Frugality: The Do’s and Don’ts
Frugality, funnily enough, is a habit that is often practised by the rich. The practice, however, generally carries a negative connotation and is certainly not perceived as cool. That said, you don’t have to be a sour penny pinching demon to make your dollar go a long way. All you need is a bit of common sense. So what are some of the frugal habits that I would recommend?
- Avoid debt (!) like the plague, I said: AVOID DEBT LIKE THE PLAGUE! Sure, not all debt is bad, in fact if you use debt the right you can actually become filthy rich (see more on that on the video below), yet, I’m talking about that expensive consumer debt you need to avoid. So, say NO to personal loans, NO to car loans, No to credit card debt… or any other consumer debt. These debts should be avoided at all cost.
- Drive a safe, practical car. Perhaps boring and painful for the egocentric, but a lot better for your wallet. Value quality and reliability over pleasing your ego and impressing people you probably don’t even like to start with.
- Live on less than you earn. Sounds easy, yet, for many it seems like a near impossibility. I’m sure you can do it though! Living below your means may actually be your best bet for achieving riches too!
- Spend time shopping around when making big purchases. Looking to buy a car or a house, or are you looking to repair your car or renovate your home? These are BIG decisions that are worth shopping around for (get at least 3 quotes). It can literally save you thousands or sometimes years worth of pay cheques.
- Remember what is really important. Don’t worry, I’m not going to tell you it’s all about collecting memories, yet, be conscious about what you spend your dollar on. Spend it on the things that you really value.
- Review your insurance and bank expenses from time to time. Also, only insure the things you generally ‘can’t afford’ or would make a big dent in your savings. Healthcare, car, and travel insurance, YES, but insurance on that new iPhone or extended warranty on that television set? Probably not. Also check what insurances you already have. Your credit card will probably insure your purchases against theft, loss and damage for 6-12 months. Just make sure to pay of that baby at the end of the month!!
- Paying for Services you no longer use. Still paying comprehensive insurance on your 10 year old car?
- Gasoline. It’s all the same crap, so stop buying into the premium bullshit.
- Repair before you replace. Only do this if the repair is an actual repair and things are not hanging together in pieces of course (there is a limit!). Try it, it’s satisfying too!
- Don’t feel the need to upgrade technology/buy the latest gadgets. More often then not you don’t really need the upgrade especially if you bought premium at the outset. The replacement also becomes more satisfying.
- BONUS: Don’t pay late fees. Keep an eye on your bills, and pay them on time!
Frugal habits that don’t work.
- Sweating the small stuff such as penny pinching in the supermarket. Sure keep an eye on prices, yet, don’t obsess about pennies on the dollar for small ticket items.
- Don’t cheap out on gifts and/or treats for friends and family. Giving is, for many people, more rewarding than receiving.
- Buying on the cheap. More often than not you will find you get what you are paying for. Not always, and your own experience will tell you what product categories this applies to, but keep it in mind. Sometimes it is more frugal to spend a few more dollars on a shirt that will last 5 years than one that will need to be replaced in less than a year. For you people in Europe, Yes I’m referring to those 2.50 EUR Primark T-shirts that go vintage after one wash.
- Ignoring maintenance. Yep, when it comes to maintenance, a frugal person will not look to save a buck by skipping car maintenance, neglecting upkeep of the house, or even ignoring medical issues. Spending a bit of time and money on maintenance can prevent expensive repairs down the road.
Need more motivation? Take inspiration from the frugal habits from these billionaires! Also, with reference to point 1 above, this guy has a lot of sensible things to say about the difference between the good and the bad debt. Watch it!