Lavish lifestyles presented in the media sell—a lot. From upscale food and drink to designer clothes to seductive toys, gadgets, and cars, few of us are 100% immune. When it comes to money many Americans think that if you “have it”, you “show it”.
In this installment of our back-to-the-basics series we discuss being frugal, or, living below your means. But first: let’s define “cheap”. Frequently, the two are confused.
The way I define “cheap” is simple: being “cheap” is being actively selfish. It’s putting your needs ahead of all else. “Being cheap” is behavior where someone tries to get a product or service “for nothing”. And, it gets ugly. Being cheap is frequently insulting and/or abusive — a one-sided “bargain”. Being “cheap” ignores the foundation of trade as equal exchange.
Being “frugal”, on the other hand, doesn’t mean driving a hard bargain. It’s living life by spending wisely. A frugal person might look for the best “bargains”. And, they might just spend less overall. But a truly frugal person never approaches a financial transaction with the goal of “putting one over” on the other party.
In short, being frugal is a great practice to put more money in the bank. Being cheap is a great way to piss people off.
So, how does frugal behavior increase your bottom line?
First, being frugal requires that you evaluate all your spending. It requires that you prioritize between wants and needs. A frugal person might “want” a new car, but instead chooses a “pre-owned” vehicle.
You think you know what comes next, right? Not so fast…
Some people will take the money “saved” by purchasing the “pre-owned” vehicle and spend it elsewhere. (Admittedly, that’s my toughest challenge!).
But truly frugal people have a greater purpose in mind. What is it? They put all of their reduced-cost savings to better use. This could be by paying down debt, saving, or investing. The point is: a frugal person not only conserves money, but, takes these incremental savings and puts them to better use.
Think of how much more productive you would be - financially speaking - if you took a lesson from frugal people. Too frequently we like to claim we “saved” money. But how many of us can point to specific dollar amounts and explain how it has been put to better use?
I’m learning to be more frugal. It’s both a mindset and a practice. But, I know the reward will be greater flexibility and greater ability to impact the causes that are important to me.
Find more discussion on frugal living by checking out Geezeo Groups.
Related:
* Articles by TheStreet.com writer Jeffrey Strain
* Open Book: How to be So Money by Farnoosh Torabi
