On the surface, frugality might not seem that appealing. Between couponing, pinching pennies, and budgeting, I can see how some people might view it as a restrictive, burdensome lifestyle. But, truthfully, frugal living has all sorts of benefits.
Now, I’ll be honest, when you take your first steps into frugal living, it can be a difficult lifestyle to adopt. I mean, when you have spent years spending beyond your means, without any real regard to the toll your decisions are taking on your financial future, frugality can be a shock to the system.
Though, once you experience the wonderful, life-enriching benefits frugality has to offer, I can almost guarantee you will never look back.
So, without further ado, here are the 10 best benefits of frugal living.
1. More Freedom To Pursue Your Passions
My wife and I have come to realize that one of the best benefits of frugal living is that we have more freedom to pursue our passions.
This might be surprising to you, because you would think that spending less money would mean less pursuit of fun and enjoyment. However, with each frugal choice we make, our financial situation improves slightly. And the better our financial situation is, the further we move away from a paycheck-to-paycheck lifestyle. That means more freedom.
For example, before my wife and I decided to adopt a frugal lifestyle, we were buried in debt, and we were impulse spending on just about anything within reach. So, in order to keep up with our monthly debt payments and spending habits, we relied on our next paycheck to make ends meet. Whether we liked it or not, we had spent our way into a trap.
That’s no way to live. And since adopting a frugal lifestyle we have broken free of that trap.
Additionally, have you ever paid attention to how many people hate their job? Have you ever wondered why they continue to work for a company they don’t trust, or a boss they don’t respect? Well, in many situations, the risk of losing their paycheck is greater than the pain they are experiencing at work.
And guess what, frugal living is one of the best ways to escape a situation like that. If you learn to live on less, save, and invest more money, you will become less and less reliant on your next paycheck. And when that happens, you experience freedom to pursue your passions.
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2. Earlier Retirement
Have you ever done the math on your retirement? Do you know how much wealth you need to build up in order to provide for yourself in your retirement years and leave a legacy for your children?
Well, if you are a frugal person, your retirement number doesn’t need to be quite as big.
Consider this, if you live comfortably on $4,000 per month, then in order to make ends meet in retirement, you will need $48,000 per year. So, if you have $1 Million sitting in retirement investments, you could live off the interest alone if it earns a conservative 5% each year.
On the flip side, let’s say you live a not-so-frugal lifestyle, and you need $150,000 per year in order to make ends meet in retirement. Well, at that same, conservative, 5% interest rate, you would need to have $3 Million in retirement savings. That would take much longer to build up.
Here’s the best part, if you live a frugal lifestyle before retirement, and make a point to get out of debt, live within your means, save and invest, not only will your retirement expenses be extremely low, but your investments will be large. So, if you want to live a more lavish lifestyle in retirement, you can do so.
Side Note: there is nothing wrong with wanting to have deep retirement pockets. So, if you have dreams about living an extravagant retirement, there is nothing wrong with that. All I’m saying is that frugal living will help you get there faster. And, obviously, the less you need, the quicker you can retire.
3. Financial Contentment
In my experience, one of the best benefits of frugal living is financial contentment.
You see, frugal living is all about learning to live on less, improving your own financial situation, and no longer comparing yourself to others. So, when your neighbor gets a brand new car, you don’t feel bad about the 10 year old, pre-owned car you’re driving around. When you go to somebody’s house that’s bigger and more beautiful than yours, you don’t feel shame about your little two-bedroom fixer-upper.
When you embrace your financial ability, and learn to live within your means, it all but eliminates the envy you might normally feel when you see somebody richer than you.
Beyond that, when you practice frugality, your eyes will be open to how often other people spend beyond their means. Seriously, just because somebody has a nicer car than you, doesn’t mean they have more money than you. In fact, in many cases, it just means they have a ton of debt.
This is known as the illusion of wealth, and it is a slippery financial slope.
The good news is, finding financial contentment is the best way to avoid it. And it just so happens that frugality is the best way to find financial contentment.
4. More Money For Saving And Investing
This might be the most obvious benefit of frugal living, but it is still worth talking about. If you live a frugal lifestyle, you will have more money for saving and investing.
It’s a really simple concept: the less of your money that you spend, the more of it you get to keep. That means more savings, more investments, and an ever-improving financial situation.
Who wouldn’t want that?
5. Less Financial Stress
As a husband and a father, I don’t have any desire to take my family down a path that leads to financial struggle. I went down that path as a single man, and it was hard enough.
I remember sitting in my apartment with $100 in my bank account, and a full week before my next paycheck. It was brutal. Between my various debt payments, bills, and foolish spending habits, I would lie awake at night, stressed about making ends meet. It was unpleasant at best.
All I can say is, thank goodness my wife and I adopted a frugal lifestyle, because it turned all that around.
You see, now that my wife and I live within our means, we almost never stress (or argue) about money. In fact, the only recent financial situation I can think of that caused me a little stress, was a medical bill that hit our checking account before I transferred money from savings in order to cover it. So, that stress lasted about 30 seconds.
Please know that I’m not saying this to brag. I’m just saying that if you want to reduce your financial stress, you should really consider adopting a frugal lifestyle. I’ve experienced both sides of that equation, and I can tell you that the work that goes into frugal living, is way better than the stress of financial hardship.
Even if this is the only benefit you ever experience from living a frugal lifestyle, it is worth it.
6. Improving Your Net Worth
I talk about net worth a considerable amount on this website, because it is such a crucial focus if you want to improve your financial situation.
When you lead a frugal lifestyle, it is significantly easier to grow your net worth. Between all the saving, investing, cutting expenses and living within your means, a growing net worth is just a symptom of good, frugal habits.
For instance, if you cut your grocery bill by $100 a month, and instead, put that money into savings, you will increase your net worth by $1,200 per year. If you use your frugal lifestyle to get out of debt, every payment you make increases your net worth.
Pretty much everything you do when you live a frugal life benefits your net worth.
7. More Ability To Give Generously
The more I have experienced the frugal lifestyle, and gotten to know all sorts of frugal people, the more I have come to realize that true frugality comes with a focus on generosity. You see, the biggest difference between being frugal and cheap, is that frugal people are generous.
I’m sure you’ve experienced the difference.
A cheap person is willing to sacrifice the financial situation of somebody else in order to improve their own. Whereas, a frugal person is willing to cut their own expenses in order to give generously, while still living within their means.
And here’s what’s funny, when you start to emphasize frugality in your own life, you will have more ability to give generously. Think about it, if you are barely making ends meet, how much ability do you really have to give to someone else in need? Not very much. Meanwhile, if you have your spending under control, you are living within your means, and you have some financial margin in your life, it is much easier to use your finances to help those around you that are struggling.
8. Able To Ride Out Financial Storms
I can tell you from personal experience that when you are scraping by, and living beyond your means, it is difficult to ride out any financial storms. Looking back, there were plenty of times when one big, unexpected, financial hit could have put me in a terrible situation.
Now, I’m not just talking about economic storms like a stock market crash. I’m talking about things like losing your job or health struggles.
Financial storms come in all different shapes and sizes, and when you know how to live within your means it is much easier to get through them.
9. Higher Risk Tolerance
In investing, higher risk comes with a higher potential return. And when you live a frugal lifestyle, within your means, it naturally increases your ability to tolerate risk.
Think about it like this, if you are spending beyond your means, making numerous debt payments each month, and have barely any savings, you don’t have a lot of room for error in your financial life. Therefore, it wouldn’t be very wise to invest in anything that comes with the risk of losing money. If anything, your best option would be a savings account.
Meanwhile, if you live frugally, debt-free, and below your means, there isn’t anything holding you back from making some higher-risk investments. Now, I am not advocating for an aggressive, unwise investment strategy. All I’m saying, is that instead of putting all your money into a savings account that earns 1% interest, annually, you could put your money into a mutual fund that has the potential to earn you 9% – 12% annually.
When your expenses are low, and you aren’t strapped for cash, you can do more with your money.
10. More Financial Creativity
There’s no doubt that frugal living requires some financial creativity. Between couponing, shopping at multiple stores in order to find the best deal, using cashback apps, and choosing to DIY instead of buy, frugality takes creativity. Though, if I’m being honest, that is part of the appeal.
There is just something so satisfying about finding little ways to increase your savings each month. And the more frugal you choose to be, the more creative you have to be. It’s a fun mental muscle to flex, and it’s amazing how good you become at it over time.
Do you live a frugal lifestyle? If so, what are your favorite benefits?
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