If you want to improve your financial situation, frugality is one of the most important habits you can adopt. Between cutting expenses, couponing and reducing your impulse spending, frugal living can help you put a few extra dollars into savings each month. But, can frugality make you rich?
No, frugality alone cannot make you rich. However, practicing frugal habits such as, budgeting, living below your means, eliminating wasteful spending, and placing a high priority on saving money can all have a positive (and significant) impact on your ability to build wealth.
In fact, in the rest of this article, I am going to reveal 5 ways frugality can help make you rich.
So, whether you’re thinking about adopting a more frugal lifestyle, or you just need a little motivation to keep pinching those pennies, keep reading.
1. Frugality Helps You Create Financial Margin In Your Life
First and foremost, the main benefit of living a frugal lifestyle is that you get to keep more of your money. In other words, instead of spending every dime you make, frugality helps you create some margin in your financial life.
And the more financial margin you have in your life, the more ability you have to save, invest, and actually build wealth.
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2. Frugality Helps You Make Better Long-Term Financial Decisions
I equate frugal living to going on a diet that restricts your sugar intake.
If you’ve ever been on a diet that required you to do that, then you probably know exactly what I mean. However, for those of you that have never experienced this difficult dietary task, allow me to elaborate.
When you first start living a frugal lifestyle, it is really hard to stop impulsively spending money on things you don’t need. Similar to a sugar craving, it’s hard to conquer your desire to buy things that don’t bring any real value to your life.
Like eating a whole box of Oreos after going to the store on an empty stomach (that’s a weirdly specific example that may or may not have happened a few times in my life), spending money on something fun and unnecessary might feel really good for a few seconds. However, over time, small decisions like that can lead to long-term consequences.
The good news is, eventually, as you start to see and experience the positive financial results of a frugal lifestyle, (similar to the health benefits of reducing your sugar intake) it becomes easier and easier to avoid those spending impulses that used to give you so much financial trouble.
And here’s the cool part, when you reach this stage, it allows you the clarity and foresight to make sound financial decisions.
So, instead of letting short-term thoughts like, “I can finance this car. It’s only $350 per month for 84 months!” run your financial life, you’ll experience a thought transformation and base your decision on the long-term financial implications. For example, “If I invest $350 for the next 84 months, I could end up increasing my net worth by $40,000. Beyond that, if I let that $40,000 sit in retirement for 30 years, it could grow to nearly $700,000.”
Truthfully, I think it’s amazing how living a frugal lifestyle can shift your thinking and provide you with enough clarity to make better long-term financial decisions.
3. Frugality Can Help You Find Contentment
Along the same lines of making better long-term financial decisions, living a frugal lifestyle can seriously help you find financial contentment.
Now, if you don’t consider yourself a very frugal person, I can understand how this might seem a little counterintuitive. But consider this, in order to live a frugal lifestyle, you have to focus your time and energy trying to live within your means. This leaves little time to compare your financial life to other people around you, which in turn, reduces your desire to keep up with them and spend beyond your means.
Ultimately, since you aren’t always looking to buy the next bigger, fancier thing on a never-ending list, you begin to experience contentment with what you have, and the financial life you are leading.
Simply put, frugality leads to contentment, which frees you from the burden of comparison.
4. Frugality Helps You Simplify Your Finances
One of the things I have come to learn about personal finance is that simplicity almost always leads to success.
For instance, when my wife and I first got married, we were making monthly payments on all sorts of debts. Between our various credit card balances and car payments, we had a lot to keep track of. At times, it got to be pretty confusing, and quite honestly, overwhelming.
However, as we worked our way out of debt, and retired our various balances, our financial life became much simpler.
Since adopting a frugal, debt-free lifestyle, our financial life is incredibly simple and easy. And through that simplicity, our net worth has nearly tripled in less than a year and a half.
Now, I’m no mathematician, but if frugality can do that much for our financial life in that short of a timeline, just imagine how much benefit it will have on our road to build wealth over the next 50 years.
Financial simplicity is extremely important if you want to get rich, and frugality is the best way I know of to achieve that!
5. Frugality Keeps You Focused On Your Financial Goals
I think most people would agree that success — whether in personal finance or any other area of life — is the result of focused effort over a long period of time. And in the case of building wealth, frugality forces you to maintain focus and act in the interest of your long-term financial goals.
In fact, true frugality, at its most basic level, is just the act of prioritizing your long-term financial goals over your short-term wants.
And over time, that kind of focus transforms into impressive financial results.
To put it into the simplest of terms, if you want to get rich, you need to be laser-focused on your goals, and frugality is a great way to do just that.
While frugality alone can’t make you rich, it sure does make a difference.
From helping you discover financial margin in your life so that you have the ability to save and invest more money, to helping you find contentment and reduce your desire to spend money on things you can’t afford, frugality plays a major role in building wealth.
And as with anything worth pursuing, the more you put into it, the better your results will be.
So, if you’re thinking about adopting a frugal lifestyle, I can’t encourage you enough to jump right in. Or, if you just needed a little extra motivation to continue on your frugal path, I hope this article was the boost you needed.
In the meantime, may your frugal lifestyle be a beneficial step on your road to wealth!
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