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Being frugal doesn’t have to mean living at the poverty line

Play along with me for a moment and imagine that you just got a raise that tripled the amount of your disposable income. You can now afford 3 times more than you could before, congratulations. Well that’s exactly what it’s like once you are able to buy everything at 70% off. Actually, it’s even better than this. That theoretical raise we’re talking about would require you to always make that new income amount to enjoy the same quality of life and afford these experiences. In some capacity, you are now dependent of this new money. Just buying things for cheaper by using your frugality, allows you to keep saving even if your income drops.  Economies contract, layoffs happen, wars occur about every 20 years, health(yours or someone you love) can put you out of action or shift priorities for extended periods, and life throws you curve balls that will affect your income.

Being frugal is about 2 things…

1) Being efficient with your money.

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That looks different for different people, depending on how much money they make and how much they have in reserves, savings, or perhaps an attic war chest. For example, I might make a monthly budget with an entertainment budget that is 5% of my take home pay. Yours might be a higher or lower percentage. If I take home $3000 a month, then that’s $150 that I can spend on entertainment. So is a person spending $400 a month being financially reckless? What about $4000? It all depends on their budget and how much they make. If you make $8000 a month, then $400 a month or roughly $100 per weekend, would be right in line with a 5% entertainment budget. So how does this help you? Use it as a guideline to set and keep your spending at a reasonable amount(set your own percentage. I just used 5% as an example. Some people might use 15, 30, or 30%.) that still leaves room for savings and your other expenses.

The freeing thing to keep in mind is that frugality isn’t meant to be a prison that you trap yourself in. It should be more like a GPS, keeping you on track as you charter your life on a path of your financial design and choosing, allowing you to afford experiences that make fantastically rich existence. As you make more money, feel free to re-evaluate your budgets appropriately. Once you know that you have your savings tracking where you want it, you can add a little more for the fun things in life. How far that money will go depends greatly on the next item though…

2) Paying what an item or experience is worth or less.

What does that mean? It means not overpaying for things you want. A fun and entertainment budget doesn’t go very far when you pay 3 times what an item is worth? Not what a commercial, price tag, or person told you it was worth.

Now I know the cost of some things are fixed and that there’s no getting around them, but for the great majority of expenses, you can easily save 20, 30, 40, even 70% if you simply shift your mindset to searching for these items where they are the cheapest. Don’t believe me? I’ve outlined how I do it here (No I’m not going to try to sell you something). Is a retail store in the mall the cheapest place to buy a watch? A purse? Clothes? Of course not. Here’s how I like to think about it; what could you realistically sell the thing you just bought at the mall, for once you step outside? 70% of what you paid? 50% of what you paid? 30%? This should be a wake-up call about it’s intrinsic value. This helps put a purchase in perspective sometimes. If I can only sell it for half of what I paid for it, then why not just look for someone that has already bought it and it now trying to sell it? Because it’s not as cool when someone else has used it? Where did you get an idea like that? Marketing maybe? This takes patience and some time to master but before long you’ll start to realize that most things you want can be had at a huge discount. This includes clothes, jewelry, tools, cars, airfare, housing, vacations, and food!

There are of course exceptions. If it’s a life experience (Your siblings wedding, a funeral, your kid’s field trip, etc.) then don’t let the difference of money keep you from it if you can responsibly afford it. Be careful not to use the emotional component of that last statement to justify bad financial decisions either. It gets very easy to do when powerful feelings are involved.

So that’s it; spend responsibly, advance passionately, and live your life in ever increasing vibrancy!

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