How Frugal Living Increases Savings
When someone says frugal, most people think cheap. Being frugal is not cheap. Being frugal is about planning your spending so you can spend money on the things that are important to you.
Suppose you are not wasting money on things that are not important to you. You have money left over.
You may be asking yourself, If you are frugal and frugal isn’t cheap, how can frugal living increase my savings? Read on to learn how being frugal will increase your savings.
How Frugal Living Increases Savings
Think about it like this, if you are being frugal, you spend money on the things that are important to you, including things you need.
If you have debt, you pay interest on the borrowed money. Is paying interest important to you? Probably not, so paying interest isn’t a frugal move. In this example, paying off your debt and not acquiring more would be more economical. Freeing up money you can save.
Frugal vs. Cheap
Another example is it’s your friend’s birthday. You run out and buy the cheapest thing you can find. You didn’t consider if they wanted it or not. You need to think about whether they can or will use it. That’s cheap, not frugal. Your friend will probably not use it. That’s a waste of money. You spent money on something you don’t care about. A more frugal way to do this is to find out what they want, plan for it, and save for it. Then at the appropriate time, buy it.
One benefit of frugal living is learning how to save money. I’m surprised at the number of people that don’t know how to save money. They may spend less but need to learn how to save money.
Frugal living unlocks financial security because you are not wasting money on things that don’t matter to you. Consequently, you have more money to save for that rainy day and things that matter to you. Learning to save money transformed my life from being broke to having a healthy savings and retirement fund.
Most Americans are concerned about retirement. And if all you will have is social security, you should be worried about retirement because social security alone will not be enough. But if it’s important to you–you can save for retirement. You may also become eligible for early retirement.
Frugal Living Increases Savings.
Frugal living is about paying for things that are important to you. If you buy a car, the car may be necessary for you. But the interest you pay for the loan on the vehicle is not important to you.
If you’re frugal and need to buy a car, you have saved the money to pay cash or saved enough to make a sizeable down payment, reducing the interest you will pay. And that’s frugal.
To be more frugal, you could buy a good used car. Buying a used car can save you a small fortune, especially if you have a good used car inspection checklist.
Frugal living is about buying important things and not spending money on things that don’t matter to you.
This Is How Frugal Living Will Increase Your Savings
Frugal living is about planning your money to have the things you want. The things that are important to you.
If you think about it, you will only earn a certain amount of money in your lifetime.
To have the best life you can and enjoy it as much as possible, it’s essential not to waste money on things not important to you.
Think about your lifetime earnings as a bucket of money. You only have so much and no more. Don’t spend money on unimportant or unessential things. So you will have more money to spend on the things that are important to you.
You need to decide what’s important to you. Is it important to you to retire early, send your kids to college, take a vacation of a lifetime, or home ownership? This list can go on forever. Include your everyday living routine:
- A cup of coffee from Starbucks
- Season tickets to the football games
- A new car VS a used car
What’s Not Important To You?
After you have decided what’s important to you, determine what’s not important to you. You are looking for expenditures that don’t help you acquire the important things, like bank fees, overdue book fees, subscriptions to magazines you don’t read anymore, a gym membership (when was the last time you want?), parking tickets and so much more.
After you’ve made a list of what is and is not important to you, avoid paying for the items that aren’t important to you and focus on the things that are.
The unimportant things are holes in your bucket of money. Do what you can to plug the holes.
The Important Things To You
Concentrate on what’s important to you. Make plans for them and save money for them. Suppose you were going to take that vacation of a lifetime this year and don’t have the money saved. Put it off until you have the money to pay cash next year.
Let’s use the car example. You decide that owning a car is essential to you, but you also decide that spending money on interest is unimportant because it doesn’t help you achieve your dreams, needs, or wants.
To avoid spending money on something unimportant to you, save the money to pay cash and not spend it on interest.
How Important Is Starbucks?
The average cup of Starbucks in America is $2.75 a cup. If you work a job five days a week and buy a cup of Starbucks every day on your way to work fifty weeks out of the year (2 weeks for vacation time) at the end of the year, you’ll have spent $687.50.
The amount you spend on coffee is significant. What else can you do with that amount of money?
Maybe you should cut back or eliminate it.
The question is: how important is a cup of Starbucks coffee to you every day?
I’m Hungry Now
Most of the time, you can wait until you are home to get a snack. If you go to Macdonald’s for a Big Mac, the price will be approximately $3.79 plus tax.
Like in the Starbucks example, small amounts add up in a hurry. And that, well, it wasn’t that expensive, becomes that expensive after a few trips.
The Frugal Moral Of The Story
Most people have money leaks and spend too much money on things that aren’t important to them.
They could plug the money leaks and have more money for important things.
Bringing It Altogether
We work hard for our money. To spend money on things that are not important to you is like buying a meal at a restaurant you know you won’t like. It doesn’t make sense.
Decide what’s important to you, focus on those items, save, and plan for them.
Conclusion
By living frugally, you decide what’s important to you and what’s not. You then focus on what’s important to you and avoid spending money on things not important to you.