Why Be Frugal? The Myriad Benefits of Frugality
This may be the most important post on this blog, because understanding the benefits of frugality is step #1 towards adopting a frugal lifestyle. As human beings, we make most decisions based on self-interest, aiming to choose the path that will bring us the most utility. Therefore, in order for people to choose to live frugally, they must believe that frugality will benefit them more in the long-run than the alternative.
What often separates frugal people from non-frugal people is not a fundamental difference in personality, but the fact that frugal people understand and have fully bought into the advantages of frugality.
Living frugally has countless benefits, both financial and non-financial. In addition to making you freer and richer, frugality will make you more relaxed, focused, skilled, grateful and healthy. Here are nine good reasons to live a frugal lifestyle:
Many people wish they could afford certain things but feel that they can’t, due to all the other expenses in their life. But in fact, if these people were able to reduce their expenses, they would be able to spend on what truly makes them happy.
That’s not to say that everyone can afford everything they want. It very much depends on income, and we know that many people have to struggle just to get by. But there are many people with good incomes who still feel that they can’t spend on what they truly want. It’s amazing how often the words “I can’t afford…” come out of the mouths of people with well-paying jobs. The truth is that these people could easily afford what they wanted if they just got a handle on their finances and stopped wasting money on items that they don’t need.
Today, the salaries for well-paying jobs (including most professional jobs) far exceed the cost of life’s necessities. If well-paid individuals feel that they do not have enough income to pursue their desires, it is because they are letting their money go to waste on less important things.
Being frugal has allowed me to spend a lot of money on travel, one of my biggest passions. In the last seven years, I have been able to go on annual trips to various countries in Europe, Africa, South America and Asia. These trips were a ton of fun, taught me about myself and the world and have left me with some amazing memories.
These trips are expensive, and I would certainly not be able to afford them if I did not live frugally. But since I save in many other areas, I have been able to go on these fantastic adventures, and still have sizeable savings every year.
To give another example, we recently bought our first home. One of our priorities was to stay in the city and live somewhere where our commute would be a maximum of 30 minutes (by bus for me and by car for my husband) and where we could walk to stores. Choosing an urban neighbourhood over the suburbs meant an automatic increase in home prices by hundreds of thousands of dollars. But thanks to our frugality, we are able to choose to put more of our money towards our house and consequently towards living the lifestyle we want. What could be more important?
Take a moment and ask yourself this: If you had enough money to live a comfortable lifestyle for the rest of your life, would you continue to spend your time the way you do today? Would you be working the same job? Would you live in the same place?
Many people would answer no. And you don’t have to hate your job to say no either. My husband Finn and I are in fields that we find quite interesting. My job has brought me a lot of intellectual stimulation and fulfilling accomplishments over the years. And yet, when I ask myself the questions in the first paragraph above, the answer is still no. If I were not dependent on my job for income, I would likely be working at another job - probably at a not-for-profit supporting a cause that I feel passionate about, or running my own business. As well, I would potentially be living in another place with a warmer climate, since job prospects would no longer be a major determinant of where I live.
Frugality, combined with a decent income, allows you to have a high savings rate. It can therefore allow you to build up substantial financial assets over a period much shorter than the 35 to 45 years that most people work. Once a certain amount has been saved up, it is possible to live off of the investment income from the assets (interest, dividends and capital growth).
Multiple blogs online chronicle people’s journey towards accumulating enough assets to reach financial independence and retire early. But in my opinion, this is just one way to enjoy this mapsparticular benefit of frugality. The reality is that quitting your job in your 30s and never working again is one extreme, and it may not work for everyone or even interest everyone. Luckily, there is a whole gamut of options for the frugal-minded:
- Get to a point where you can comfortably live off of the investment income from your savings, without having to work at all. This could be done very early compared to the average person (in your 30s), a little later (in your 40s) or closer to the typical retirement age (in your 50s).
Get to a point where your savings are providing you with some income, but you still need to earn some additional income in order to live the lifestyle you want. Options include part-time work, sporadic work or working at a job that pays less but is more satisfying.
Get to a point where your savings can, through investment income and/or principal reduction, easily support you for a year or a few years. This can allow you to take some time to do what you want - stay home with your kids, try to start a business or some other venture, get a degree, travel, move to another country, try a completely new lifestyle, etc.
Continue to work full-time, but enjoy the fact that your financial independence means you are not beholden to anyone. You will have more flexibility in your career and life. For example, you will be able to take on contract work without fearing the lack of income stability. In addition, just knowing that you are not dependent on your job for income will give you a great mental boost.
Finn and I are not sure which of the above options we are heading towards. They could all be possible, and we will see what we want to pursue later on.
“He who will not economize will have to agonize.” -Confucius
When you live well below your means, you always have money available in case you need it. It is either available in cash form (as an emergency fund) or in liquid investments that you could sell if you needed to.
This eliminates any worry about how you will get by if your income situation changes in the short-term.
For example, when my husband found himself without a job, we were never worried about how we would pay our monthly expenses. There was no doubt that we would be fine financially. First of all, my income at the time fully covered our essential expenses. We were effectively living on less than one income, and saving the rest. Second, we knew we had enough assets to cover expenses for years if we needed to.
That kind of financial security is priceless, and you cannot have it if you are not able to build up a significant amount of savings. When people spend most of the money they earn, they put themselves in a very vulnerable position. They have to worry about making ends meet from month to month. They are never able to relax and take a long-term view. Anyone who has experienced financial difficulties before knows that it is incredibly stressful and takes a real toll on your well-being and your relationships with others.
Another advantage of frugality is that you are able to withstand financial shocks if they occur. For example, if an unexpectedly large expense hits us, although we are a little sad (as any true freegalistas would be), we know that it won’t have any real impact on our daily life. It is just a debit to our savings, which we leave alone and don’t touch anyways. Our savings are there for our future, not our present.
When you live well beneath your means, you also know that your savings will continue to grow - it is just a matter of time. This significantly reduces stress about your future financial situation, such as your ability to retire. While there are no guarantees, it is good to know that if you keep doing what you are doing now, you will be just fine financially.
One of the defining traits of both me and Finn is that we never want to have to worry about finances. Our frugal lifestyle has given us the freedom of knowing that there isn’t anyone or anything that can put us in dire financial straits.
While we know we’ll be fine in the short-term no matter what, we are still concerned with long-term financial prospects. We know that we need both good incomes AND our frugality to attain our financial goals. If my husband had not found a new job quickly, we probably would have gotten stressed. Similarly, I have been in a situation where I hated my job, but was prevented from leaving by my worry that a short period of employment would look bad on a resume and hurt my future employment prospects. The only way to completely eliminate this kind of stress is through point #2 above - attaining financial independence, i.e. ending our dependence on our jobs. Fortunately, frugality leads to that too, and we’re on our way.
We all know that consumer choice has exploded in recent decades. There are many more items available for sale, and for every item there are countless variations.
We could literally spend all our time thinking about what we want to buy, analyzing our options and shopping.
One of the benefits of frugality is that it takes you out of this game. When you no longer see shopping as a worthwhile pursuit, and in fact try to minimize your purchases, you actually gain more time. You can now use this time for other, more meaningful activities.
But consumption doesn’t just take your time - it also takes your energy. Finding the perfect consumer item is hard work. The perfect outfit for every circumstance; the makeup product to beat all other makeup products; the latest and best phone.
When you jump on the consumer train - especially when you have a weakness for a particular category of goods - it is a cycle that never ends. There will always be other options and you will always be interested in trying them. You will never truly be satisfied.
I was never a major shopper, but I have become even more focused on avoiding unnecessary purchases in the last 6 months. I see a real difference in how I feel about clothes. In the past, like most women, I would often stare at my closet and bemoan the lack of appropriate clothing. Periodically, I would feel a strong need to go and buy new clothes that would better meet my needs or better compliment my figure. Now, however, I never find myself looking at my clothes like this, and the thought of going clothes-shopping doesn’t even cross my mind. I have a Forever 21 gift certificate from a return I did a year and a half ago, and I haven’t had any inclination whatsoever to go and use it. Somehow, my philosophy has completely changed - my approach is to use the clothes I already have, and leave it at that. When you embrace a more minimalist lifestyle, you avoid the continual energy drain associated with the hunt for new and better products.
The last consumption-related burden that frugality can free you from is society’s beauty and wealth standards. If shopping is a regular pastime for you, it is far more likely that you will find yourself wanting to buy beauty products and status symbols. On the other hand, when not buying unnecessary items is a central tenet of your life, you simply don’t have the urge to buy these products. Frugality allows you to walk away from these pressures entirely.
“There is enough in the world for everyone’s need; there is not enough for everyone’s greed.” - Gandhi
Frugal people consume fewer goods and services, and reduced consumption is essential for protecting the environment. The following excerpt explains the problem:
To live means to consume; and consume we do. 24 hours a day, we consume air for breathing, water to drink and food to eat. In addition to these basic essentials, we consume ever increasing amount of goods and services - cars, houses, appliances, computers, furniture, books, travel and entertainment. The list of things and services we have come to depend upon on is endless. The American market system depends on our continued and increased consumption, so it does its best to make us want more, desire more, buy more, upgrade more, pollute more and waste more.
However, there is a price to pay for this uncontrolled consumption. Perhaps, we do not yet realize that everything we consume comes from the natural world - it is extracted, mined, farmed, grown, fished, cut down - and the resources on this planet are limited. As we continue to consume at an ever increasing rate for the illusion of a “comfortable” life, the planet suffers from this over-extraction of resources - forests, fish, soil, minerals, water… resulting in degraded and collapsing ecosystems, habitats and species. In addition, increased consumption creates increased pollution and waste and the very essentials for life - air, land and water get more and more polluted and toxic.
Frugality involves a search for the cheapest - and the cheapest option is often DIY.
Doing things yourself means that you are cutting out the cost of the labour that goes into the good or service you are seeking. This is usually a substantial component, and a little DIY can go a long way in reducing the cost of an item.
But to produce the good you wanted to buy or render the service that you usually pay for, you may have to acquire new skills. The list of skills you could learn that would help lower your expenses is truly endless. Here are just a few examples:
- Making your own wine or brewing your own beer
- Making your own bread, chicken stock, pickles, condiments, nut butters, yogurt, etc.
- Growing your own vegetables and herbs
- Refinishing floors or cabinets
- Making homemade skin care or cleaning products
- Changing the engine air filter and cabin filter in your car
- Cutting your spouse’s hair or doing her nails
- Planning your own trips abroad
- Cooking new cuisines - the kind you usually go out for because they seem difficult or foreign
- Taking high quality photographs of your family
- Making your own jewellery
When you try to live more frugally, you will naturally find yourself turning to these DIY options and learning new skills as a result. Your new knowledge will make you better-rounded, more self-sufficient, and just plain more interesting! For many items, making them yourself also provides a much greater emotional reward than paying for them to be made for you.
A nice bonus is that most of these activities will also result in a higher quality product - tastier and healthier food, less toxic cleaning products, a trip that is tailored to your interests, etc.
Once your perspective has shifted to avoiding all unnecessary purchases, you really start to become aware of and appreciate the items that you already own.
All of a sudden, you realize that your current belongings already meet your needs. You also realize that, with little adjustments, your belongings can grow with you and meet your future needs as well.
It is nice to realize that you already own so much that is useful. There is a peace in knowing that I have already accumulated enough goods to meet my needs for years and years. Many people are in the same situation as me, but they may not realize it until they turn off their “buy something new” instinct and start focusing on maximizing the utility from what they already own.
As an example, last year, I found myself with many short-sleeved work-appropriate shirts, but not many long-sleeved ones. Rather than buying a bunch of new shirts, I simply bought two long-sleeved black cardigans in different styles. With these two cardigans, I can now convert any short-sleeved shirt to a long-sleeved shirt for the winter months. It is great to know that my current collection of shirts, which I already really like, can meet my needs year-round.
A book that helped crystallize this way of viewing my belongings for me was The Life-Changing Magic of Tidying Up: The Japanese Art of Decluttering and Organizing by Marie Kondo. Her notions of “loving” and “being grateful to” the items that you own really made me take a step back. I had never viewed my belongings with such appreciation before.
When you know that there is so much more than you can buy, at any instant, it is truly a foreign concept to think about your belongings in terms of scarcity. And yet scarcity is a precursor to appreciation.
When you shut the door on unnecessary purchases, you become aware of the abundance that you already have in your own house.
Simply put, frugality is fun. It is all about finding ways to do more for less, which is an entertaining challenge to have. Frugality inherently entails creativity and ingenuity, since it involves coming up with alternative, cheaper ways to get what you want and solve any problems that arise.
It is very satisfying when a frugal person finds a new frugal “hack” or tactic to use. It becomes a game - what else can you do? What new trick can you find? What’s also nice is that it is a game where you have many little “scores” - more basketball than hockey.
Frugality leads you to favour several behaviours that are better for your health.
Frugal people are more likely to be a one-car or no-car family. Therefore, they walk and bike more. Since they tend to insource services, they are also more likely to engage in activities around the house such as cleaning, home repairs, landscaping, etc. All of this leads to a more active lifestyle, a higher level of fitness and better overall health.
Frugal people are also far less likely to eat out and more likely to cook their own food. They control what goes into their food and avoid the excessive amounts of fat, salt and sugar that are found in restaurant food. They are also less likely to buy expensive processed foods and more likely to favour simple raw ingredients.
Proper nutrition and an active lifestyle are essential for good health, and frugality helps with both - quite a powerful medicine if you ask me! In addition, as we’ve discussed above, frugality results in better mental health by providing a greater sense of control over your life, lowering your stress levels and protecting you from societal pressures.
Once you fully recognize the rewards that frugality can bring you, it becomes that much easier to make frugal choices on a daily basis. In addition, understanding the merits of frugality will make you proud of this quality of yours, and pride will allow you to resist peer pressure and stand firm on your beliefs.
If you are already a seasoned frugalista, I hope this post has reinforced some of your driving motivations and perhaps made you aware of a few benefits that you hadn’t thought of.
If you are just starting your frugal journey, take the time to think about what you have read in this post, do some additional research and reflect on the benefits that frugality could bring to your life. A strong understanding of the benefits of frugality will be the difference-maker between seeing frugal decisions as sacrifices and seeing them as the smart financial trade-offs and positive life choices that they are.
What positive impacts has frugality had on your life? Can you think of anything we missed?