The Frugal Mindset

Updated: Nov 29, 2020

I’ve talked about Budgeting, Increasing Income, Decreasing Expenses, Motivation, Vacationing Cheap & Retirement Accounts. That’s a broad array of topics, but what they all have in common is that they are looked at from a “Frugal Perspective”. What I mean is that I looked at all of those categories from a perspective of “how can I save more money?”, “how can I spend less?”. This is how I analyze everything that involves money. In fact, even things that don’t involve money, I look at from an efficiency standpoint. “How can I do this better, faster, more efficient?”. “How can I make this easier?”. Especially in this go go world, finding ways to streamline processes is essential.

When I started looking at everything from a frugal perspective, my entire viewpoint changed. Suddenly, even things I thought I was being frugal about, had areas for improvement. BOGO Egg McMuffins on occasion from McDonald’s weren’t as necessary. Sandwiches for lunches I brought into work could even be improved (buying the fixings in bulk). Utilizing my cash off for gas through the Super Market savings card, by filling 2 tanks up at the same time for the discount. Buying dog food in bulk when it’s on sale twice annually and at the same time, buying gift cards in advance at a discount to pay for the discounted dog food. You get the point. Anything and everything that is purchased is analyzed from a pro/con perspective, if it is needed or not and of course “if it’s a good deal”.

You really start to realize what is important and what is not. Would you rather have a $5 coffee from Starbucks every morning or an extra year in retirement? You see, most people don’t analyze things like that. And, that is a problem. What you need to realize is that little things, a couple bucks here and there add up. In this scenario, if you were to buy a $5 cup of coffee 5 of the 7 days a week, you would be dropping $1,300 on coffee for the year.

But it doesn’t stop there, because what else are you spending money on that “just cost a couple of bucks”? Going out to eat? Movies? Concerts? All of these things add up and when little things add up together, they become big things. That’s when the frugal mindset comes into play. Just that $1,300 you may be spending on coffee each year is taking away $1,300 from your annual savings. Those savings are even further sacrificed because of lost potential on investing.

I don’t know about you, but I would much rather not be working than having a cup of coffee from Starbucks everyday just because it gives you that warm and secure feeling inside. This mindset isn’t saying that you have to give up coffee all together, just make it at home and save yourself the time and money of picking it up from a shop. The challenge is getting to a point where you see the effects of your actions, the realization that “every penny counts”. When I see a penny on the ground, I pick it up. You have to think like that. It might sound silly, but every penny counts and it all adds up.

So, where can you start? Budgeting. As discussed before, by monitoring your spending, you are consciously making a choice before you spend money. This is extremely important and the #1 best and easiest way to take control of your financial situation. Next is to look at pros and cons of each purchase and if it is worth it. You can analyze things as small as a pack of gum, all the way up to the purchase of a home.

Every purchase you make has a number that makes it worth it. I’ll give a few examples. When we purchased our home, it would not have made sense or been a logical purchase if we were to simply buy, live there and pay the mortgage ourselves. However, we decided to “house hack” and therefore, found a property that we could rent out the lower portion of our home to both supplement our mortgage cost and allow us to live in an area that we loved. It was a win-win.

Another example is going on vacation to Alaska this summer. I know that for everything that we would like to do, we will likely need $4-5 grand. However, I don’t want that to take away from our monthly spending, so I have thoughtfully analyzed how to save up the funds for that trip through “credit card hacking”. We will have enough travel points saved up to pay for that trip, without taking a dime away from our monthly savings.

A third example is Cable Television. We don’t need it and it’s a waste of money in our opinion. When weighing the pros and cons, it was easily axed off the list. We get by just fine by utilizing Hulu and Netflix in which we pay for one service and a friend pays for the other.

Lastly, grocery shopping. Every single item is scrutinized before buying. I love grocery shopping, because my frugal mindset really comes out to play. The moment I enter the store, I’m in “frugal mode”, constantly weighing the pros and cons of “price” vs. “worth”, if we need it badly or not, can it wait until it’s on sale, etc.

Try it out for yourself. At first, it’s a challenge, because you realize that you have to do things differently than you’re used to. However, it becomes fun when you start to see more and more areas where you can save money. You start kicking yourself for how you used to spend and become even more efficient going forward, figuring out more ways to increase your savings rate. Best of luck and cheers to frugality!

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