This article is about the idea that frugality, or living more simply financially, can buy you freedom both in the long run and in the short run.
Frugality does not have to be a painful and difficult sacrifice. Frugality does not mean you must become a greedy, covetous Ebenezer Scrooge. Like people who love exercise or enjoy eating healthy foods, frugality can become a way of life that is both fun and financially rewarding.
I usually write about frugality when describing the path to financial freedom, where income from your investments surpasses your personal overhead. The math is pretty simple to reach this destination, but how long it takes depends upon a key measure of frugality, your savings rate.
But, freedom isn’t just the final destination. It starts when you payoff one credit card balance, reduce your cell phone bill by $50/month (see the Rule of 173), or find free entertainment that is fun.
Freedom also begins with increased confidence and decreased fear about money and investment. Freedom continues to build as you make better and better choices.
The main point I’d like to make is this:
Every dollar you spend is really a choice between the object you purchase and increased life options. Frugality, or deliberately spending less, is actually a conscious choice to purchase more freedom.
With the help of marketers, we have an unspoken assumption that the worthwhile things in life must be purchased. In many ways this makes sense because who doesn’t like fun trips, good food, clothes, comfortable furniture, electronics, gifts for family, houses, or cars.
Rental Property Analysis
A course by Coach Carson that teaches you how to run the numbers so that you can confidently analyze and buy profitable rental properties. It also includes Coach’s rental analysis spreadsheet. Get the CourseI don’t have an inherent problem with any of these money choices, but I do wonder if we really understand the opportunity cost of chronic overspending in these areas?
If we knew that our daily spending choices deprive us of the most valuable things in life, like time, options, and flexibility, would we change our spending habits?
The value of frugality is not as obvious as highly marketed items in stores. Marketers in the U.S. spent $180 billion dollars last year trying to convince you of the value of their products and services. Only independent weirdos like me (and JMoney at BudgetsAreSexy.com) are telling you the value of spending less!
Here are a couple of examples where I’ll try to convince you of my “weird” point of view.
Buying Job Independence With Frugality
Frugality can buy yourself the right to say no to activities that don’t fulfill you or make you happy. This shows itself most of all with your work career.
Being a slave to your job means you can’t afford to walk away or to take a job you enjoy more that pays less. How many employees stay in a particular job because of the shackle of income security?
Before you reach the crossover point to financial independence, frugality and savings are the only leverage you have to control your work destiny. When you have less money going out each month, you can choose to take a lower paying job or to negotiate better terms with your existing job.
I love this article at jlcollinsnh.com which describes this concept as “F-You Money” (don’t worry, no actual vulgarity:) and what it means in the job market.
Frugality has allowed me to work as a small entrepreneur for my entire career. I love the simple things about staying small and working for myself. I like setting my own schedule, choosing what I wear in the morning, eating casual breakfasts and lunches with my family, and taking trips without asking for permission from anyone.
I had job opportunities along the way with higher and more stable incomes, but I would have lost my flexibility and control of my time so I turned them all down.
For too many people an unpleasant job situation controls a large majority or their waking hours. If they could buy a lottery ticket that was guaranteed to start freeing them from this condition today and not years from now in retirement, most people would.
Frugality, to me, is that winning lottery ticket.
Buying Your Life Back With Frugality
I did not wish to live what was not life, living is so dear … I wanted to live deep and suck out all the marrow of life.”
~ Henry David Thoreau
Once work is not such a burden, what else do you want to do with your life? Are there hobbies, activities, or contributions that reflect the essence of life for you? Frugality can actually buy you more time and flexibility for these life-enriching uses of your time.
In case nothing is coming to mind, here are few that I hear often from others:
- More time to coach your children’s soccer teams
- More time to exercise
- More time to prepare healthier meals
- More time and flexibility to travel and see the world
- More time to work in the garden, do crafts, work with wood
- More time and flexibility to contribute to important causes and non-profits
- More time to start a new business for fun and profit
The wonderful thing about freedom is that the specific definition is so different for each one of us. If you want to put a true positive value on frugal choices, it helps to get clear on what life-enriching activities that frugality is purchasing. This can be a simple process of taking out a pen and piece of paper and writing it down.
At least for me, most of the things I listed required much more time and flexibility than they did money. And for the things that required money, a little creativity and patience meant I could have them as well over time.
Final Questions
I realize that this is a touchy subject, and there are no black and white road maps to describe what frugality should look like in your own life. But, I challenge you to think hard on this subject. Ask yourself some tough questions, and see if there is room for you to get better.
- Do you have room to improve in your spending habits? If so, specifically where are they?
- What are your preconceptions about frugality?
- What are your knee-jerk objections and “yeah buts …” that came to mind when you read this?
- How do the benefits and costs of frugality balance out in your own life?
- Where is your comfort zone in this area, and where are the edges where you can stretch yourself?
I appreciate the opportunity to share with you. I hope to hear from you in the comments section below.
What does frugality mean to you? What are the different levels of freedom you’ve experienced in your life? Would you leave your job if you could? Or would having less money worries allow you to enjoy your current job more? Let me know your thoughts in the comments section below.
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I totally agree with your article about frugality and can totally relate. I worked for a company that was run by a very nice and fair man. Unfortunately, he sold the company to a large publicly traded company in 2002 and I have been on the corporate tread mill ever since running the place. In October of this year I finally got the financial freedom to step down and become a sales rep instead. This brings a lot less stress and time commitment and will allow me to get back to spending more time with my family and friends, sports that I love, traveling, and living a healthier more balanced life.
I couldn’t have made this happen without being frugal with spending and the investments I made in RE along the way. I am now trying to make a transition over the next year or two to the RE investing business using mentors and insight from people like Coach Carson. I am from the Boston area and the market in my area is very hot and overpriced, trying to find deals is difficult.
Regards,
Don
Hi Don,
Wow, great to hear how frugality has made such a difference in your own journey. Your story really shows that you don’t know what your life or job will bring you, and you had the flexibility to take a sale rep job that worked more for your life.
Definitely let me know how I can help on your real estate investing journey. High-priced cities are a challenge, but if you can get deals there the demand, increasing rents, and ease of renting seems to make the deals better over the long-run.
Happy New Year!
Chad
It’s a balance and everyone needs to find the saving/spending relationship that works for them.
It gets even more complicated when you get married and have kids because there are more voices commenting on what that relationship should be.
We have always had healthy spending levels and never really lacked anything. Thankfully we had VERY healthy earning levels, so we were able to spend a good amount and still save a ton.
Agreed. It’s a personal balance we each have to strike. And marriage and kids certainly change things! Thank you for commenting.
Very nicely done post, Coach!
Thanks for linking to my F-you Money post and, especially, your very kind words concerning it!
Thanks for stopping by, Jim! And I am happy to share that post. That and many other of your posts are extremely helpful.
I am going to reach out to you directly. We are going to Ecuador next year as a family, likely to Cuenca, and I hear you are a good person to talk to for tips.
Not sure how helpful I’ll be, but happy to talk about Ecuador. Cuenca is our favorite larger city there.
This is a great article! I agree 100% that frugality = freedom. I’ve made big shifts in the last year to further maximize my frugality, including living in a house hack. My co-workers think I’m crazy, or maybe just poor, as they make fun of my car or house but I have a plan. I’ve also found that getting creative really opens up your possibilities.
I heard a 50ish coworker lamenting that she might not be able to retire early due to the cost of healthcare, $1k a month. I immediately thought “oh, a good four plex would solve that” but of course, that’s not an option in her world.
Great articles lately- I’ve been bookmarking several of yours and am working through the ’12 almost unfair advantages’ one on BP again, so I thought I’d drop a little note of appreciation. Thank you for your articles!
Loved your comment! Thanks!
You are so right about building that ability to think creatively to solve problems. It is a skill that gets suppressed over the years of institutional thinking. I love your idea” a quadplex will solve that.” Exactly!
Glad the articles have been helpful. Thanks for your kind words.
Chad, good post. Frugality should not remain a touchy subject, and as long as we all keep saying it is, we all continue to live in a marketer’s dream. Frugality is the sane realization that your money is hard-earned and so it should support you when you are no longer able to earn it. Of course, frugality can be taken to extreme so we should also consider that we cannot ‘shrink’ our way to FI. That’s why I believe in sensible frugality: http://tenfactorialrocks.com/sensibly-frugal/
Well said, TFR! Your article’s point about focusing on the big expenses is sensible, indeed. I wrote an article about getting rich with embarrassing old cars and ugly houses on the same subject. Like you, I like the idea of increasing the gap between income and outgo. Thanks for stopping by and commenting!
The balance can be hard to find but I agree, there is always more room to improve. Even on higher incomes, frugality can make a big difference.
Chad,
First, great to meet you at FINCON!!! Congrats on Rockstar!
Frugality allowed me to have the money to pay off my debt and primary residence. I thought being debt was so awesome, I even started paying off my rental properties!!!
Frugality has given me the freedom to retire early. I don’t have to, but I can if I’m ready. That’s a great feeling.
Rich
Rich, great meeting you as well! Yeah, I was excited to see the Rockstar Finance mention. That made my day;)
That is awesome to hear how frugality allowed you to pay off your residence and now your rentals. As I said on the article, you were actually buying freedom, because you have so many options now. Best of luck, and I look forward to following your blogging progress!
Great post! I love having the freedom to not work full time that my lifestyle has allowed me. I don’t need a fancy car, boat or house. What I want is time, freedom and mylittlebluekayak.com!
I love the littlebluekayak theme. What a cool happy place. It reminds me of the kids book “The Little Blue Truck” that we read to our daughters. It’s such a happy little truck too:)