EVERYONE should partake in ultra frugal living for a little bit of their life.
I bet you were expecting an article about how to live cheap without feeling like a cheapo. Nope. Embrace it! Just for a while and reap the amazing benefits of overly aggressive saving.
Why Everyone Does Frugal Living Wrong
Here’s the thing. Most people make a feeble attempt to spend a bit less. It’s usually after a spendy month, and they realize that they have to reign things in a little bit. Maybe they’ll buy the store brand of cereal, maybe they’ll tinker with their thermostat settings. and maybe they’ll see a reduction in their credit card bill… For a month tops.
Long story short, nothing really changes.
Frugal Living For Maximum Impact.
I want you to make a change as if your life depends on it! Think of it like a “juice cleanse” for your finances.
Are you going to buy the brand name of cereal or the store brand? Neither! You will optimize every meal and every other aspect of your life, short of impacting your wellbeing, to be as frugal as possible.
Sound horrible? Remember that like a “juice cleanse,” this is only temporary so that you can shock your money habits. Commit to frugal living for a week to prove to yourself that you can do it, then extend it for as long as is reasonable to reap its full benefits.
Adopt the mantra “Does this cost money that I don’t need to spend?” in everything you do and you’ll start to really decifer when you’re spending money on a “want” versus a “need.”
And remember, this is temporary! When you emerge out of your ultra-frugal living haze, you’ll still be good at saving money, but every extra bit of spending will feel like you’re bathing in luxury. We’ll get to that in the end.
Sure, sure, no one wants to be known as a Scrooge but frugal living like a Scrooge – just for a bit – can be a huge game-changer when it comes to super finances.
For how long? That’s the best part. You don’t have to do it for the rest of your life. After you pare back for a while, adding those little luxuries back into your life will make you feel like royalty. AND you’ll actually appreciate them this time.
My magic mark is that you should be a miser like Scrooge until you have some actual investing money. I live in an expensive city so to me that means until you have $100K in the bank, and your income is over $60K. Until then double down on frugal living. Live super frugal.
Today we’ll learn:
- 3 reasons for frugal living.
- How to know when you can STOP living frugally.
- 4 ways to be responsible and still love life.
3 Reasons why you need to be frugal living
1 – Frugal living teaches you what you do and don’t value.
This is a big one for me. The biggest reason.
Frugal living is hard, but that’s kind of the point. It’s not about finding coupons or how to save money on books. If you don’t live very cheaply at some point in your life, how can you learn what you need and don’t need in your life?
Frugal living lets you understand what you need most. Even better, you’ll be surprised by how many things you can do without.
2 – Saving is the #1 determining factor for your future
Your financial future is all about your income vs. spending ratio which means saving is important! While you might have one or two vices you just can’t seem to get rid of, that’s fine as long as you remove the extra financial baggage you are carrying.
Once you make the hard choice of frugal living like a scrooge, you will know exactly where you can save money. You will also learn how little you can spend and live, which reduces the amount of money you need to save up before you can quit your job.
You don’t like saving and think you will be the lucky one who just happens to make a fortune in the stock market? Think again.
Almost no one gets rich just playing the stock market. They get rich saving then grow it to a huge value by investing it.
But wait, you’re a stock market wizard who can find the perfect investment no one else can see? Yeah right, even fancy advisors can’t do that.
Saving is the only sure way to succeed if you are serious about your finances.
Preparing for retirement isn’t really about investing huge sums, or even making a fortune. Stop tricking yourself into thinking you are going to be the exception to the rule by investing better than anyone ever has before.
Follow the sure path to a successful early retirement by saving aggressively now and investing wisely. Extreme saving will outpace any gains you could potentially make in the stock market.
3 – Force frugal living until you have the ultra-lucrative investments!
Until you have invested in all the ultra-lucrative things, you need to hold onto your money like Frodo held onto that ring.
But it is worth letting it go for the ultra-lucrative investments of the world. See below.
In fact, there might be some investments you can make right now close to home.
- You should invest in yourself! If you can learn something to enable you to boost your income by a couple hundred dollars a month, that would still translate into thousands of dollars extra every year.
- Or why not invest in your house itself? If you have a basement to spare, you could be making an extra thousand dollars a month after spending only a minimal amount on basic renovations.
- Even better, pay off credit card debt that has been accumulating. The high fees associated with it are quite big but more importantly, it’s going to hurt your credit which will hamstring all your future abilities to make money.
How can I STOP frugal living the Right Way!
Once you have:
- Covered those amazing investments
- Pared-back a painful amount to learn what you care about
- Skyrocketed your savings rate above 50% of your income
Only then, can you start spending more. Your life should be in a much better place than it is right now.
If you are living frugal the right way, you probably think you have to go without a lot of things. The reality is that most people associate saving with living less joyfully.
This doesn’t have to be the case though.
You can start frugal living by identifying aspects of your life you don’t really need. Like mentioned before, find what you miss by cutting back until it’s too painful.
Add back ONLY that which you miss.
If you can’t stand to live without something, then keep it. In fact, spend more on that thing! Refocusing your spending will give you more satisfaction in life.
Purposefully spending more to stop frugal living
It’s a funny point in your life, but think to yourself that you are cutting back elsewhere to splurge on this thing you love. I hire tutors and maids. I love it, because I hate learning slowly, and I hate cleaning.
While you might need those karate lessons to stay fit, is that ice cream sundae afterwards at the same level of enjoyment? It’s tough choices like these that will not only help you save for retirement faster, but help you spend more on what you love.
Don’t believe me? By aggressively saving now and eliminating those frivolous expenses you know you will be able to easily do without, you can just quit your job. That will bring some happiness for sure!
It is hard to spend more once you have really hammered that stingy lifestyle into yourself.
If you need some help easing yourself back into spending while still keeping most of your money, here are the 4 big ones.
Tips to stop frugal living…responsibly
1 – Eating out:
I don’t recommend eating out as a whole, not just as part of frugal living. But you can still have a lot of fun with it by saying no most of the time and making a big deal when you say yes is a good way to save money with friends.
Instead of wasting money on fast food, you could be saving money for that dream vacation AND having one stellar meal out every month.
2 – Don’t budget hard…but have goals.
The sweet, sweet taste of freedom will keep you driving towards the achievement of your savings goals instead of budgeting your way there.
Just remember that. With every dollar you save enthusiastically now, you are that much closer to living the dream life you have always wanted to lead. that’s the basis of my money saving system that is 100x better than saving. Compare everything to that dream and if something is too painful for you to avoid (like toilet paper), it will feel worth it to delay your dream just a little bit.
3 – Vacations
They are fun and can work with frugal living by taking frugal vacations!
Keep taking vacations! But you can travel to places that are inherently low cost. (Thailand anyone?) Then, you can happily vacation frequently without worrying at all about what you spend.
4 – Teach your kids to save
Before getting too spendy you can spend time teaching your kids to be savers and have money skills. It’s rewarding for you and has incredible value for them.
Financial literally for kids is something most schools hold off on teaching until kids are in high school, but by then kids have piles of opinions already about the world. Start them young and you will make their lives better.
Plus by teaching, you’ll need to practice what you preach, and that will make you a proud saver.
5 – Set a value for your time
Your time is worth something. Actually, your time is incredibly valuable.
It’s the whole reason I worked at dropping my job. I decided on a pay rate that I think my time is worth and anything that didn’t fit was cut, work included (kind of, long story short my job became too amazing to fully quit).
If I am doing something I don’t like and I think I can pay someone else less than my magic pay rate, I do it.
Truth be told, I’ve walked down this path really far. If I can pay someone under $50/hr to do something I don’t like to do I’m doing it and I will ALWAYS offload it.
I was stingy once and now I know what I don’t enjoy. Now I REALLY know what I hate and what I like.
And if I hate something I will definitely pay to not have to do it again.
- I won’t do much searching on amazon to find the best price.
- Drive to a faraway store/Craigslist ad to save money? Nope. I’ll pay for delivery thank you very much.
- I pay $3 / hr for a language tutor online (Amazing I know!). My tutor easily saves me many hours of learning time so blamo, I’m all in.
- Bring in a cleaner every 2 weeks. I don’t like cleaning and cleaners charge very little.
- Now I pay handymen to do what I don’t like. I was raised to be a handyman, but most of the time it’s really not how I want to spend my days. Cleaning gutters, blech. Joe down the street will do it for $50.
You don’t have to go so far as me but set that number and once you know what you don’t like and how long it takes to get it done, calculate and offload!
TL;DR – Frugal Living
- Dropping costs is a real game-changer to get you super finances
- PLUS you don’t have to do it forever – just until you have some real money – then you can start adding those little luxuries back into your life, but just the ones you really care about
- There are great ways to spend money on yourself but still save tons. You just have to make the choice of what’s worth it for you.
What about you guys? Have you dropped any “necessities” that have helped you save to a frugal living life?