The Importance of Being Frugal
Money.
The root of all evil.
Mo' money, mo' problems.
Money doesn't grow on trees.
Can't buy me love. The list goes on and on.
We all need it whether we like it or not. But it gets a bad rap in society and today's culture.
Financial wellness is a popular topic around the new year, with tons of resolutions being made to "stick to a budget". I decided to write a series on the subject, delving into areas such as money and relationships, saving for retirement, and how automation can affect your future. First up, the importance of being frugal.
I used to hate talking and thinking about money, and to be honest I'm still not 100% comfortable with it. My parents had a weird dynamic when it came to their finances, and I still feel guilty when I buy something that's not absolutely essential. I'm working through it. But I've learned that money is critical for feeling satisfied in life because it is a tool that allows you the freedom to do what you want.
Frugal vs. Cheap
My partner gets called "cheap" frequently, but he's actually just frugal. Being frugal means being smart about what you spend your money on, while being cheap means to be stingy with everything. Does that milk really taste any better because it's brand name? I don't think so. But spending the extra $30 for a better-made pair of jeans will probably get you a longer wear out of them.
Being frugal is deciding what's important to you, your goals in life, and what you enjoy. Being frugal = saving more money = having more money for what is important to you.
Imagine you're coming up on your 40th birthday. You've been a part of the working world for over 20 years, and you still have 25 years left to go! You'd rather be spending time with your kids and partner, studying to become a yoga instructor, or living abroad for a few years. You're regretting not starting to save for retirement sooner. Wouldn't it be nice to be able to semi-retire at 45, work part-time, and spend your time doing something you really want to do?
What would you do if you didn't have to work?
More on financial independence (FI) in another article.
How Money is Linked to Your Emotions
If you don't already know, our early experiences are crucial in shaping our young brains, creating beliefs in our subconscious minds that are still present today. These beliefs play a role in every decision we make, but we're usually unaware of it. Money memories are no different. If you grew up with parents who fought about money, you'll likely have some sort of anxiety about it as an adult. If you were taught from a young age that you must struggle and work 70 hours/week to be successful, this belief will likely color your perspective on working and money. If you avoid thinking about your money problems because it's uncomfortable, they will get worse and the hole you're digging will be harder and harder to pull yourself out of.
EMDR can help you identify what your beliefs are about money and how they are affecting you today. Many people subconsciously believe that "money is scarce" or "wealthy people are snobs", but these negative beliefs may be keeping you from financial success and wellbeing. We can identify which memories are feeding into these problematic beliefs, process them, and install a positive belief to take it's place. In the end you can wholeheartedly believe things like, "money is a tool" or "I make good choices about my finances".
Tips on Being More Frugal
- Make a list of financial priorities, ordering them from most to least important. This puts into perspective what you should be spending your money on. Take care of your needs first (rent, bills, etc), then wants (going out to eat, shopping for new clothes, etc) if there's enough left over. More on budgeting in another article.
- Meal prep once a week. This reduces food waste and also saves so much money on eating out for lunch at work. It's healthier too! budgetbytes.com is a great site for great tasting meals with a tight budget in mind.
- Buy in bulk. Memberships to wholesale stores like Costco can save you a ton on goods that don't go bad, like paper towels and canned foods. Buy your meat wholesale or buy it in large quantities at the grocery store when it's on sale, then freeze it. If you have the room, you can buy a small deep freeze for more storage for frozen foods.
- Consider thrift stores for your housewares. Stores like Goodwill have great decorations and furniture to turn into DIY projects. It's a bit more work to sift through the junk, but there are some gems. It's like a treasure hunt! And also entertaining. The finished product you can put on display in your home is a great reward for your work that you can admire everyday.
- Buy a used car. Yes, a new 2018 Subaru would be nice. But the monthly payment on a new car is outrageous. The value of a new car drops significantly the second you drive it off the lot, and a 2013 Subaru with some miles on it isn't really that much of a compromise.
- Check out Mr. Money Mustache. A delightful blog about a man who has retired early and lives with his wife and son in Longmont, CO for under $25k/year. He gives great tips on being frugal and why spending more than you need to is stupid.
Be sure to check out next week's article, Financial Wellness Part Two!