“Living a frugal lifestyle gives you the opportunity to invest more money towards your future.” – John Rampton
Welcome back to WF. The topic today is on frugality.
Us Millenials tend to get pushed into one of two categories: cheap or spendthrift. Let’s take a look at this for a second. Either you don’t want to spend on anything at all or you enjoy blowing your money. Cheap people tend to be considered as those who will order from the dollar menu at McDonald’s and would rather park a mile away in Free Parking rather than pay $3 an hour in a parking lot that is near to your destination. A spendthrift is known to be a “yes” man/woman in the sense that whatever they want, they buy.
Both of these are okay when you have the means and it makes sense. But, we have to distinguish the difference between someone who is cheap and someone who is FRUGAL.
Being frugal is what I am to an extent. My personal definition of being frugal is where you will spend heavily on things that are long-term and spend meticulously on things that are here then gone tomorrow. For example, books, stocks, real estate, travelling, fine jewelry, and gold are things that I will ensure I get the right price on, but I will not be afraid to drop a pretty penny on them. As you can see, the things that I listed are to me, assets.
Travelling is an asset because exposing yourself to different cultures and lifestyles around the world gives you a broader understanding of your role to play and may inspire you in various ways. Books are an asset (I am referring to self-help, business books, etc.) because they teach a reader how to create wealth and take advantage of opportunities as well as taking care of your body. Real estate and stocks are obvious assets, as you can earn income through them. Fine jewelry and gold are assets, which are self-explanatory.
Where I become frugal is when it comes to when to buy clothing, certain foods, go out with friends and where, etc. Things that are immediate gratification immediately get me thinking how to cut costs. I am a long-term thinker in everything I do, especially when it comes to where my money goes. This year alone, I have learned a lot about controlling my spending and getting past the human nature of immediate gratification. This is my definition of frugality.
So what are you? You may be called cheap but are you truly cheap? You may just be frugal and you don’t even know it. You may prefer to spend $10,000 on a month trip around Europe but would rather grab a cheeseburger from McDonald’s rather than a Big Mac just because of the price.
If this is you, you are on the right path. Take advantage of the way you value your money and stick to it. If you are interested, I’d advise you to take it a step further and start investing in something you feel comfortable with (or get an adviser to do the hard work for you). When the years pass by, you will most likely notice that those who were spendthrifts (unless you have affluent friends – even sometimes that doesn’t matter) are dead broke or just getting by. This does include those who are making $100k a year and spending $100k or more (because of debt).
All in all, figure out what you are. If you are cheap, try and move over to being frugal. You shouldn’t just settle for the cheapest things in life, you will be missing out on a plethora of things. But don’t be overly frugal either. I know millionaires in families where they still cut coupons for grocery shopping…I don’t even do that. It all depends on where your interests lie. Like I mentioned before. Some may go cheap on one thing but ball out on something else – all depends on your passions and interests.
Until next time,
Live Long and Prosperous.