Obligatory I live in the US.
I was listening to The Millionaire Nextdoor for probably the fifth time now.
It was written in 1996 and in the beginning they mention how frugal all the millionaires are that they interviewed.
30 years later from release I want to know what you think it means to be frugal when compared to today. What would you say is different in our spending habits and ways we commerce that might make it harder to save vs then.
Something that I keep getting stuck in with my finances are needs vs wants vs now.
It is easy for me to cut out trips and restaurants. When it comes to grocery shopping I don't cut coupons. I am looking to purchase that item now because I want to eat it. Things like vegetables, fruits, meats. I've generally cut out all the novelty.
I own my car, never lease and my biggest expense monthly is my mortgage.
When it comes to home I do my own repairs, mainly because I like to, not because I'm thinking of saving money. With home repair though you need the right tools and some specialty tools that speed up the work. In my mind I will balance the purchase cost vs hiring a handyman or skills trade because their hourly rates, while fair, are more than I prefer to pay considering I can do the work also. It just costs my time.
I generally don't do anything other than stay at home.
Yet, to jump in the bandwagon and sound like a broken record, I feel like I'm not able to save more. I think I've cut all my expenses and aside from strict budgeting I'm always surprised when I look through my credit card statements, my easiest form of payment for most purchases (most places around me won't take cash), and see how much I owe. More scary, when I go down line by line I'm always thinking, "That's right, I needed that to do this thing", "Oh yeah I forgot that yearly payment was due (insurance, annual fee for something I actually use, etc)".
There is hard core frugal and then there is spend all your money and never budget. I think most people want to fall in between.
If you've read The Millionaire Next Door and compared it to today, what would you say is different in our spending habits compared to then.
What does being frugal mean today
byu/unscodst_1 inpersonalfinance
Posted by unscodst_1
8 Comments
I think the key is always just living below your means. My family growing up was lower middle class, but my parents always lived below their means. They always bought the cheapest reliable car possible. They always cut coupons. They always saved where they could and put extra towards principle on the mortgage. They could have afforded nicer cars, TVs, and other things, but always went basic. They retired fairly comfortably with that same simpler lifestyle.
Now my family benefits from that same philosophy. My wife and I make good money, and are technically upper middle and now pushing upper class. But we live as basic as possible. We have a toyota corolla that is paid off. We could afford a 700K house easily, but are staying in our 300K smaller house instead. Stuff like that makes a huge difference, especially over time. We splurge on wants here and there, but they are smaller things and always measured.
I don’t think there’s any difference, it’s a realization of, like you said, needs vs wants. Many people today have an overload in their “needs” column that aren’t truly.
As for budgeting, it’s not in the same convo as being frugal vs frivolous. You can budget your money and still spend on frivolous things. It’s more on the spectrum of being carefree and being aware of your financial picture. It’s the ability to see what’s going on, plan for those “That’s right, I needed to do this thing”, and regarding credit cards, track that spending so you’re not surprised when the bill comes.
So why can’t you save more? Your budget and spending tracking will tell you if you’re leaking money on useless spending, and if that’s all in order, then shows you you need to earn more to hit your savings goals.
A want and a need are different. I believe you have to have a balance between spending and saving. How’s your 401k?
Currently it’s about lifestyle design. Minimizing exposure to inflation and designing your life in a way that makes it easy to be frugal.
Frugal does not mean cheap. Frugal means being thoughtful about what you spend your money on. Go on the expensive trip, but to save cut down on the casual expenses. Identify what expenses are important to you and use your budget to fund those goals. If you are living paycheck to paycheck that’s a different issue.
You are likely doing what you can with where you are at.
We are in a position where we have one small outstanding debt which will paid off this year, then it’s just living expenses. We don’t “coupon” either but we do check our grocer’s weekly flyers to see if things we do want are discounted to cut a couple bucks here and there. If it’s non-perishable we’ll stock up for future use. We also keep an eye out for cheap meat to toss in the freezer.
We rarely get takeout (1x/mo on average), don’t have subscription services, own our vehicles and have no mortgage.
If you have a low APR on your mortgage, likely not much you can do there unless you have “too much house” (like multiple bedrooms after the kids move out and in an empty nest). That’s a deeply personal/situational decision for what’s right for you at this point in your life.
You do want to have some discretionary money for things which bring you (and your significant other if applicable) happiness. There becomes a point where frugality becomes punitive and then what’s the point if everyone is miserable?
Spouse and I are early 50’s and socking away a substantial portion of our income right now to have an exit from the wage slavery system. We are in a similar boat where we have our monthly costs down and forgoing “extras” to get out of the rat race.
I’m a big fan of the book, and don’t think the message has changed at all. It’s all about spending less than you take in, and managing your money appropriately. To me, being frugal is knowing where your money goes.
I’m never, ever surprised at my CC bill. I know what’s on there because I’ve tracked it in my budget and I know that I can afford the needs and the wants that I’ve purchased.
For example: Though I’m an adult, I like Lego sets. I really enjoy building them, but they are expensive. So when a very cool $800 set is going to be released, I make sure I save up my “Lego Money” in my budget so I can buy it (preferably when it’s on sale). Yes, that’s a “want” but I’m still being frugal because I’ve saved up the money before I pull the trigger.
Very similar. It’s getting harder. Bought a quart of paint and some rollers. Was $30. Can’t imagine paying someone to paint