, deciding to put off a large purchase until it goes on sale, or does it remind you of the old TLC program “Extreme Cheapskates”?
According to the Journal of Consumer Science Research frugal can be defined as, “The tendency to acquire goods and services in a restrained manner, and resourceful use of already owned economic goods and services, to achieve a longer term goal.”
Like anything else in life there is a full spectrum of what frugal can mean. While there are many different ways to classify being frugal I have broken them down in to four categories. See which one (or two) that fits you!
- No Frugality
- Obvious Frugality
- Conscious Frugality
- Extreme Frugality
No Frugality
These people can be described as people who enjoy instant gratification and will buy something regardless of the price. As Ariana Grande would say, “I want it, I got it”. There are very few people who are strictly this type of frugal and people who are this type of frugal either probably have a much bigger salary than any of us, or they are really in debt. In the Frugal Living section you will find ways to curtail this type of non-frugality and develop healthy, non-stressful ways of living frugal.
Obvious Frugality
This requires very little effort to follow. This type of frugality includes things like:
- Making Meals From Scratch – A typical meal for a family of four can cost upwards of $80 whereas a meal made at home can be as low as $10! At an average of two meals/week that’s a savings of $480 a month or at a modest 6% return a whopping $575,543 over a 30 year period! Don’t believe me? Check out my article Eating a Hole in your Pocket
- Detecting and Avoiding Manipulative Advertising – If it sounds too good to be true, it probably is. Remember, businesses say in business by making money.
- Waiting for Things to be on Sale – Everybody knows that black Friday is a good time to make big purchases. However, you can find deals just as good on things like TV’s during the Super Bowl and the spring when new TV models are released. Do research on items before you jump into what you initially thing is a good deal.
- Going to Outlet Stores Instead of Box Chains – BE CAREFUL! While most items at the outlet store are typically cheaper, 3% – 78% according to consumer research, some of the items are not of the same quality and some can actually be more expensive. Outlet stores also carry the same hazard of impulse buying and overspending so go with a specific item in mind and stick to a budget.
- Utilizing Reward Cards – Almost every credit card has some sort of cash back or incentive to use their credit card. Most credit cards have some sort of introductory offer and if used correctly can be used to travel as a reduced or zero cost!
Conscious Frugality
This type of frugality requires a little bit of effort to follow and involves the use of special knowledge or research that is perhaps not widely available to save money. You will go out of your way to earn this discount and it includes things like:
- Comparative Shopping – You get what you pay for. There are a lot of websites out there like google shopping, pricegrabber, and shopping.com that are dedicated to helping you quickly find what you are looking for at the lowest price possible.
- Curbing Costly Habits – Habits form anywhere from 40%-95% of your daily activities according to neurobiologists, cognitive psychologists, and others. If you can develop habits that are financially healthy then it will feel like
- Avoiding – Know what social issues or personal tendency’s cause financial stress and avoid them!
- Growing a Garden – Walk over to the organic section at your local supermarket and you will quickly find out that healthy food gets expensive. Growing a garden requires hard work but the rewards can be physically and mentally healthy.
- Using Barter – An often lost form of payment trading ones goods or service for another good or service without the exchange of money can benefit all parties involved.
- Embracing Cost Free Options – Libraries are a prime example of this. You can get books, DVD’s, CD’s, Video games, online databases, free programs for kids, room reservations, computers, WiFi, tutoring, museum access, and books by mail just to name a few!
- Defying Expensive Social Norms – Society expects that as you make more money continue to buy nicer things. This is one I like to refer to as lifestyle creep. Don’t fall for it! While you can (and should) reward yourself for working hard don’t fall victim to the never ending hamster wheel of lifestyle creep.
- Seeking Efficiency – Creating healthy habits and making them efficient gives you more time in your day to choose what you want to do. Decision fatigue is defined as the deteriorating quality of decisions made by and individual after a long session of decision making. Don’t get decision fatigue!
Extreme Frugality
This type of frugality requires serious life changes and a lot of extra effort. To be this type of frugal it includes things such as:
- Getting Rid of all Non-essential Debts – This includes things like cars, boats, four wheelers, your oversized house, and jewelry.
- Move to the City – Move within walking/biking distance to your job, food store and choose activities in that area that don’t require a vehicle. The goal of this move is to eliminate your car and all of its associated costs.
- Never go out to Eat – As stated before going out to eat just twice a week can be very different (long term) financially. Choosing to never go out to eat can cause social issues with your friends and create unnecessary tension.
- Live a Minimalist Lifestyle – Getting rid of excess stuff and living life based on experiences rather than worldly possessions is what minimalism is all about. This is an extreme measure to reach your financial goals and in a survey completed by CivicScience only 10% of the population consider themselves minimal
Before starting my accelerated path to financial independence I found myself solely in the obvious frugality category and I believe most people will find themselves in that category as well. As I performed research in to the FIRE community there were repetitive ideas that everybody wrote about. I accumulated that data and most of my ideas portrayed in these articles are an average of those ideas.
As I scroll through online news articles, and even Facebook, I see advertisements stating that people were able to eliminate hundreds of thousands of dollars of debt in a very short time. Those people chose the extreme frugality route and completely changed their lifestyle in order to accomplish their goal.
While this is an option for a very small portion of you readers out there, that is not what you will find on this website. The ultimate goal is for you to simplify your life by developing healthy financial/mental habits whose result is a faster track to your personal goals. Continue to read the articles in the Living Quarters section to give you specific examples on how to start your path and control your future.
Take away points:
- Frugality isn’t a bad thing. It is a tool that people in the FIRE community use to obtain their life’s goals faster.
- The decision on how extreme you want to be with your frugality is life altering and serious thought needs to be put in before you jump on the band wagon.
- There are a lot of small changes you can make to your life that will help be more frugal. Check out the Living Quarters section for more information!
