Frugality – Overly Stressed? Or Not Stressed Enough?

In the past I have blasted frugality as being the “easy way out” and being stressed too much by personal finance blogs and the personal finance community at large. The reason for my criticism is that there is another option: increasing your income. Having the same effect as someone who cuts back, increasing your income can allow you to increase your savings efforts, pay down debt, and in the end experience a higher standard of living. I used to look at frugality as “thinking small” as opposed to “thinking big.”

Then it dawned on me: Frugality is at the core of financial success

1. Reach Financial Goals Faster

The less you spend, the more you can save. The more you can save, the more you can put that savings to work through investing. If you have money working for you that you obtained through frugal means, this is money that you otherwise would have spent. Therefore, being frugal with your money actually will increase your net worth and income long-term and allow you to reach your goals faster.

2. Practicing Frugality Makes You A Better Investor

You may have never expected to see Donald Trump in the same sentence as frugality, but think about what Trump does. He invests in real estate that is underpriced or cheap. He searches for only the best deals. When you practice frugality you are making choices that give you the most for the least, similar to what Trump does. Great investors always look for “steals.” Whether it be a stock, real estate, or some other form of investment. Frugality makes you a better investor.

3. It’s Not An “Either Or” Decision

What I was doing earlier on was thinking with an “either or” mentality. What people need to do to be successful financially is to think with an “and” mentality. Frugality and increasing income. I can at the same time save money by clipping coupons, making gifts, changing my oil, etc. while I am also increasing my skill set for a higher paying job or launching a small business on the side. These two can work in tandem, and oftentimes do.

For 2010, I will continue searching for new ways of increasing my income but will also look for ways to be a more frugal individual. I’m not used to frugality, but there is never a better time to start than today!

Best,

David @ DINKs Finance