Reaching financial independence faster boils down to either increasing your income or decreasing your expenses. This is why so many books and blogs focus on frugality and saving money. However, too often the term frugality conjurs up the image of an old woman eating gruel while separating her double-ply toilet paper into single-ply.
After an interesting conversation about how vegetarians often have different motivations (religious, ethical, environmental, amongst others), I thought about the many driving forces that can result in frugality.
Purely Financial
Let’s start hypothetically, and say that all you care about is money and you cut expenses purely because you would rather invest that dollar and have it produce income for you. You could move into a smaller house, buy a fuel-efficient car, walk or use public transportation instead of driving when possible, make dinner from scratch at home instead of ordering dinner at the restaurant, and cancel the cable TV service. But if you won the lottery tomorrow, you’d drive your Hummer everywhere, eat at Morton’s Steakhouse once a week, and subscribe to everything from ESPN to HBO and add in the 5-DVD Netflix plan to top it all off.
Environmental / Green
But wait, you are rather concerned about preserving natural resources, so perhaps you’d still walk a little more and buy a fuel-efficient car. A smaller house would probably use up less electricity and heating oil as well. Using raw ingredients to cook uses less wasteful packaging made of plastic and styrofoam.
Simplicity / Minimalism
If you want to reduce chaos and clutter in your life, then you may still have a reason to move into a smaller home since that’ll force you to get rid of some extra things. Do you really need a big car, or is a hatchback or station wagon enough? Hey, the Europeans make do, as gas costs $10 a gallon there.
Physical Health
Walking or biking is much healthier than driving, so you won’t need that Hummer as much. Medical studies have shown that the more time you spend sitting, the shorter your lifespan, so you don’t want to be that TV-watching couch potato.
Self-Empowerment
Sure, you could pay someone to cook your food, but wouldn’t you feel great if you knew how to brine a turkey, make your own beer, or grow your own vegetables? This might also apply to whatever other skills you want to pick up. Home repair, appliance repair, auto repair, landscaping, investing…
Religious / Philanthropic
The sooner you reach financial independence, the sooner you can start giving more back to society and serving others instead of trying to make money.
So in the end, you could be the same person, with or without a big pile of money. (Maybe not. I’d get some cool toys.) A more practical idea would be to use these other motivations to make saving money more appealing. You’re not buying a compact car because you’re cheap, you’re being minimalistic and environmentally conscious. You’re not skipping Olive Garden because you’re broke, you’re doing it because you know how to can make your own risotto at home that’s even better. Find a different (higher?) cause. (The extra thousands of dollars growing in your brokerage account won’t hurt either.)
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Great post. Reminds me a lot of this post: http://www.mrmoneymustache.com/2012/04/02/what-would-you-do-with-way-more-money/.
So true.
I am always so confused when people chalk up our financial habits to deprivation. Our primary motivation has always been to not be stuck in a job, not rely on constant employment, and to actually have REAL TIME for our kids. Just because we don’t treat our finances like average (mindless sheep) doesn’t mean we aren’t enjoying life. My life is sad because I don’t go to Starbucks every day and I don’t drive newer cars? Seriously? Everything that is truly important to us is a goal we have already achieved in our young lives. THAT, is priceless. Frugal motivations come in endless sizes, shapes and forms. I’d say our primary motivation is FAMILY. I’d also like the option to quit my job to care for aging parents, if I needed to. Stuff like that. I just don’t want to be the person who neglected everything important in life for some thankless job.
I think this touches on a good thought experiment. “How would you live your life if you had your target retirement income today?” It was tempting to say “How would you live your life if money weren’t a concern?” but I think that is the wrong perspective. The point isn’t the cliched “if I won the lottery”, but rather, what choices would you make differently if you were no longer in the accumulation phase?
I struggle with this in part because of the non-retirement expenses I still have, in particular, those associated with my kids. Still, I find it interesting to consider.
Hmmm…it reads straight from the e-book “How to set Goals”, available at Amazon for $2.99.
Very well summarized and inline with the best philosophical ideas and religious thoughts that we humans have acquired over our history.
I’m just curious why you, the national news orgs, etc always reference heating oil. According to the sources I could find, it represents less than 10% of the population.
http://www.fiainc.com/energy-efficiency/fia_energy_faq.php
Another motivations analysis you should look at now that you’re starting a family is to determine the optimum number of kids to have. Along the lines of your financial well being, are you going to put all of your eggs into one basket and focus on just one kid? Two? What about 5? or 10? Do you space them out or have them close together?
@Baughman – I agree, MMM is a great example and advocate of the frugal lifestyle for a higher reason, as was ERE. I must admit that with big money I would enjoy driving a nicer and faster car, although I wouldn’t live in a bigger house I wouldn’t live in an RV, and I would eat at ethnic restaurants just as much as now (which is much more than them I would think)!
@Alexandria – Family is a great reason, how could I forget that one!
@Ren – Yes, I think there is a practical aspect. We may always want more, but retirement is still a compromise and not being a billionaire. Then there is living life now vs. delaying gratification.
@T-Bone – That’s nice, but I can assure you I have never bought any eBook about goal-setting for $2.99. I did read about how meat is worse than vegetables because it’s so inefficient to make all these vegetables to feed and raise cows instead of just using the land for vegetables and feeding more people. So many people choose to be vegetarian for almost financial reasons that we could feed more people for less. Almost, because obviously people in general like paying extra for meat (myself included).
@scott – I think it’s just because not everyone uses electricity, so to seem relevant to more readers we include natural gas and heating oil. I only have electricity, but I used to have an old heating oil tank in my basement.
I’ve given up on the number of kids to have, with our situation I’m pretty sure I’ll have whatever nature gives me up to three unless there’s some sort of triplet situation. 🙂
Overall just good thoughts to remind ourselves money is a means, not an end. It’s pretty easy to forget this basic fact in today’s society. Your Scrooge cartoon is a perfect image for it. So many people, regardless of income, are his spitting image.
Looks like there’s something for everyone on this list. Now people have no reason not to be a bit more frugal in their financial management.
Having read all of the above, “Well” is the word I could say. If money is not an ultimate end to me, I would say it is a semi-end to me. Without money, maybe I am still struggling making ends meet. With money, I will have options for my life style, for a better quality of life, and for making payment for my kid’s school tuitions. Jonathan says that he would not live in an RV. I guess you would not live there permanently. But, would you like to travel with/by an RV? If yes, what class of the RV would you consider? Class A, Class B, or Class C? If you would not like to go RVing, fine; just take public transportation–take the train, bus, or plane. That’s your choice.
Frugal? I think we should not be frugal. I would spend within my financial capacity and help the economy, help people stay in their jobs, and also help myself have more time enjoying other things and doing less house chore such as cooking from scratch. People are trained to be specialized in certain fields/areas. Some are good cooks; thus, I pay for the cooked food. I also pay for the clothes–a finished product not made by me. I say clothes and not fashion because the latter is for my college kid. …
I will cherish stay outdoors when allowed, meaning that I have some $$$, leisure time, and means to getaway from routine, from everyday life.
Live in a small house or a big one? Whether it’s big or small, we need to define. For me, I just need enough space to house myself, my family, and all the personal belongings and there is enough space to let us make turn.
@ Wanny. You are economically illiterate. It is ignorant to imply that spending money on overpriced restaurants does more social good than living frugally and using the proceeds to provide capital to companies searching for cures to cancer, the next iphone, etc. If there were fewer of you and more people like me in society, perhaps we’d be at a cure to cancer already and have flying cars.
The more I realize how the world works, the more I realize that each transaction I make provides funds (through sales tax, income tax of recipient) for a bloated, incompetent government.