When you’re starting to get serious about managing your money (and especially when you start paying off your debt), living a frugal lifestyle may seem like the natural next step to achieve your goals faster.
But is it smart to be frugal?
Being frugal with your money is a smart move. It does not mean you are being cheap with money but being very conscious about where your money goes. This means that, in some cases, you may spend more upfront to purchase a quality product that you will have to replace less often, ultimately saving you money in the long run.
Overall, frugal people end up spending less over time, allowing them to allocate their extra money toward savings.
It can definitely seem unrealistic and undesirable if you’re just getting started (or even just thinking about it), but a frugal lifestyle is really a fantastic financial decision, for many reasons:
- You stop pouring money into unnecessary expenses (like recurring monthly subscriptions that you forget about until after it is delivered)
- You’re very intentional with your income, as opposed to haphazardly using your debit card until the funds run out
- You think twice about the daily coffee shop trips, going to restaurants, or just “checking out” that new car (guilty)
Overall, a frugal lifestyle is an extremely smart financial decision.
But why is that?
Table of Contents
The meaning of being frugal with money
It’s easy to start living a more frugal lifestyle when you begin budgeting and becoming more intentional with your money, so the line can be blurry as to when you are actually being frugal with money.
Being frugal with your money means that you are very intentional with every dollar and choose not to overspend whenever possible. Frugal people typically keep a budget and are able to allocate more to savings.
Frugality does not necessarily mean that a person is living a less-than-desirable life. In fact, when someone is frugal with their money, they have control over every dollar and are able to save money for things that mean the most to them.
I really like this definition of frugality on Bankrate, because many people believe being frugal is living as cheaply as possible, which is just not true.
It’s about being intentional with your money; always being in control and allocating your funds to things that truly matter to you. Most importantly: not overspending in areas that aren’t necessary.
The quote on Bankrate continues with:
As a result, frugal people spend in ways that add value to their life while actively eliminating spending that does not help them reach their specific goals. For example, a frugal person may find that cutting his cable television subscription saves him money without impacting his life in a negative way, so he does that. But the same person might splurge for something else he loves, like gardening or woodworking, since he doesn’t mind spending on what matters most.https://www.bankrate.com/banking/what-does-frugal-mean/
It’s all about spending your money where it matters, but dialing back in areas where it isn’t as important!
Is it worth it to be frugal?
There are so many people out there that, before giving a frugal lifestyle a shot, think it is not worthwhile to make sacrifices like those that live frugally.
Being frugal is worthwhile because it gives you a plan to stretch your money and make the most of every dollar of your income. Frugality allows you to spend your money in areas that you find absolutely important, like more on organic produce instead of processed foods, while skimping on areas that are not as important (cable or eating out).
Below is a table of potentially unnecessary monthly expenses, per person, that you may be able to cut out to live a more frugal life.
|Daily coffee at the coffeehouse||$55|
|Restaurants (once per week,)||$52|
|Cable (basic service)||$25|
|Monthly subscriptions (gym, subscription boxes, etc.)||$38|
|Movies (ticket alone)||$9|
|Gas station snacks (once per week)||$20|
Some may seem extreme in this list (specifically cutting your own hair or ditching disposables), but it does give you an idea of the cost savings you could see by cutting things out!
Since this table is how much the average person spends on these things, imagine the savings if you have more than just 1 in the family.
We ended up cutting out almost all of these monthly expenses and saw huge savings. I believe it’s what helped us pay off our debt ahead of schedule.
Can frugal living make you rich?
If you’re considering a frugal life in order to make yourself rich, you may be disappointed.
Frugal living alone cannot make you rich. It takes a combination of frugal living, budgeting, and saving money over time to increase your net worth.
There is a lot to be said about incorporating frugal living traits into your everyday life: it is an excellent way to build your savings by not spending excess money on things that are not necessary.
As the table above shows, the amount of money you’re able to save per month living a more frugal lifestyle is substantial! While it’s not enough to make you rich, it is enough to save up over time or even invest to bring in extra wealth.
Is a frugal lifestyle good or bad?
If you’re asking if a frugal lifestyle is good or bad, it really depends on the person you’re talking to.
There is more good than bad to a frugal lifestyle. From an outsider looking in, it can look cheap and unflattering. But in fact, a frugal lifestyle is an excellent way to not only enjoy the basics in your life (without cable, restaurants, and other unnecessary expenses).
Not only that, but a frugal lifestyle is good because of the amount of your money that stays with you instead of being spent on unneeded things.
We adopted a more frugal lifestyle when we were paying off $100,000 in debt, and I have to say: it changed the way I think about money and expenses.
We would spend freely and spend A LOT, but once we reigned in our spending, it really opened our eyes to how much was going out every month that could have been saved.
That money we spent on 3 different monthly subscriptions that we never used will be gone forever.
That’s why I really believe a frugal lifestyle is good. It transforms the way you think about spending your money!