What Frugality Really Means and How to Achieve It

Home » Money Management » What Frugality Really Means and How to Achieve It

What Frugality Really Means and How to Achieve It

In today’s society the term “frugal” often has a negative connotation. Most of the time it is used interchangeably with terms like “cheap” or “stingy” to disparage a person. In other cases one might think that, in order to be frugal, they must make huge changes to their lifestyle just to save a few dollars. However neither of these definitions is necessarily correct.

As Trent Hamm points out in a recent Lifehacker article frugality more often than not means making small changes to your spending or consuming in exchange for rewards that are far more valuable to you. The example he gives is how he managed to cut his electricity bill by 50% simply by making his home more energy efficient. In this case he traded wasted heating and cooling — which was worth nothing to him — for an extra $100 a month. That’s what being frugal is really about and there are many ways to make a big difference with just some small changes.

What is Being Frugal?

First let’s dispell the notion that being frugal means you need to take drastic measures like practicing extreme couponing. Those who collect coupons often make their purchasing decisions based on what discounts are available to them, which may lead to buying inferior or unneeded products just to get a discount. Instead frugal shoppers will purchase items because they need them — not because the price is reduced. Additionally frugality is about getting the most for your money and so buying quality items that will last will often trump a cheaper purchase that will need replacing.

That being said frugal people also know how to spot a deal when they see one. This often includes purchasing store or off-brand products. In most cases you’d be hard-pressed to find a difference between these less expensive options and the name brand. Granted some consumers may be able to tell a significant difference between generic cola and a classic Coke, but many other items such as cereals taste nearly identical. Even if you don’t want to test your taste buds in that way, switching to products that have the same functionality as name brand —especially when it comes to items like over the counter medications — can be helpful to your budget as well.

Calculate Those Savings

Lastly another tip for achieving frugality is to truly consider the cost savings and put them into perspective. In his article Hamm mentions that he makes his own laundry soap, which saves him approximately $.20 per load of laundry. You may be quick to dismiss these savings but his five minutes of effort nets him $10 in savings (each mix makes 50 loads of laundry). If you had a job that paid you $2 per minute that would equate to an hourly pay rate of $120 or nearly $250,000 a year for a typical 40 hour work week. While it’s unlikely that you find anyone to pay you that kind of money to make soap you can surely see how that $.20 per load can quickly add up.

Perhaps you don’t want to make you own laundry soap (I can’t blame you). The beauty of being frugal is that you don’t have to! Frugality simply means trading things that aren’t important to you in return for tangible monetary savings. Suddenly being frugal doesn’t sound so bad, does it?

Author

Jonathan Dyer

I'm a small town guy living in Los Angeles looking to make solid financial decisions. I write for a number of finance websites, including HuffingtonPost and Business2Community. I founded DyerNews.com in 2015 to focus on personal finance and the emerging FinTech markets.

Other Articles by Jonathan Dyer

American Express Partners with PayPal, Venmo for New "Split It" Feature

There's no doubt that the advent of peer to peer (P2P) payment apps has made it easier for friends and family to split dinner bills, reimburse each other for gas money, and much more. Nevertheless, as simple as services such as PayPal, Venmo, Square Cash, and others make the process,...

Zuckerberg Heading Back to Capitol Hill to Talk Libra

Ever since Facebook initially announced plans for the cryptocurrency Libra, it's faced a seemingly endless wave of critiques and inquiries from regulators. Neverthless the company has remained resolute, saying it would continue to pursue its plans while working to assuage concerns. Now, as part of those efforts, it's been revealed...

Robinhood Takes Second Stab at Cash Management Account

Late last year, the commission-free stock trading platform Robinhood announced it would soon be offering a "Checking & Savings" account. These would complete with a debit card and a headline-worthy a 3% APY on savings. Unfortunately those plans were quickly rebuffed by the Securities Investor Protection Corporation, sending Robinhood back...