{"id":2289,"date":"2020-08-20T10:20:28","date_gmt":"2020-08-20T10:20:28","guid":{"rendered":"https:\/\/www.oconnorcpafirm.com\/blog\/?p=2289"},"modified":"2020-08-03T18:23:43","modified_gmt":"2020-08-03T18:23:43","slug":"can-one-be-frugal-without-being-cheap","status":"publish","type":"post","link":"https:\/\/www.oconnorcpafirm.com\/blog\/2020\/08\/can-one-be-frugal-without-being-cheap\/","title":{"rendered":"Can One be Frugal Without Being Cheap?"},"content":{"rendered":"\n

Frugality. It\u2019s a word that strikes different people in different ways. For some, it\u2019s a refreshing way to get more value out of your money. For others, it conveys a sense of cheapness or of self-denial. Yet for others, it\u2019s just a way of living.<\/p>\n\n\n\n

Frugality is usually defined as \u201cthe quality of being economical with money or food.\u201d In other words, people who practice frugality are trying to get the most value for their money in all of the things that they do. It\u2019s a powerful strategy for personal finance, no matter what your goals are.<\/p>\n\n\n\n

Being frugal vs. being cheap<\/h2>\n\n\n\n

One of the biggest problems that people have about frugality is that they perceive it as cheap. It\u2019s important to think of frugality and cheapness as two very different things.<\/p>\n\n\n\n

Frugality means that you\u2019re not ignoring your internal wants and desires, but understanding them. You\u2019re thinking about your purchases, asking yourself what value you\u2019re really getting out of them, and spending money when those things give you a lot of value. Cheapness means that you spend the absolute minimum amount of money necessary to maintain the basics of life and no more. There are no other values you care about.<\/p>\n\n\n\n

If I have friends over for dinner, I\u2019m going to try to make a great meal that they\u2019ll enjoy while trying to keep the costs low. That involves thinking carefully about the meal, shopping thoughtfully for ingredients and making large batches of food at a reasonable cost. That\u2019s frugality. If I were cheap and had friends over for dinner, I\u2019d serve them the least expensive meal I could possibly figure out, ask them to bring their own drinks and not have any hand soap in the bathroom, because my only value is saving money.<\/p>\n\n\n\n

Aim for frugal, not cheap. If something is important to you, obtain the results you care about while minimizing costs, not about how to save every penny.<\/p>\n\n\n\n

Strategies to become more frugal, not cheap<\/h1>\n\n\n\n

I. Minimize the cost of urgent and important expenses<\/h3>\n\n\n\n

We all have essential regular bills that we simply have to cover to maintain our basic needs. Housing, food, water, clothing, toiletries, electricity, insurance, a car and home internet to stay employed. You need those things, and it\u2019s usually extremely clear what it is you want out of those things. When you pay your rent or mortgage or property taxes, you do it to keep a roof over your head, right?<\/p>\n\n\n\n

The first big step of frugality is to ask yourself the big questions and evaluate each of those expenses really carefully to see if you can reduce them:<\/p>\n\n\n\n

  1. With housing, is there a less expensive place that you could live, have your needs met, and be happy? If you\u2019re frugal, you would carefully consider what you value and need in a house, instead of choosing the least expensive one.<\/li>
  2. When it comes to your car, do you really need it, or could a less expensive car fit the bill? In this, being frugal means buying a car or using transportation methods that maximize your value of time and cost. Buying a yearly pass and taking the express train or bus every day instead of paying for a car may save you more money in the long run.<\/li>
  3. For insurance packages, have you shopped around recently? How much of a deductible can you afford on those packages? People should think to shop around for insurance every two or three years by getting quotes from various insurers and then negotiating with your current insurance company. Explore bundling your various types of insurance as well, and think seriously about how much of a deductible you can afford if you actually do have to use the insurance policy.<\/li>
  4. With food and household supplies, are you eating primarily meals you made yourself at home? Are you buying a lot of store brands? Are you doing\u00a0sensible meal planning\u00a0and grocery shopping? You don\u2019t have to buy food that you don\u2019t like or is not nutritious in order to be frugal \u2014 remember you can still enjoy meals without spending more money than what\u2019s in your food budget.<\/li><\/ol>\n\n\n\n

    These are all ways to retain the parts out of these essential expenses that you value while cutting out the parts that you don\u2019t. Remember, it\u2019s about what you really<\/em> value.<\/p>\n\n\n\n

    II. Reflect on the value of splurges and upgrades<\/h3>\n\n\n\n

    What about all of the other expenses in life? The upgraded expenses, fun things, hobby expenses, takeout and travel expenses. Where do they fit in?<\/p>\n\n\n\n

    Because those expenses vary so much from person to person, it\u2019s hard to give good strategies for each person. Rather, this is where a frugal mindset really pays off. Here\u2019s how to evaluate those expenses.<\/p>\n\n\n\n

    1. Review your last few credit card bills, bank statements, and store receipts, and ask yourself which of those expenses actually brought you lasting value in line with that expense. Just go through those credit card statements, bank statements, and receipt items line by line and ask yourself, for each one, whether you really got enough lasting value out of that expense. You can still enjoy the little things in life like good coffee and movie rentals, as long as that\u2019s what you value.<\/li>
    2. Aim to talk yourself\u00a0out of<\/em>\u00a0things rather than talking yourself\u00a0into<\/em>\u00a0things. Many of us have a bad habit of talking ourselves\u00a0into<\/em>\u00a0purchases. We\u2019re on the fence, but our mind tries to talk us\u00a0into<\/em>\u00a0it because we have this short-term impulsive desire. However, if you need new work clothes, then you need new work clothes, and frugality should not get in the way of looking professional and put together.<\/li>
    3. If you feel any doubt at all, delay the expense by 30 days. If you are thinking about buying something that you don\u2019t strictly need and you have any doubt about the purchase at all, delay it for 30 days. Simply make a deal with yourself that you\u2019ll revisit this in a month and if you still want it, you\u2019ll buy it then.<\/li>
    4. Use the pleasure of anticipation to your advantage. Best parts of spending your money on something that you want but don\u2019t strictly need is the anticipation of it. It\u2019s actually quite enjoyable to know that you\u2019ve got something fun or enjoyable coming up on the horizon.<\/li>
    5. If something you like has begun to feel less enjoyable because it\u2019s become routine, give it a break. It happens to all of us. We find something we like, consistently replay and\/or repeat it, and just because it’s “normal” becomes less enjoyable.<\/li>
    6. Intentionally give free and low-cost things a priority, and delve into things that you want to try. If you have an abundance of options in front of you, intentionally overvalue the ones that are free and extremely low cost. If your choice is to watch a movie on a streaming service you already have or to rent a movie, then opt for watching a movie or show on the streaming service you have.<\/li>
    7. Try to aim for the \u201cleast expensive ordinary day.\u201d Perhaps the single most powerful tactic for really making frugality click is the realization that if ordinary days are made as inexpensive as possible without making them miserable, not only would spending be a lot lower, we’d also appreciate the special days a whole lot more and wouldn\u2019t have to spend nearly as much to make days special.<\/li><\/ol>\n\n\n\n

      III. Put the money you save toward long-term goals<\/h3>\n\n\n\n

      All of these frugal strategies add up to one thing: you spend a lot less money while retaining almost everything you care about in life. The challenge then is to make sure that the money you save doesn\u2019t go into more and more urgent but not important fun things, but into important but not urgent big life goals.<\/p>\n\n\n\n

      Use the money you\u2019re saving from frugality to\u00a0build an emergency fund,\u00a0pay off your debts, and then\u00a0start saving for retirement. Think about your other big life goals as well and start actively saving for them, too. Do you want to own your own home? Do you want to travel around the world? Start savings plans for them. Those are the important but not urgent things, and they\u2019re the true fruit of the frugality tree. When you start frugality, you are able to think more about better uses for your money, and along with it comes\u00a0success in your financial goals.\u00a0<\/p>\n\n\n\n

      Remember…<\/h2>\n\n\n\n

      …there\u2019s a difference between being frugal and being cheap. Being cheap will ultimately save you money, but at the cost of happiness, convenience and even personal relationships. On the other hand, frugality will help you learn more about spending less and saving for long-term goals while still enjoying life.<\/p>\n\n\n\n

      To be frugal means to have a high Joy-To-Stuff ratio.<\/strong><\/em><\/p><\/blockquote>\n\n\n\n

      <\/p>\n","protected":false},"excerpt":{"rendered":"

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