10 March 2008 162 views One Comment Print This Post  Email This Post

There’s only two ways to get richer, make more or spend less. Saving as much money as possible is one of the fundamentals of building wealth.  It is applicable on day one, that’s why I’m an advocate of frugal living. However, I also want a happy and balanced life, which is why I wrote about frugality being relative. Some just have to save more than others to reach their financial goals. Either way, you must not only find new ways to save money, but you also need to know where to draw the line so it doesn’t affect other aspects of your life. I remember reading about someone who fills up their ketchup bottles with ketchup packs at local fast food restaurants. It does save a buck or two, but its borderline stealing and opening up all those little packages when you don’t have to doesn’t help the environment much. Aside from wacky stories like that, you have to think about whether or not a certain frugal practice will cost you more in the long run.

Health

I’ll never sacrifice my health to save money. Not only will your body suffer, but all your future medical bills will crush any savings you’ve accumulated through the years. I won’t eat fast food to save money, I’d rather cook at home. I won’t buy cheap toys as gifts if there is a remote chance they contain lead. I wouldn’t spend less on an apartment if it’s in a crime infested, polluted part of town. Good health these days is simply priceless.

Happiness

This one is a gray area because many of us are programmed to be happy if we have stuff. Of course we all know that hyper consumerism is the major reason why we’re deemed the country that doesn’t save. I’m not advocating that we all go out and buy stuff, but if there is something you really want to own or experience and it costs a bit of money, do it. I’m talking about things like collecting stamps, owning a pet, etc. All I say here is do it in an intelligent and frugal manner. I’m a watch collector. I just like watches and all things mechanical and I don’t know why but it makes me happy. I only own one authentic Swiss watch and the rest are high end replicas. So even though I spend money collecting them, the way I see it is I could be paying 10-15 times for authentic versions. Of course, if you’re convinced that a Ferrari will make you happy, practice delayed gratification and wait until you can truly afford it.

People Around You

I don’t like to force my frugal habits onto others. It’s a personal lifestyle and although you should suggest it to others, you should let them make their own choices. I personally drive a 10 year old German car, but I want my girlfriend to drive a late model, more reliable Japanese car. I don’t care about the extra attention my car needs but I wouldn’t force that on those around me. Additionally, I wouldn’t let my frugal practices negatively affect those around me. For instance if I take the bus, I would leave earlier so I don’t have people waiting. If someone treats me to a $10 meal, I wouldn’t return the favor by offering them a lunch at McDonald’s. My frugal practices should only affect me and my net worth.

The Long Run

Next time you start a frugal habit, think about the long term. I’ve had friends who drive 15-20 miles out to save a nickel per gallon on gas. It likely costs you more in the long run factoring in time, engine wear, and gas. I’m an advocate of buying a used car, but I wouldn’t buy cheap light bulbs for it. They burn out quicker and cost you more in the long run. Have you ever shopped at 99 cent stores? If so, you’ll notice a lot of the items are so poorly made, you have to buy a new one two weeks later. That’s not being frugal. You should develop frugal habits that will save money not only at the moment, but in the long term.

Thumbnail image by jpmatth