If you're concerned about the poor economy, exploring the link between frugality and getting ahead is a smart move.
The Frugal Mindset
Frugal living is about making the most of your limited resources. People who are frugal understand the importance of sticking to a budget, spending their money wisely, and avoiding an attitude of materialism.
While some people become frugal out of sheer necessity caused by very low incomes, others see frugality as a tool for getting ahead. By being frugal with their money, they can accumulate the savings necessary for long-term financial goals such as opening their own business, buying their own home, saving for retirement, or providing help with a child's college education.
If you are a parent with young children at home, remember that kids do tend to pick up their attitudes about money from the adults in their live. By managing your money responsibly, using credit wisely, and not viewing shopping as a major recreational activity, you're helping to set your children up for a lifetime as financially successful adults. This is a much greater gift than any toy or trinket you could possibly purchase at the local mall.
Rules for Frugality and Getting Ahead
If you're interested in overhauling your financial habits, consider these rules for frugality and getting ahead:
- Think of frugality as a game. Maintaining a frugal lifestyle will be difficult if you're stuck in the mindset that saving money is something you must do because you're poor. If you consider thriftiness a game and learn to view comparison shopping and coupon clipping as ways to stretch your creative thinking skills, however, the task will be much more enjoyable.
- Keep your eye on the bigger picture. While frugal habits do save money, there are other reasons to adopt these practices as well. For example, recycling items you already own instead of rushing out to buy new things helps reduce the amount of waste that ends up in landfills. Similarly, carpooling helps save money and cut air pollution. Take pride in the fact that being frugal is environmentally friendly.
- Don't rush to "upgrade" your lifestyle. When you get a raise or a promotion, don't automatically increase your budget to accommodate the extra cash. Plan to save the money for emergency expenses or invest it for your retirement and continue living just as you have been.
- Surround yourself with people who share your priorities. In many cases, people spend money unnecessarily when they feel pressured to act a certain way by those around them. By surrounding yourself with people who don't equate happiness with material possessions, you'll find it easier to maintain your frugal lifestyle.
In case you need some inspiration on your quest for frugality and getting ahead, consider the lives of these famously frugal billionaires:
- Noted investor Warren Buffett has a net worth of over $57 billion, but still lives in the same home he bought for $31,500 nearly 50 years ago.
- Jim C. Walton, son of Sam Walton and heir to the Wal-Mart fortune, reportedly drives a 15-year-old pickup truck instead of a fancy sports car.
- David Cheriton, rewarded with a sizeable chunk of stock after introducing Google founders Sergey Brin and Larry Page to the venture capitalists at Kleiner Perkins Caufield & Byers, cuts his own hair to save money and prefers to ride his bike around town instead of wasting gas with unnecessary driving.
John Caudwell, a former auto-repair shop owner who built a $2 billion fortune through the Caudwell Group, summed up the attitude of the frugal billionaire best when he said, "I don't need to spend money to bolster my own esteem."
Of course, this doesn't mean that frugal people should never money on luxury items. The key is to keep a balanced perspective and only splurge on the things that bring you the greatest joy.