I hope you are enjoying your weekend, it certainly has been a nice one here in the Mid-Atlantic region. It’s amazing how much fun you can pack into the weekend for free. In the past two days I’ve done some rock climbing, hiking, and enjoyed a game night with friends all without spending a dime.
If I were to tell people the only money I have spent beyond basic needs was $5* this month. They would probably think I was living a deprived life. Why would we want to live on so little? I mean, doesn’t hardcore savings require a hardcore lifestyle? Like living under a bridge or in your car?
It turns out that hardcore savings can be achieved without decreasing quality of life. In fact, living frugally is all about learning to live happily with what you have. Socking away some serious cash is just a nice side effect. Frugality is achieved through adopting a more efficient, and once you begin to see the light, happier lifestyle.
Unfortunately, there exist many misconceptions that make frugality a trait to be frowned upon. Often the idea of being frugal is mixed up with being cheap. To call a person cheap is not something I would take lightly. A cheap person exploits others for personal gain. They are not the type of person you would want to have in your group of friends or do business with.
Frugal people, on the other hand, are on to something that others could learn from. They focus on how to do things better and more efficiently. Both frugality and cheapness have the side effect of high savings rates, which is how I believe the two have become mistakenly intertwined. I will draw a hard line between the two for you so that you may better understand the differences.
A cheap person will make decisions based on acquiring more money. Money is the end goal, and will be attained even at the expense of others or oneself. A cheap person will haggle prices down to the extent of damaging relationships. They will often lose sight of what makes truly makes them happy because they believe that money is the point. Cheap people are thinking of the COST of things.
A Frugal person, on the other hand, makes decisions based on acquiring more happiness. With happiness as the end goal, a frugal person understands the value of money as a tool. They are an efficiency minded breed who utilizes their resources for the purpose of maximum happiness. They cut waste on everything that does not contribute to the well being of them or their loved ones. Frugal people are thinking of the VALUE of things.
This chart should help clear up some of the confusion of Frugal vs Cheap
|Cheap people care about the cost of things||Frugal people care about the value of things|
|Cheapness affects everyone around the cheap person||Frugality only affects the frugal person|
|Cheap people make you uncomfortable because they exploit others||Frugal people make you uncomfortable because they make you see you could be doing better with the resources you have|
|Cheap people think short term||Frugal people think long term|
So you see, cheap people deprive themselves and others, while frugal people utilize resources with maximum efficiency. If you make happiness your one and only goal, things suddenly become simplified and you learn to look at the value of things. Suddenly your spending drops significantly on the things in life that simply do not matter. You will even find that you can spend much more on the things you love while keeping your overall expenses surprisingly low.
Once you become efficiency minded, you true priorities come first. You will find you have the monetary resources to free you of the rat race. Here in the U.S., there is an embarrassing surplus of wealth. Our wages are high enough to support a very wasteful lifestyle. Why not cut the crap and put it towards your happiness instead? You will discover just how easy it is to put away half your income.
Some of you may be more ambitious and want to really put yourself on the fast track to retirement, saving more like 75% of your take home pay. I mean, what could be more motivating than the thought of total freedom all the time?
Challenge: Spend no more than $5 past your basic needs (food, water, shelter) this week.
*That $5 went towards pitching in for gas for a trip to Pittsburgh two weekends ago. Here my girlfriend and I spent most of the day exploring the cities many steel bridges, parks and trails. $5 well spent, in my opinion.