I have been reading a lot lately about frugality. Different examples like the Frugalwoods, etc. For me frugality comes down to priorities and value. In other words, we can’t have it all, therefore it is important to establish our priorities when it comes to spending.
We cannot live for free and there is an operating cost to running our lives. But a key factor to building wealth is keeping these operating costs as low as possible for many years in order to invest.
Along this track, I develop a priorities exercise. Basically I make a list of priorities:
- Providing a safe comfortable environment for my family.
- Having safe and functional transportation.
- Providing healthy foods, etc.
- Doing some domestic travel…
These are the things high on my list of priorities. Low on my personal list is having a luxury car, having fancy clothes, eating at high end resturaunts, owning a bunch of stuff I do not need, etc.
By having our priorities straight, we can hone in on where to spend money most effectively.
Another aspect of frugality is caring for the things we have. When things wear out faster it is bad for environment and our financial health. Here are some ways I am attempting to take care of things so that they last longer and we gain maximum utility.
I actually enjoy organizing stuff. We wrote before about the ways we can apply the Marie Kondo Konmari methods to finances Applying The Konmari Method to Our Finances
… Organizing is imperative because if we do not know what we own, we will most likely go out and buy it again. Organizing also has a psychological impact by creating order in your environment and respecting the stuff you worked so hard to acquire.
It is a truth in real estate as much as it is for other stuff, it costs less in the long run to maintain properly than to allow a problem to get worse and for the whole system to fail. Put some energy and time into maintaining things, they will simply last longer and work better.
SEE RELATED: Analyzing A Real Estate Investment
Keeping something clean is a way of respecting it and adding useful life. I recently cleaned up my lawnmower after years of neglect and I’m convinced I have extended the life of the thing.
There is another category of clean and organized that can be implemented for collectibles. Collectibles and antiques go up in value over the years as they become more rare. When something is more rare, it commands a greater price. Many collectibles are lost to mistreatment and neglect over time. Imagine if you had just not opened one of those Star Wars toys. Today those types of collectibles in good condition can sell for thousands.
SEE RELATED: Invest In Collectibles & Nostalgia
4. The Right Stuff
No, not the movie about the astronauts that flew to space, this is about having the right stuff for your life. See, stuff takes real estate to store and keep. Americans in general waste billions every year on storage unit lease costs. Is it really worth it? Many folks never stop to ask this question.
My point is to assess if you have the right stuff for your lifestyle, pursuits and hobbies. It does not make sense to keep a bunch of stuff around that adds no value or will almost never be used. Donate to a charity, donate on the Buy Nothing Project or sell.
The main thing is to have the right tools and stuff at the right time. Another element I have been considering lately is when to rent vs. buy. Sometimes in life it makes sense to rent something vs outright ownership. In America we tend to have an ownership culture, but renting can make a lot of sense sometimes. Especially if you require specialized equipment for a particular job.
Lately, I have even considered the concept of renting an RV. Yes, it is expensive to rent an RV for a trip. But guess what is even more expensive, owning the thing! The point is know what it is you truly need to own and what it makes more sense to rent.
5. Recommit to Frugality
Being frugal is not being cheap. This is a common misunderstanding about frugality. Being cheap is being a kind of person that is not very giving with time, energy and resources where it is deserved. Being cheap is buying low quality items that either do not work or fall apart quickly, which in the medium and long run wastes money.
Being frugal on the other hand is seeking best value. Best value for your time, energy and resources that aligns with your highest priorities. Being frugal is making no expense unless it furthers your highest priorities and helps others. Being frugal directly leads to freeing up capital that can be wisely invested in other people’s labor and ingenuity through investing vehicles.
To me being frugal is ultimately about developing a certain level of maturity, wisdom and decision making. You are being wise with your money and time when using it in a frugal manner. You are realizing the reality that you do not really know where your next cashflow will come from or if at all. Things change, time to use those resources
wisely in the present and be prepared for the future.