The Psychology Behind Frugal Living is a mini-series that explores the psychology behind how frugality can help you live the life of your dreams, how to overcome fear of what others think of your frugality, and how to develop frugal habits effectively.
Odds are, for most of you reading this right now, you don’t have the freedom to wake up each day and spend it however you like.
You have obligations.
You have bills to pay.
You probably have a full-time job.
It’s possible that you leap out of bed each morning, ecstatic to brew your morning coffee and head off to your job. But according to statistics on job satisfaction, this isn’t the case for most of you. You’re also reading a blog that revolves around financial independence, so I’m guessing the thought of leaving your full-time gig has at least crossed your mind.
Even for those of you who may enjoy your job, there’s probably elements of it you wish you could change. Perhaps you’d rather work part-time so you can have more time to spend with your kids. Or maybe you wish you had the flexibility to work from home. Or more power to choose what projects you want to work on.
Some of you just flat out wish you had the means to take a year off work entirely and spend it traveling.
So the question is: How can you go from working a job you may or may not love, spending your days in a monotonous routine, coming home from work each day with no energy to hang out with the people you love, to having the flexibility to choose how you spend each day?
There’s only one solution: radically changing your financial situation.
Two Paths to Changing Your Financial Situation
The reason most of you continue to trudge to work each day, whether you feel like it or not, is because you need the money. You don’t have enough savings or another income stream that would allow you to step away from your job.
There’s two options to remedy this problem:
- Develop another income stream
- Save up a huge pile of money
For option 1, I suggest starting a side hustle. My personal side hustle is tutoring students in statistics in my free time. I make anywhere from $400 – $1,000 per month doing this. Other possible side hustles include: buying and selling items on Ebay, tutoring in a subject you personally know well, or working a part-time job on the weekends.
Option 1 is wonderful for people like myself: fresh out of college, no family to support, with plenty of freedom outside of my day job to hustle and earn extra income. Option 1 can also become a full-time gig if you earn enough money from it.
However, not everyone has the flexibility in their schedule to develop another income stream. For these people, option 2 is your ticket to freedom. This option entails simply keeping the job you have, but saving a huge percentage of your earnings.
(As a side note: I advocate using both option 1 and option 2 if you can!)
For many of you reading this article, this is the point where I risk losing you because instead of giving you a quick and easy way to earn thousands of extra dollars per month, I’m going to suggest the opposite: save a huge percentage of the money you’re already earning. This is the most realistic way many of you can actually acquire a life of freedom, with the ability to choose how you spend each day.
There’s a reason that how-to-become-a-millionaire, how-to-start-your-own-business, how-to-become-part-of-the-1% books sell millions of copies each year and yet…very few people that buy these books actually become wealthy. The reason? It takes a huge investment of time, energy, and resources to start your own business and become incredibly wealthy. For most people in the 1%, it takes decades, not years to acquire millions of dollars. Most people just don’t have the means to sacrifice this much time and energy.
But here’s the good news: most of you don’t need to be multi-millionaires to be wildly happy. You just need the freedom to decide how you spend each day.
This freedom is dependent on having a rock-solid financial life. With financial worries out of the way, you can spend more time focusing on living your dream life, and less time worrying about how to pay the bills.
Frugality is the way to achieve a rock-solid financial life.
Maintaining Your Quality of Life With Less Spending
So what the heck is frugality and how can it change your life? The dictionary definition of frugal is:
economical in use or expenditure; prudently saving or sparing; not wasteful
Most people mistakenly think frugal and cheap are the same thing, but they are not.
Frugal living is a more efficient way of living, that helps you save both time and money, without sacrificing your quality of life.
An example of frugality is accepting outdated headphones that work perfectly fine from your friend, instead of going out and buying new headphones at Best Buy. This method saves both time (no trip to the store) and money (no spending on new headphones) without sacrificing quality.
Cheap, on the other hand, costs both time and money. An example of this would be buying the cheapest headphones you can find at Walmart. This requires a trip to the store (time-consuming), spending money, and likely another trip to the store in a few weeks after the low-quality headphones you just bought stop working.
More Savings = More Freedom = More Happiness
The whole point of frugal living is to maintain your current lifestyle, but at a fraction of the cost. There are plenty of ways to reduce excessive spending on food, technology, vehicles, housing, entertainment, and any other category of spending, while maintaining the same level of happiness and fulfillment.
Once you embrace frugality, the amount of money you’re saving begins to skyrocket. But more importantly, the amount of money you require to live a good life begins to drop. This means the amount of time it takes to save up enough money to live your dream life also decreases.
Whether your goal is to be completely financially independent, have the flexibility to work part-time, or simply work for yourself full-time, a frugal lifestyle allows you to reduce your spending and save up enough money to be comfortable with making the leap to a new lifestyle.
Once you see that frugality leads to a life of freedom and flexibility, the next steps are simply overcoming the fear of what others will think of your frugal lifestyle (Part 2) and implementing frugal habits (Part 3) to help your savings rate go through the roof.
Stay tuned for Part 2 and Part 3 coming soon…
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