Talk of frugality and words like sparing, thrifty, prudent in spending start coming to mind. (source: Wikipedia) What does being frugal mean? What will make it really work? Well, for sure, not by acting poor!
I can bet most people don’t understand frugality. Savings and thrift sound like ideas from the 18th century or before.
This is a consumption driven world. We ought to have the latest gadget, car, exotic holiday and what not.
That’s what is important. That is what money is for.
Saving is for the future – uncertain, unknown and we don’t know if we will reach that future.
Live now and make merry.
That’s the credo of modern life.
Instead of being frugal, we are smart shoppers. We believe in getting the best deal in everything we buy, even if we don’t need it.
#1 You want a new smartphone. The credit card company sends you a message: Buy your favourite iPhone or Pixel 2 on EMI and get upto Rs 10,000 cash back.
Your decision: BUY
#2 You want your own 2 BHK house. The real estate builder has launched a mega offer. Buy a 3BHK and get Rs. 5 lakh cash back. No GST.
Your decision: BUY
#3 Need a new pair of clothes. At your favourite Shopping Stop, the deal is: Shop for Rs. 5,000 and 2 vouchers of Rs. 500 each that you can use for shopping later.
Your decision: BUY
I hope you get the drift.
Frugality and Financial Freedom
Most people in the personal finance space talk about frugality and financial freedom and the linkage between them.
Being frugal can help you achieve your financial freedom sooner. Of course, the lesser you spend and buy only what you need and not what you want, your savings requirement literally crash. You can live more with less.
That is “IF” you want this financial freedom.
A big IF.
Let me share my 2 bits on frugality.
Frugality can’t be forced upon you. You don’t need to chase frugality too. It comes to you automatically when you decide what is more important to you.
As the saying goes,
It is easier to say NO, when you have a deeper YES burning inside.
The NO is for what is not important to you. If you have decided be on your own, live your own life and not the part of the rat race, you entire effort will be around to make this freedom happen.
To repeat, the YES to the financial freedom has to be really deep, burning. The NO to the expensive phone or a 3BHK when you need only a 2BHK are easy decisions then.
It has been true for me too. Once upon a time I used to get a monthly salary and boy, what a reckless spender I was!
Sometimes, I didn’t even realise when the so called expenses climbed a few notches. Yes, I didn’t realise when I switched from the local filter coffee to a CCD. The switch was not an exception but by habit.
However, things changed once I decided that my Freedom was the most important thing to me in life. All other things started to fall in line. Decisions about money and spending had only one guiding principle – will it help me add to the life I wish to have?
So, was I being a penny pincher?
My learning is that frugality is not about penny pinching. I never did that. It is about knowing what is more important to me and then using my resources to get there. Money is just one more resource.
Frugality makes you inventive, innovative and more aware of yourself.
At some point, you will realise that being frugal is awesome. I did.
Here’s further reading about starting up and saving money, with frugality.
What’s your frugal story? Do you think you are frugal? Do share your experience.
A well planned personal financial plan will help in knowing what is important and what is not. For example saving for retirement is may be more valuable spend than buying a car if you are constrained to choose only one because of limited resources. So are you really constrained? as a first step better to consult advisor to know where one stands in terms of his/her finances. Fee paid to advisor will add lot of value compared to wrong financial decisions
Thanks Girish. Glad to read a positive view on an advisor’s role. 🙂