Frugal living. When we normally think of living a frugal life, we usually think of a life that is completely boring, no entertainment, no fun, eating tuna for breakfast, lunch and dinner while drinking water. Living the complete minimal lifestyle and being called a “tightwad” by your peers.
Does this ring a bell for you?
If so, then welcome to the world of frugal living, where impulse purchases are non existent, bargaining for purchases at the store, buying second hand clothing, furniture and various items.
This is the common perception of frugality, this is the image that holds true for society. Many people think that being frugal is living that type of lifestyle, however as I always believe, it’s all about perception.
So what’s wrong with being frugal? Why waste money on things you don’t need? Why spend all your money?
People view frugality as a disadvantage, I view frugality is an advantage and a great help to your life. If you’re frugal and become more responsible with money, this means that you’ll have less worry about money. However, if you receive your pay and spend all of it, that means you’re broke for the rest of the week, if you’re broke you’re miserable. Why be happy for one day and miserable for the remaining 6 days?
So what’s the beliefs between a person who is frugal and a person who isn’t? It can be explained in this diagram.
|Type of Person||Values||Financial Outcome||Future Outcome|
|Frugal||Save First, Spend Later||More Cash||Future Financial Stability|
|Non Frugal||Spend First, Save Later||Less Cash||Future Financial Instability|
Money affects everything. It affects your attitudes, it affects your health, it affects your relationships, it affects your career. People who say money isn’t everything obviously hasn’t tried living without it.
This is where the problem of frugality begins, our perception of it.
Common Perceptions Of Living Frugally
After many years of speaking with people and seeing their attitude towards money, I’ve found that people who are frugal are accused of the following:
- If you’re frugal, you’ll never be happy.
- If you’re frugal, you’ll be boring.
- If you’re frugal, people will stop hanging out with you.
- If you’re frugal, you’ll be seen as a person who doesn’t spend therefore won’t be fun to be with.
- People who are frugal are also often made fun of but when the times comes, they are usually asked for money when needed.
Perhaps some of those perceptions are true, perhaps not. However, if a person is a spender, they usually hold negative beliefs about frugality. If those people hold those beliefs about frugality, then it’s most likely they can not amass a large sum of money and usually end up without cash.
Therefore, the only thing stopping them from amassing a fortune is their perception of frugality. If they could change that one thing, which is their attitude towards frugality, then it’s that one thing that would change everything.
How I Lived A Frugal Life And Was Still Happy
When I first started out, my beliefs towards savings money wasn’t good. Saving money just wasn’t my strengths at all. I used to believe that being frugal means I would not be popular, I would lose my friends and I would live a boring life style.
So when I was young, I used to go to the city and spend all my money on buying the most expensive clothes. I earned $100 per week and I used to buy the top of the range jeans I could afford which was with $80.
I bought the jeans and somehow lived off $20 per week. When I bought those jeans, I felt like I was accepted and part of the “normal” crowd. I wore the jeans and felt accepted.
However, I found that after a few days, I would quickly get bored of those jeans and they would slowly fade. Once again, I would go out and spend all my money is keeping up with the latest trend. I would spend all my money on looking rich but really, I was poor. I was living on $20 per week but looked rich.
Although it was nice wearing these clothes, I absolutely felt miserable inside, the reason is because I was always broke and stressed about money. I couldn’t afford to pay for my bills and couldn’t even go out to nice dinners because I spent money on things I didn’t really need.
That’s when it hit me like a ton of bricks.
Spending money to impress others is a facade. Spending money on things you don’t need makes you feel unhappy. I realized that I would be so much more happier if I was wearing basic clothing but had a fat bank account. Having a fat bank account means I know I could afford a lot of things and also gives me peace of mind. I also realized that having judgmental friends was no way to live a happy life.
Spending money on the things that would “impress” others is like trying to fill a bottomless pit. Yes, owning that latest mobile phone will make you look cool but give it a few months and there will be another version out there and you’ll look like a fool again.
Don’t live like that. It’s a waste of time and money.
It was then I changed my life and started learning how to live within my means. I would save my money first before I would spend on other items. I would resist the temptation for impulse purchases and I would be careful with money.
Initially it was quite strange holding and resisting to purchases, however I got used to it. I also found that I was more happier in the long run because I was no longer dependent on other people’s opinions about me.
I felt more free because I no longer care for impressing people, I also felt great because I knew I had heaps of cash ready for nearly any purchase I want.
I remember the day when I walked into the same store I bought my jeans and saw them for sale for $80. I didn’t buy it but I knew I could buy hundreds of those jeans if I wanted to simply because I was more responsible with money in the past.
Being smart with your money is worth it.
Types Of Frugal People
There are many different types of frugal people. There are the extreme and the moderate.
The extreme type of frugal people are the ones who really go to the greatest lengths to shave all cents from everything. They are the ones who purposely neglect friendships so they save money, they really don’t spend any money at all, they earn a lot of money and hoard everything. Even if they are given a huge sum of money, they would go back and save all of it and wouldn’t even think of rewarding themselves something nice.
Extreme frugality are the type of people who has lots of cash but focus everything down to the last penny. Their whole world revolves around the last penny and happiness to them is getting discounts. Fortunately, I’ve only met an extremely small number of people in this category.
The moderate frugal people are the ones who are also great with money but they know when to spend money on themselves. Being frugal obviously helps me amount a large sum of cash but they do still money on themselves occasionally.
Moderate frugality are the type of people who still have lots of cash but still live a happier life of balanced spending.
The Benefits Of Being Frugal
There are so many great benefits behind being frugal, here they are:
- You sleep better at night.
- You no longer worry about not having enough money for things.
- You get satisfaction out of having a huge bank account.
- You can afford many things.
- You can afford the big things such as traveling the world for a long period of time.
- You always have money for your family.
- You create stability for your family.
- You build discipline.
- You teach your kids the power of saving money which teaches their kids too.
- You teach your kids how to fish rather than giving them the fish.
- And much more.
How To Live Frugally And Still Be Happy Action Steps
In order to live a frugal lifestyle, it’s it requires a lot of commitment, determination and patience, however the rewards will be great.
Here are the action steps in which you can take to help you become more frugal.
Step 1. Make A Decision.
The first thing you need to do to become more frugal is to make a decision that you need to change your spending habits. You need to realize that by overspending, you’re actually hurting your future happiness and lifestyle. Would buying that item really make a huge difference to your life? Do you really need it? Make a decision today that you’ll become more frugal in life to create a happier life.
Step 2. Begin Saving Money.
Saving money is the cornerstone of financial stability. You need to learn and practice the habit of saving money. I can not stress this enough. You need to learn and practice the habit of saving money for there is no way you can move forward if you can not save money. As soon as you get money, put away 10% or more of it into a place where you can not touch it. If you receive a bonus, save 50% of it and spend the other 50% on anything you want, that way you’re still saving but your lifestyle also increases by 50% as well.
Step 3. Delay Gratification.
Yes, by not spending your money on that item may suck but remember, you probably don’t need it anyway. If you’re casually walking in the mall and see something you like, remember you lived perfectly okay without it and all of a sudden, you need it. Therefore, remember to delay gratification for those purchases of things you don’t need.
Step 4. Remember To Reward Yourself.
Being frugal is a good lifestyle move. However I don’t believe in hoarding cash and not treating yourself or rewarding yourself with things. If you’ve been working really hard at work, you’re budgeting well and saving up a good amount of cash, always remember to reward yourself for your great efforts. Go and buy that thing you want. Go traveling. Go and buy something nice. You earned it. By rewarding yourself, you’ll keep yourself sane instead of just saving money all the time which is not a good thing to do.
Step 5. Make It A Life Long Habit.
The final step is the most important. It’s not the amount of money you save, it’s the habit that’s most important. As you’re on your journey of being more frugal but living a happier lifestyle, you want to continue this habit for the rest of your life. Of course, your savings will go up and down but it will trend upwards. Your savings will increase and you’ll be ready to invest your savings into income generating assets and more. Make frugality a lifelong habit.
The Story Of Frugality – Le Van Vu
I would like to finish this article with a great story on frugality and how it can change your life forever.
The following story is from the book “Chicken Soup For The Soul” written by John McCormack, by Jack Canfield and Mark Victor Hanson.
Willing To Pay The Price
“When my wife Maryanne and I were building our Greenspoint Mall hair salon 13 years ago, a Vietnamese fellow would stop by each day to sell us doughnuts. He spoke hardly any English, but he was always friendly and through smiles and sign language we got to know each other. His name was Le Van Vu.
During the day Le worked in a bakery and at night he and his wife listened to audio tapes to learn English. I later learned that they slept on sacks full of sawdust on the floor of the back room of the bakery.
In Vietnam the Van Vu family was one of the wealthiest in Southeast Asia. They owned almost one-third of North Vietnam, including huge holdings in industry and real estate. However, after his father was brutally murdered, Le moved to South Vietnam with his mother, where he went to school and eventually became a lawyer.
Like his father before him, Le prospered. He saw an opportunity to construct buildings to accommodate the ever- expanding American presence in South Vietnam and soon became one of the most successful builders in the country.
On a trip to the North, however, Le was captured by the North Vietnamese and thrown into prison for three years. He escaped by killing five soldiers and made his way back to South Vietnam where he was arrested again. The South Vietnamese government had assumed he was a “plant” from the North.
After serving time in prison, Le got out and started a fishing company, eventually becoming the largest canner in South Vietnam.
When Le learned that the U.S. troops and embassy personnel were about to pull out of his country, he made a life-changing decision.
He took all of the gold he had hoarded, loaded it aboard one of his fishing vessels and sailed with his wife out to the American ships in the harbor. He then exchanged all his riches for safe passage out of Vietnam to the Philippines, where he and his wife were taken into a refugee camp.
After gaining access to the president of the Philippines, Le convinced him to make one of his boats available for fishing and Le was back in business again. Before he left the Philippines two years later en route for America (his ultimate dream), Le had successfully developed the entire fishing industry in the Philippines.
But en route to America, Le became distraught and depressed about having to start over again with nothing. His wife tells of how she found him near the railing of the ship, about to jump overboard.
“Le,” she told him, “If you do jump, whatever will become of me? We’ve been together for so long and through so much. We can do this together.” It was all the encouragement that Le Van Vu needed.
When he and his wife arrived in Houston in 1972, they were flat broke and spoke no English. In Vietnam, family takes care of family, and Le and his wife found themselves ensconced in the back room of his cousin’s bakery in the Greenspoint Mall. We were building our salon just a couple of hundred feet away.
Now, as they say, here comes the “message” part of this story:
Le’s cousin offered both Le and his wife jobs in the bakery. After taxes, Le would take home $175 per week, his wife $125. Their total annual income, in other words, was $15,600. Further, his cousin offered to sell them the bakery whenever they could come up with a $30,000 down payment. The cousin would finance the remainder with a note for $90,000.
Here’s what Le and his wife did:
Even with a weekly income of $300, they decided to continue to live in the back room. They kept clean by taking sponge baths for two years in the mall’s restrooms. For two years their diet consisted almost entirely of bakery goods. Each year, for two years, they lived on a total, that’s right, a total of $600, saving $30,000 for the down payment.
Le later explained his reasoning, “If we got ourselves an apartment, which we could afford on $300 per week, we’d have to pay the rent. Then, of course, we’d have to buy furniture. Then we’d have to have transportation to and from work, so that meant we’d have to buy a car. Then we’d have to buy gasoline for the car as well as insurance. Then we’d probably want to go places in the car, so that meant we’d need to buy clothes and toiletries. So I knew that if we got that apartment, we’d never get our $30,000 together.”
Now, if you think you’ve heard everything about Le, let me tell you, there’s more: After he and his wife had saved the $30,000 and bought the bakery, Le once again sat down with his wife for a serious chat. They still owed $90,000 to his cousin, he said, and as difficult as the past two years had been, they had to remain living in that back room for one more year.
I’m proud to tell you that in one year, my friend and mentor Le Van Vu and his wife, saving virtually every nickel of profit from the business, paid off the $90,000 note, and in just three years, owned an extremely profitable business free and clear.
Then, and only then, the Van Vus went out and got their first apartment. To this day, they continue to save on a regular basis, live on an extremely small percentage of their income, and, of course, always pay cash for any of their purchases.
Do you think that Le Van Vu is a millionaire today? I am happy to tell you, many times over.”