This post was originally published on 11/26/2012
When you hear the term “frugal living” or “frugal,” what thoughts does it generate? Is it negative or does it sound restrictive like the word “budget?”
According to Wikipedia, the definition of frugality is, “The quality of being frugal, sparing, thrifty, prudent or economical in the use of consumable resources such as food, time or money, and avoiding waste, lavishness or extravagance.”
Frugal living doesn’t have to be a bad thing, in fact it is necessary to be able to win with money. Recently, my wife started shopping at Aldi. When I think of Aldi, I think of poor people, but that is not the case at all.
Becky (my wife) has found the same quality food at lower prices. We don’t buy everything from Aldi, but we are now saving about $25 a week. That comes out to an annual savings of $1300!
Here are 5 reasons why frugal living should be a part of your financial plan:
- God’s Ownership: Scripture tells us that we should be stewards (or managers) for God’s resources. When you understand that God owns it all, you will begin making wiser financial decisions.
- Contentment: Sheryl Crow said it best in her song “Soak Up the Sun.” “It’s not having what you want, it’s wanting what you’ve got.” Being content with the things you have will alter your approach to purchasing “wants” versus “needs.”
- Cash Flow Planning: If you get the first two reasons, then you will understand that frugality helps you stick to your budget. In fact, you may be able to find extra savings by using coupons, going to flea markets, Craig’s list, Ebay, estate auctions, etc. to make purchases.
- Giving: If you do not manage your resources very well, then it is difficult to give. Especially when your income is leaving you in the form of debt payments to MasterCard, American Express, auto loans, student loans, and the list goes on and on.
- The Wealthy: Despite how the media portray the so-called “rich,” the wealthy serve as an example on how to build wealth. According to Thomas Stanley’s book, The Millionaire Next Door: The Surprising Secrets of America’s Wealthy,
80% of millionaires are first generation rich. Their frugal financial decisions is how they became rich.
Being frugal is one of the best behaviors used in financial planning. As the financial expert Dave Ramsey says, “personal finance is 80% behavior and 20% head knowledge.” If you are not smart with your money, it doesn’t matter how much you know about finance, it will you.
Many people are not frugal because they are more concerned about impressing other people. I say embrace your frugality like a badge of honor and win with money!
Question(s): Are you as frugal as you ought to be? If not, have you thought of any areas in your personal finances that you could be more frugal? Please share with a comment.