Frugal Living: Meaning and Tips for an Independent Life

Photo: CC0 Public Domain / Pixabay – Nattanan23

Frugalism is an informal movement that is centered around the idea of spending as little money as possible, in order to gain freedom and independence. We’ll explain what frugal living means and give you some tips for how to add a bit of frugalist wisdom to your own life.  

For frugalists, spending very little money and living a happy life are not at odds with one another. Frugalism focuses on things like deep friendships, physical fitness, and lifelong learning for fulfillment and satisfaction; things which do not have to cost money but are nevertheless incredibly valuable. 

The Meaning of Frugalism

frugal living tips
Frugalists do not need expensive things in order to enjoy life. (Photo: CC0 Public Domain / Pixabay – Greyerbaby)

Frugalism is similar to minimalism, but focuses particularly on finances. Frugal living is about being very careful about where every dollar goes, and giving thought to how to maximize the value of every penny.

But frugalism as a movement is not only about frugal living in general; there is also a concrete goal. The idea of frugalism is based on an American movement called FIRE, which stands for “Financial Independence, Retire Early”. The aim of a frugalist is to adopt a lifestyle that is conducive to saving as much money as possible in order to accumulate enough wealth to literally buy their own early retirement.

The Frugalism Formula

meaning of frugalism
Frugalism is similar to minimalism. (Photo: CC0 Public Domain / Pixabay – Frantisek Krejci)

The goal of many frugalists is to retire by 40, but how much money do you need to actually save in order to do this comfortably? According to the Guardian, the goal is 25 times your annual spending. After that, you can invest your money in stocks and shares and live off the “safe withdrawal rate” of 4% per year for the rest of your life. 

The more you save by frugal living, the faster you will reach your goal. If you save 10% of your income, it will take you 51 years to build up enough savings to reach that target. If you set aside 50%, you can do it in 17 years. If you save 75% of your income, it is possible in just seven years. 

7 Frugal Living Tips for Beginners 

Frugalists radically cut back on their expenses and try to optimize spending as much as possible. If this idea inspires you, we have seven practical frugal living tips for you:

  • Reduce your fixed costs (rent, insurance, mobile phone, all contracts) to a minimum. 
  • Use your bicycle or walk instead of using other expensive means of transport.
  • Cook for yourself instead of going out to restaurants.
  • Meet up with friends at home instead of going out.
  • Sell old things you no longer need on internet platforms or flea markets. 
  • A frugal living tip that can easily be incorporated into any lifestyle is buying things used whenever possible. It’s good for your wallet, and also for the environment. 
  • Try to solve a problem with your existing resources instead of buying something new immediately.

Frugal Living: Things to Consider

frugal living considerations
Frugal living may not be for everyone. (Photo: CC0 Public Domain / Pixabay – Antanias)

There are some things you should think about before deciding whether frugal living is for you:

  • The early retirement goal of frugalism can only be realized by people who are privileged enough to have relatively high-paying jobs. Anyone who is being paid at just above the subsistence level would have a very hard time saving the required amount of money. 
  • Frugalism is not for everyone. If eating at michelin-starred restaurants or collecting vintage cars is your favorite pastime, this lifestyle will not work for you. 
  • Frugalism is not only about living frugally in the here and now, it is a life-long commitment. Because your money has been calculated according to your annual spending, you must continue to keep that annual spending consistent over the years, even after you retire. 
  • Many people have chosen frugal living in order to be able to stop working earlier in life so that they can pursue their dreams without having to worry about an income. Retirement doesn’t mean doing nothing but relaxing, it means freedom to write the book or the screenplay you’ve always wanted to, hike the Appalachian trail, or work with underprivileged children in a foreign country. 
  • In order to be a successful frugalist, you need to have real knowledge of the financial markets. Be sure to take the proper amount of time to gain real understanding of how the system works, and be informed about where your money is going, to make sure that you are investing in line with your values. 

This article was translated from German to English by Christie Sacco. You can read the original here: Frugalismus: Bedeutung und Tipps für ein unabhängiges Leben

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