Frugal and happy? Yes, it’s possible. I know, because I’ve been both for years.
For many people, though, becoming “frugal” conjures up unappealing images of having to live a spartan existence and/or giving up the finer things in life. In actuality, “frugal” means “to avoid waste,” and in my life it has meant “to avoid wasting money on things that don’t ultimately contribute to my happiness.”
In the past I haven’t shared a lot of my knowledge about frugality, as I understood the negative connotations associated with it. More importantly, I didn’t think anyone was interested. Now, however, with the financial crisis seeming to grow in magnitude each day, I am finding that people are not only interested, they are eager to learn how to stretch out their dollars.
Thus, I am writing this blog to share my ideas, in hopes they will help people now and in the future to “avoid wasteful spending” while maximizing happiness.
Frugality and Happiness in Action
To gain the most benefit from my ideas, however, it’s helpful to understand my philosophy of “frugal and happy” as it forms the launching pad for my suggestions. My philosophy is as follows:
Write down the top 3 things that really make you happy. Now, spend discretionary money ONLY on what will help you achieve that happiness. This is key—be frugal on everything else, so you’ll have the money to spend on what matters TO YOU, i.e. what truly makes you happy.
Let me share an example. Ted is in his mid-thirties and has a wife, Mary, and a 10-year old son, Chris. Ted earns about $45,000 (about the U.S. average per household) each year. After Ted and his wife pay all the mandatory expenses each month (mortgage, food, maintenance on their house and car, etc.) they have several hundred dollars left over.
Now Ted knows that he could use that money to buy a new car (he drives a 1998 Toyota Camry) or a new digital TV (their TV is at least 5 years old), but neither of those things matter to him. He doesn’t have the latest or greatest of a lot of things, but he does have the absolute best golf clubs—because he loves golf. And he loves spending time with his son, Chris. He even bought Chris a set of good clubs, and he takes him to play golf several times a week on the public courses around town. When they go out of town for vacation or to visit relatives, he’ll splurge and pay more to play one of the truly great courses, because that’s a real thrill.
Family time is also quite important to Ted, so he and Mary are saving for a family vacation to Orlando, where Mary’s sister lives. Mary is excited to spend time with her sister as well as to take Chris to the Orlando attractions for the very first time. They are going to stay with her sister and use the money saved to spend several extra days at the theme parks and for Ted and Mary to have an upscale dinner while Mary’s sister takes care of Chris.
You Don’t Have to Have It All
So Ted’s frugal on some things: driving his car a long time, for instance, and staying with relatives instead of at a hotel. But it’s not as if Ted is 100% frugal on everything …after all, he owns the very best golf clubs money can buy and is planning to take Mary out to a fancy dinner in Orlando. The distinction is that Ted makes a choice to go with the lowest cost or no frills option when doing so does not impact his enjoyment of the things that matter most to him. Therefore, he has money available to spend on what does matter to him. He’s frugal and he’s happy, and that’s the goal.
Now, Ted could have his golf clubs AND a new car—he could just buy a car on credit and add the payment to his monthly expenses. But why would he do that? Will the new car help him play better golf? Give him more time with his son? Give his family more time together? No, of course not. It won’t do any of those things that really contribute to Ted’s happiness. So having both a new car and golf clubs doesn’t make sense for Ted—he won’t be any happier with a new car than he is now with his 10-year old Toyota.
My point here is that to be frugal without being austere you have to know what makes you happy and recognize how spending money contributes or, more importantly, doesn’t contribute to that goal. If it makes you happy to have the most in-style clothes, or the best-looking lawn, or the most exotic vacations, or a second home, or whatever, focus your discretionary funds on that and forget the other stuff.
Be frugal where it doesn’t matter, where buying the cheapest option makes not one iota of difference to your happiness, so you don’t have pinch pennies on what does really matter to you.