Benefits Of Frugality
Frugality is a lifestyle. It’s a lifestyle of being thrifty, saving money, and conserving resources. It’s a lifestyle of budgeting and planning. Those who live frugally are financially fit They have the resources to weather a storm.
The benefits of frugality are: You don’t worry about money, you’re debt-free, and you have money saved to buy what’s important to you, and improves your social relationships.
If you would like to learn more about the benefits of frugality, keep reading.
Benefits Of Frugality
As I explain the benefits of frugality, think about how frugality could benefit you. Almost everyone wants to improve their lives and almost everyone can improve their lives if they chose to live frugally.
You Don’t Worry About Money
According to the American Psychological Association, 65 percent of adults say that money is a significant source of stress.
If you live like most people live you have every reason to worry.
According to Bloomberg, two out of three adults can’t cover a four hundred-dollar emergency. When you think about it, four hundred dollars isn’t a large amount of money. So why can so few people cover a four-hundred-dollar emergency?
It’s because they live beyond their means. They don’t plan for the future. They have no short or long-range plans. They don’t save money.
If a person ever wants to change their financial picture and become prosperous they need to live within their means and save money.
When you have an abundance of money, your outlook on life changes. You don’t worry about money. Life is much easier.
Debt Free
Frugality leads a person to be debt free. Being in hock to creditors is not good for two reasons. You leverage your future. You are making decisions today that will affect your life tomorrow. Let’s say you buy a new car today and need to make payments for the next six years. For the next six years, the amount you are paying for the car is removed from your pool of money. The money you could have used elsewhere but it’s money you don’t have anymore.
The next logical step is to assume you lose your job or become sick and can’t work. Without savings, you could be in a financial bind and you could have avoided it if you had not bought the car or paid cash.
Now your whole financial future is in trouble. These problems can last for years, sometimes a lifetime.
Money Saved
The most important savings is an emergency fund. What do you do when you have an emergency in your life? Do you borrow money from the bank? Put the expense on a credit card borrowed from a relative.
We can’t avoid the mishaps in life but we have to deal with them anyway. It comes to a point of ready or not here it comes. What do you do?
If you manage your money, you’ll have emergency funds set up for when there’s an emergency.
The experts recommend six to twelve months of living expenses to deal with emergencies in life.
This is one reason to keep your cost of living low. You won’t need as much to weather the storm.
You Save For Things
You pay for everything you buy. Think about this. If you buy a new water heater you will pay for it.
If you buy in on credit you will make monthly payments until you have paid for it.
If you save for it you make monthly payments to yourself until you have the money saved then you buy it.
Either way, you are making payments on it. When you finance it you’re not only paying interest you also increase your monthly cost of living. But if you save for it not only do you not pay interest you don’t increase your cost of living. This is one benefit of frugality.
A good way to save for everything you could need is through sinking funds.
If you save for what you need you will see your emergency fund needs less.
Think about it. What loss of what would be an emergency to you? To me, the loss of my car would be an emergency. In my sinking funds, I saved the money for new tires and repairs. The amount of money I need in my emergency fund is now less. I have the money saved for those items somewhere else.
I know the difference sounds unimportant but it’s very significant in that buying tires and auto repair bills is no longer an emergency. I have it covered. And the amount of money I need in my emergency funds is now less. My cost of living is now less.
Improves Your Social Relationships
Have you ever met that person that leads you into making bad decisions? They are spend happy and you are trying to be frugal. But you can’t help but notice their more glamorous lifestyle than your frugal lifestyle.
The truth is you don’t know what their finances are. They could have inherited a small fortune or they could be up to their eyes in debt.
Either way, you need to find people with the same values as you. Giving up the people you are jealous of and people that encourage you to not observe your values is improving your social relationships.
It’s Good For The Environment
Another benefit of frugality is it’s good for the environment. Every time something is manufactured it requires resources. Think about that new couch you just bought. What materials went into it? At one time these were raw materials. To make your new couch the raw materials were refined and made into a couch. Those materials are gone. If you purchase a used couch the raw materials aren’t used because you recycled the older couch.
This is true of everything we manufacture.
Conclusion
There are benefits of frugality. I know you save money and you live debt free which is awesome. But there are more benefits than you see. There is a reaction for every action. Being debt free is cool but you also worry less about money.