A lot of people will say “be more frugal,” but it’s important to contextualize it. Everyone should strive to be frugal, but you should aim to be more frugal when your life allows for it
The big difference between being cheap and being frugal is that a cheap person saves to save while a frugal person shifts their priorities accordingly. More importantly, they are saving to then use that saved money for something better whether it’s for investing or paying down debt.
The biggest contention people tend to have with these videos is that the advice isn’t generic enough to apply to everyone, so naturally, you have to tailor the advice to your life and getting used to the frugal mindset and way of thinking. If you absolutely need a car, then that’s fine, but by becoming aware of what you’re giving up for that, you are being more conscientious about your finances. For example, by having a car, you could be spending upwards of $10K a year on financing, parking, maintenance, insurance, gas, etc. That money every year could exponentially speed up your ability to invest and retire so you have to understand that by enjoying the convenience of a car, you are giving up an earlier retirement than if you bought the car later on or went without it entirely. If you can internalize this notion, you can retire significantly sooner.
A good way to shift your mindset is to start looking at everything in terms of how many hours you need to work to pay for it rather than just looking at the dollar value. Another great way to start is to try cutting something out for 30 days. After 30 days evaluate whether or not your life is better, worse, or the same, and then decide whether to reintroduce it or cut it based on the value you get.
Also, if you want to retire early and live on passive income like I am, you realize that by cutting out a simple expense like $50 a month, actually works out to be $600 a year meaning that I would need about $12,000 invested in 5% dividend-yielding stocks to pay for that expense. By cutting out small expenses you can actually drastically reduce the money needed to retire. You can also calculate this by taking your annual expenses and multiplying them by 25 to get the amount needed for your retirement.
Some specific examples of how I save a great deal of money are mainly buying my own groceries and not eating out, living with roommates, not having a car, wearing the same outfit every day, cutting my own hair, and watering down beverages. You can even spend a bit more money to save time and thus save money. If you are able to work remotely or on your side hustle, then the hour spent shopping is absolutely worth the $5 fee for grocery delivery. Again, you can measure the cost-benefit of anything based on the number of hours worked or the number of hours you could otherwise work.
Frugality isn’t being cheap, it’s prioritizing what you value the most including your time.
What do you think about frugality? How important is saving to you? Do you agree or disagree with what I’ve said? Let me know what you think about this in the comments below and don’t forget to subscribe!
*Disclaimer: This is not financial advice and is purely for entertainment purposes. What you see, hear, or read is my personal opinion, and any statements made are based on my views and should not be misconstrued as fact. My crypto portfolio may or may not be simulated*
Since the pandemic, I given up a lot of the wants and true enough the savings that came from buying those wants are quite substantial. 🧡👍