You don’t get rich then get frugal, you are frugal , and then you get rich!
Professor Lastovicka in 1999 defined frugality as “a unidimensional consumer lifestyle trait characterized by the degree to which consumers are both restrained in acquiring and resourceful in using economic goods and services to achieve longer-term goals.”
Let me tell you a story when I was little, my mum used to give me MYR0.30 daily to buy food in school, since I was worried I might be running out of money, I saved most of the money. I refused to spend it even though I was hungry. The sense of security preceded my hunger, I preferred to have coins inside my pocket with a gurgling stomach.
I understood well that I couldn’t control how much money my mum gave me but I could easily control my spending and saving. It was a great feeling that after a period of saving, I could reward myself for eating ‘mimi’ snack ( which was MYR0.10 ) a few times a week without worrying about running out of coins in my pocket again. Eating ‘mimi’ was my long-term plan during childhood.
According to Professor Goldsmiths of Florida University, frugality as a pattern of behavior can be motivated by external forces such as economic downturns and personal misfortune, as well as by subjective individual differences among people that motivate them toward frugal behaviors.
Frugality in simple terms
To put frugality into simple terms, you become frugal because of internal or external forces. You are frugal because something happens externally such as recession, losing a job, or the Covid-19 pandemic. You are frugal and spend less because you do NOT have a choice.
Or you can be frugal because of internal forces. You are compelled to save due to your childhood upbringing, your personality, your previous money experiences. For me, you should be frugal not because you have to due to external forces but rather you choose to.
Frugality and Saving
Wealth is what you have after your spending. Making a good income monthly would not make you wealthy. It is what the leftovers make you. Don’t become frugal because you have to. You should be frugal because you are damn sure it is the best way for you to accumulate wealth.
It is easy to be frugal and spends less provided you desire less. And trust me, you can control desire if you have the discipline and care less about what others think about you.
It is pointless looking at how your neighbors live and what car they drive because no matter how trendy your car or how grandiose your house is, next to another street or neighborhood, there is another more expensive car and bigger house around.
Frugality and Investment
You can’t control the direction of the market next week. Whether the Fed or Bank Negara will hike the rate next quarter is certainly out of your control too. It holds true as well for your investing strategy. Whether your investing strategy works or how long it takes to work in favour of you is always in doubt. But personal saving and frugality are part of money equations that fall within your control.
Therefore worry less about market performance, you can’t control the market. And yes, you can’t control who will be the idiots sitting in the parliament fixing our country’s economy next term. So spend more time thinking about how to be frugal and save more money rather than things you have no control.
Investment returns can make you rich if you are patient. You do not need a specific reason to be frugal and save. Every single dollar you put into the stock market would give you extra freedom in the future.
Conclusion
So, being frugal is equally important as saving more if you are darn serious about being financially free in the future.
You are frugal and save more not because you are interested in tangible assets, but rather than intangible assets that give you peace of mind and freedom in life.
Morgan Housel once said:” The highest form of wealth is the ability to wake up every morning and say, I can do whatever I want today.”
Addendum: Book I’ve recently read
This is one of the best money/finance books I’ve read for years. Morgan Housel talks about the psychology of people handling their money. If you are serious about understanding more about wealth, you can buy the book HERE.
