Frugality – New and Old Ways of Saving Money
Topics I plan to cover in this series of Personal Finance Basics include (but not limited to): Financial Planning, Investing, Insurance, Income Tax, Retirement, Benefits (entitlements and company benefits), Spending, saving, giving, to start.
Becoming more frugal has become an important part of our psyche in the 21st Century. Never mind that politicians are making a game out of reducing debt and spending less. The consumers have been doing that for most of our lives, not because it is a game, but because we had to live within our means, which Congress could not, or would not, grasp. But the sense of urgency and giving attention to practicing frugal habits have become a great way to avoid consumerism, prevent buying too much stuff, reducing stress, as well as spending less money on things.
The Science of frugality can be quantified. Saving money can be analyzed and predicted. You can figure out what it would cost you to do something, and even include a value for your time for something you do yourself that you normally would pay someone else to do for you.
According to wikipedia, Frugality is the practice of:
- Acquiring goods and services in a restrained manner
- Resourcefully using already owned economic goods and services
- Achieving a longer term goal.
The goals can be to save money, become financially independent, but it does not have to be money related. It could be to reduce waste to benefit the environment, or just to reduce your own personal impact on the world we all live in together, or to simplify your life.
Areas of frugality
- Reducing Waste
- Delaying Gratification
- Developing Self-Sufficiency
- Simple Living and Avoiding Consumerism
Actively practice frugality
- Spend less than you earn
- Consider your motives when you buy – is it a “need” or “want”
- Count your successes in terms of saving more and increasing net worth
- Save up for emergency fund and retirement
- And improve in areas where you are weak (too much reliance on debt, buying things you don’t need, etc.)
It's all based on common sense.
Next post will discuss spending