The dictionary definition of the frugality lifestyle is “the quality of being economical with money”
– this isn’t where the definition should end, though…
“These people” (like me) are thrifty and use what they have instead of buying, but frankly it’s not the whole picture.
In this blog post, I will uncover the deeper values of the frugality lifestyle such as financial independence.
The frugality lifestyle opens your eyes
When practicing frugality for a while, it begins to change your mindset.
Although you have a resistant consumption pattern with frugality, you have a growing pattern of thoughts. A growing mindset.
You begin to notice others being wasteful and the importance of reducing your own carbon footprint. It will actually reshape how you view the world.
You start to realize how you can be more thoughtful with your resources and that decisions can lead to a more valued and happier lifestyle.
This mindset shift brings new values into your life such as freedom, balance, and harmony. Values that are also fundamental to the growing financial independence movement. So there is a clear connection even you never thought about it.
My eyes are frugal and make sure that I work toward financial independence 🙂
Interrelated key factors between frugality and financial independence
One of the greatest stresses in many lives is financial pressure. In a survey of 1000 people from the US, they stated that 30% are “constantly” stressed about their private finances.
The steps towards achieving financial independence are aimed at avoiding this moment on the edge and putting yourself in a position to become self-sufficient.
In other words, financial independence is about to feel better and stability in life. Just like the frugality style of living.
Frugality can actually be an important factor to achieve these steps and self-sufficient is also a great way to describe the frugal life.
Below are some key factors that are interrelated between frugality and financial independence.
➀ The savings rate is high
Cutting out unnecessary purchases is a frugal mindset and it can help us increase our savings rate (the money we don’t use).
A key factor in financial independence is having a very high savings rate.
Many who strive for this have a savings rate of more than 50% of their income.
It’s, therefore, crucial to have an eye on what the money is used for with the frugality mentality.
How much money you need is a very individual question. Furthermore, what may be a high savings rate for you may not be high for someone else.
However, increasing it and competing against yourself to increase it is very important to reach financial independence.
The good thing about the frugality mentality is that it gives you many money-saving techniques that help increase the savings rate.
Save money examples:
- Coupons: Basing your decision on where to shop by the coupons you have is a great way to cut down the grocery bill.
- Programmable thermostat: This allows us to reduce our utility bill by being accurate with only expending the necessary amount of heat in your house – it is self-regulating
- Reusing items: Reusing jars, water bottles and linen can be a great way to reduce expenses by being resourceful and creative.
- Repairing items: Learning how to sew, along with other home maintenance skills can help prevent needing to buy new trousers or hire a tradesman for small jobs.
Reducing your expenses using your creativity is going to increase your savings rate, but isn’t the only way.
Being a more appreciative person through frugality may mean you do not need the biggest house you can get a mortgage for.
The home you have will most likely be your biggest expense.
Reducing this expense can be a quick and easy way to massively increase your savings rate.
It is much harder to reach financial independence if you buy a too big house and never use half of it anyway.
As you may know proponents of frugality, minimalism and simple living actually all tend to live in the minimum amount of space that is required for them to be happy.
Tiny houses and small homes give you less space for sure but they possibly also give less money-related stress.
➁ More fulfilled life
The frugality life creates simplicity for us and limits our quest for endless cheap thrills. Removing choices can make us more fulfilled.
The clarity from simple living also gives us the feeling of more time.
Not having all of our time taken up by entertainment or browsing shops allows us the headspace we need to make informed decisions.
This is time well spent if you want to reach financial independence.
More curious about financial independence? Let’s look into it 🙂
The seven steps to Financial Independence
The purpose of this journey is to get into a position where you can commit to your own projects.
To enjoy the things you want to do, rather than have to do.
Step ① : Small emergency fund
The first step is to prepare for the worst. There is a lot of uncertainty in life and we need to be ready to account for disasters. Saving roughly 1000 EUR or 1000 USD is my recommendation for this emergency fund. Put it to the side and keep it safe.
Step ② : Pay off high-interest loans
High-interest loans are destructive to your current earnings.
They take away what you have worked hard for, and these need to be removed in order to be able to start saving money for the future steps.
Step ③ : Strong emergency fund
Step three is split into two actions. Firstly, growing your emergency fund to be able to cover several months of expenses should you get fired, or another unlucky situation arises.
Note: investing is included in all of the remaining steps.
Step ④ : Pay off remaining loans
This step is where you focus on paying off that low-interest car loan you got, or your student debt.
It is important to remove debt so you only have your mortgage/rent to pay, which is more manageable.
Step ⑤ : Paying off the mortgage
The mortgage is the next focus. Sometimes there are costs incurred to make larger than planned payments, but remortgaging to a plan of under 15 years is ideal.
This is where you can increase your savings rate from the money you saved from paying off your loans.
Step ⑥ : Totally debt free
This step is a great achievement.
Finally becoming free of debt and no longer having to give a portion of your paycheque to a landlord or bank. By this step, 100% of your savings rate can be invested.
Step ⑦ : Financial Independence 😎
Step seven is the final step where you have reached your goal. This is where enough wealth has been accumulated from your investments in order to be able to live from the interest indefinitely.
Improve the quality of your live
If you have ever had Netflix you will know what I mean (I don’t have it anymore 🙂 ).
You open the app with great optimism whilst being ready to watch a great show. When it finally loads, suddenly you are bombarded by endless shows.
You see a ton of things that look great and you add them to your list for the future, but you never actually end up watching anything. After ten minutes of browsing passes, you become agitated and unable to settle on any one show.
Frugality is “the cure” for this.
With frugality, we are in the process of a simpler life
By being thoughtful and being introspective about what you actually want, suddenly our pleasures can come from smaller things, and it is more clear what we actually want.
Less materialistic is the obvious outcome for you. But the Netflix example is a metaphor for almost everything.
Have peace in mind
Being able to go into a shop knowing what product you need, rather than letting yourself be manipulated by the endless choices and bright colored sales that aren’t really offering anything of value.
Rather than suggesting frugality gives us happiness directly, it is better to describe it as reducing suffering.
Having peace in your mind and being appreciative of the possessions you already have means that we aren’t preoccupied with chasing new shiny forms of fashionable validation.
Lastly, the frugality lifestyle helps you become more driven and healthy.
A person who cycles to work isn’t just saving money. That person has chosen an activity that requires more effort to get to work. That choice is building up their character.
They haven’t resorted to the path of least resistance – the choice that is easy and lazy. This is also the case with buying the ingredients for a healthy meal and cooking it, rather than ordering a takeaway.
This positive and proactive attitude has a knock-on effect on all of your decisions, no matter how small.
Being mindful of the costs involved in your choices, the implications (such as the environment), what you actually need (rather than simply desiring).
It all help you become a more leveled, thoughtful and fulfilled person 😎
Like this topic? 😀
💡 Do you have a frugal tip? Leave a comment below ✍
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