Being Frugal When Saving Time And Money

Nowadays, calling someone frugal is more of a virtue, like giving a badge of honor to that person. Being frugal or cheap is sometimes used interchangeably, but the terms have subtle differences. According to Merriam-Webster, frugal is characterized by or reflecting economy in the use of resources. On the other hand, cheap has a range of definitions. Cheap has two or more meanings: it can mean charging or obtainable at a low price, and it can also refer to inferior quality or worth. Not to confuse things, but frugal, stingy, miserly, and thrifty are synonyms for each other. 

While these terms are about saving money, being cheap is usually motivated by the desire to pay less. On the other hand, being frugal involves considering price along with quality and value when evaluating a purchase. There is a gray area, but considering if a person is cheap or frugal, you’ll know the difference by their actions or words.

Cheap people are penny-pinchers who will mostly pick the lowest price option even if the quality is suspect, regift presents, and are poor tippers. Many will engage in D-I-Y projects like plumbing and electrical work just to avoid spending money.

When Frugality Can Go Too Far

Being overly cheap or extreme frugality without reason and a lack of generosity is a symptom of obsessive-compulsive personality disorder (OCPD), according to the International OCD Foundation. The American Psychiatric Association has pointed to this symptom as when “a person adopts a miserly spending style toward both self and others.”

Being overly cheap can cause significant anxiety and loss of relationships. In contrast to being cheap, frugality is a strategy that saves money and considers the whole picture: quality, durability, value, and price of what you are buying. Those who are frugal are savvy about saving money for themselves and others. They will consider other variables, like whether that purchase is good for the environment and other causes.

The Frugal Warren Buffett

Warren Buffett is as legendary for his frugality as he is for his investing acumen. He has lived in the same Omaha home since 1958. Buffett frequents McDonald’s and his company’s cafeteria. He is a value-seeker when investing or in his lifestyle. Yet, for all of his frugalness, Warren Buffett has generously donated billions in the past two decades.  One of my favorite Buffett quotes: “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”

6 Benefits of Being Frugal  

1. Having A Purposeful Mindset

Adopting a frugal mindset means being more thoughtful about your purchase decisions. It is not about having it all but about choosing your purchases carefully for you and your family.  Having a frugal attitude favors good money habits like saving money and better financial management overall. It is not about choosing the lowest price option, basing your decision on price alone. Other factors are part of the value proposition.

Frugality is a lifestyle that people adopt for the simple pleasures of life. It is not new. Plato and Henry David Thoreau in Walden advocated modest or minimalist living. It contrasts with societal desires for materialistic possessions, which often lead to overspending just to keep up with your peers. Being thrifty has its merits and can lead to sound well-being.

2. Motivate Yourself By Knowing Your Goals

It is easier to save or manage money when you have a plan for your future. Determine your short and long-term goals. Those who plan to retire early work hard to set aside money for savings, retirement, and investments. Develop good money habits for future financial flexibility. By adopting frugal ways to save more, spend less now, you can retire early in life. Spending within your means allows you to choose what you want to do later on at a still young age.

 Goal setting is essential, even if you fine-tune it through the years.

The Frugal Millionaire

In The Millionaire Next Door, a favorite read of mine, millionaires were profiled in two groups. The Under Accumulators of Wealth (UAWs) were the more typical white-collar professional millionaire, devoting more of their high income to luxury goods to maintain their status. As a result, they had lower net wealth than their income because they neglected savings and investments.

The Prodigious Accumulator of Wealth (PAWs) were more frugal millionaires. They avoided a showy lifestyle, bought used cars, and often lived in blue-collar areas. Goal-oriented, they made intelligent buying decisions, using savings to invest more of their money in securities or in businesses for good returns. PAWs spent less on luxury, accumulating higher net wealth relative to income from less.

3. Prioritize Spending To Improve Your Financial Health

Although you don’t want to penny-pinch, prioritize your spending. Frugal spenders tend not to be compulsive shoppers, accumulating lots of material possessions to regret. That doesn’t mean you can’t travel, buy good things, or enjoy your life. Quite the contrary. It is about spending thoughtfully and moderately, and not on a whim. Know the difference between your wants and needs or living essentials. Your needs–food, rent, clothes, medical, education– should be a priority. Yes, you can have that latte if it gives you a particular pleasure.

Being frugal means spending less than you earn so that you can save money to improve your financial health. Those who are frugal tend to:

• Save money instead of spending too much.
• Avoid high-cost debt.
• Pay credit card balances in full.
• Have an ample emergency fund invested in a money market deposit account.
• Contribute at least the minimum amount into your employer-sponsored 401K plan to earn their match.
• Set aside money to build up an investment account.

4. Price Vs. Value

Buying solely on a price basis without regard to quality is a hallmark of cheapskates. Those who are frugal make economic rather than impulsive decisions. Price is important, but there are other factors to consider. When making purchases, economic people will evaluate the quality, usefulness, reliability, durability, style, convenience, experience, and trustworthiness of the company or the brand. In other words, they will look at the whole picture.

Of course, the price versus value equation depends on the product itself. Frugal shoppers are not going to evaluate many factors for convenience products bought frequently. Price plays a bigger role when buying toothpaste or laundry detergent. For these products and many others, you can save money by buying generic brands at a discount to name brands. The price will be lower for generic brands, as much as 35% reduction compared to name brands, but the quality is often the same.

5. Frugalness Is Good For The Environment

Practicing frugality has become part of the minimalism cult and is more acceptable in recent years.  Mindless consumption is being frugal and less wasteful, which is good for the environment. Even if you are not saving money, reusing bags at the grocery store or conserving utilities makes economic and environmental sense. Turn off your lights when leaving your room or home. Wash your clothes on the cold setting and lower or raise your thermostat. You may have personal savings, but you’re also helping a cause.

6. Be Frugal About Wasting Time

Time is money. Both are valuable resources, but time is more precious because it is finite. We cannot replenish time. Saving money is necessary, but not when it causes you to waste time. Time is an element that many of us use poorly. Examples of how we splurge on time when trying to save money are:

• Driving around to get the best gas price.
• DIY projects when you aren’t handy or don’t even like doing them.
• Grocery shopping at different places to get the best price at each store.

Being frugal with our time means focusing more on how we spend it. To save money, I sometimes over-research things to find the best product. Make a “to-do” list to organize your time more meaningfully. Don’t go shopping without a list.

When your time is short, consider spending money on time-saving services. Studies say it can promote happiness when time constraints are stressing you out. On the other hand, some people work more efficiently under a tight timeframe. I find that I often accomplish more with time constraints, which help me to be more focused. Balance your needs of saving money and saving time according to your abilities and preferences.

Final Thoughts

No one wants to be a cheapskate. On the other hand, being frugal is often a virtue that may lead to a happier lifestyle.  Saving time and money are valuable goals that can help to eliminate stress while strengthening your financial health. Maintain a balance to live a life you enjoy. You don’t need to stop pleasures just for the sake of being frugal. Instead, prioritize what is essential for you.