Why Am I so Frugal? The Reasons I Love to Save Money
I have found several different ways to save money over the years and I want to explain why I am so frugal. When I was growing up, my family didn’t have a lot of money. My dad owned a cleaning business, and my entire family would spend nights cleaning. I hated working, but the experience did help me understand the value of a dollar. Here's how.
Money is time
Whenever I want to buy anything, to this day, I still look at it in terms of how many hours I will have to work to get it. I ask myself ‘would I work 4 hours to have that? Will it bring me that much joy?’
For me, being frugal means that I'm very calculated with how I spend my money. I'm extracting as much joy and value as I can from every single penny.
Frugal vs cheap
There’s a difference between being frugal and being cheap. Someone who is cheap is just saving money for the sake of saving money. There is no real joy or appreciation when they spend.
I have teetered between being cheap and frugal and I think it’s better to lean more towards frugal and shift away from the scarcity mindset that can come with being cheap.
I’ve found different ways to spend less, like shutting off the lights when I'm not using them, and keeping my shower cold or room temp instead of hot. I even take advantage of the running water in the shower and wash my clothes while I shower. Basically, I will do anything I can to be as efficient and multifunctional as possible.
The first car I bought was a used Honda Civic for $3,000 cash. It was cheap, fuel-efficient, and reliable. I was working day and night, so I could have afforded to buy a nicer car.
Many people buy new cars every 5 years or so but that doesn’t seem like justifiable spending to me. If I had bought a new car and had $200 or $300 monthly payments, then I wouldn't be in the financial position I’m in now. A new car is a huge expense.
One thing that made me really frugal was learning about compound interest. Knowing that saving $5 or $10 by being frugal, could earn $50 or $100 in ten years forced me to be more mindful about spending.
I realized that if I didn't spend money for three to five years, I'd be able to get some investments and those would allow me to leave my job.
Saving 75% of my income
I started saving everything possible, getting really stringent. Pretty much everything I owned was either from a thrift store or given to me. I managed to save enough to buy my first multi-unit when I was 22. I was able to do that because I was saving about 75% of my income.
I was making around $50,000 a year but I was still only living off about $8,000 to $10,000. I was able to do this by refraining from shopping, eating out, ordering online, and making impulse purchases.
I've always had multiple streams of income. I've had multiple jobs simultaneously throughout my entire life. I like when I can save everything from one job while living off the income of another.
Currently, I try to live off my rental income. I have additional income from YouTube and some other projects that I do, and all of that goes into savings.
Downsides to extreme frugality
I do think there are potential downsides to being frugal if you take it to extremes. I know I missed out on taking some trips and other things I would have enjoyed, simply because I didn't want to spend money. I still need to be mindful not to become too frugal to the point that I’m just being cheap and can’t enjoy anything.
Every time I spend money on anything I think about how many hours of work it will take me to earn that amount. I also think about how much that amount of money could earn if I invested it at a 10% gain for the next 5 or 10 years. I don't know if that's a healthy way of operating, but that's how I look at every dollar that comes in and out of my bank account.
Delayed gratification is one of the things that I'm most passionate about. The chase can be more exciting than whatever it is you’re trying to attain. For me, it's more important to have the option of buying it than it is to actually buy it. Most things I've bought in my life have not brought me that much joy or happiness. It’s the pursuit that brings me joy.
I like to use big purchases as ways to incentivize myself. For example, I wanted a desktop so that I could edit videos and do a better job for you guys on Youtube. I decided once I hit 500 Youtube subscribers, I would get a desktop as a reward. That was really fun.
Chasing a goal gives me something to look forward to. I don’t even always end up getting myself the reward because so often the idea of chasing the reward is more fun for me than having the thing itself.
Why am I so frugal?
I hope this article has given you some ideas about how to be more frugal. Remember, it’s not just about having more money; it’s about achieving as much joy as possible from every penny you spend. Hopefully, some of these methods will help you save money and give you a deeper appreciation for the purchases you make.