The one thing I wish people would understand about frugality

Last week I wrote about some weird things I think about before purchasing something. A few readers pointed out that calculating cost per unit on food items might not be all that practical…

I agree yet I disagree at the same time.

Ever heard of the latte factor? It is a term popularized by David Bach to symbolize the high cost of small, periodic spending. Spending a $4 latte every day adds up to $1,460 for the year. Imagine spending that money for 30 years, that would add up to $43,800.

What if you invest that money yearly in the stock market?

At 7% annual rate of return, after 30 years you would end up with $149,026.64.

Not pocket change, that’s for sure.

Being Taiwanese-Canadian, I was taught from a young age that every dollar adds up. It doesn’t take long to save hundred dollar if you save a few dollars here and a few dollars there. It’s funny because Russell Peters explained this mentality in one of his hilarious ethnic jokes.

Small things do add up over time!!!

What if you are only being price conscious on the lower priced items and ignoring the higher priced items?

I think that will lead you to bigger troubles.

Imagine you are saving a few cents here and there on a daily basis.

But you are changing your car every other year, or buying a house that is way larger than what you really need.

Because you are not being frugal on these higher priced items, you are negating all the savings and frugality you have done with the smaller items.

It is as simple as that.

Taking out an extra $50,000 on the house mortgage so you can buy a bigger house will do way more harm than that $4 latte that you are buying every day.

Another example…. this past weekend a bunch houses on our street set up a street-wide garage sale. We set up some tables and tried to sell some stuff on our driveway.

I was absolutely amazed how many people were haggling over already-heavily discounted items.

And Justin & Kaisorn from Root of Good had an excellent way to point out the less obvious…

Save on the small stuff. Save on the big stuff.

They are not mutually exclusive!!!

The thing with frugality is that you need to look at everything you buy. Don’t just be frugal on only selective items. Be frugal on everything. Let frugality become a lifestyle, rather a fad.

Being frugal, however, does not mean that you never buy anything fancy or never spend a dime.

It comes down to practicality and what is important to you.

Consider our garden and green house…

We are spending quite a bit of money on plants, water, nutrients, and supplies. We also spent over $1,000 on the greenhouse earlier this year so we have a warm environment to grow tomatoes, cucumber, peppers, and other vegetables in the greenhouse.

I can guarantee that all the spending is negating all the savings we get from buying less produce from grocery stores.

But having our own garden and eating home-grown produce have many benefits that cannot be quantified with a dollar value.

  • Eating home-grown pesticide free vegetables and fruits are better and more healthy for us
  • We get to spend time outside when taking care of the garden
  • Our kids learn where food items come from, they learn to be appreciative of food and not to be wasteful
  • Gardening makes Mrs. T happy. Happy wife means happy life!
  • Mrs. T and I learn different ways to be self-sustainable in the future

The one thing I wish people would understand about frugality is that frugality cannot be qualitatively defined. It is way more complicated than spending vs. saving. The definition of being frugal is different for everyone. What seems frugal to me may not seem frugal to you. Being frugal should not mean deprive yourself from having a good life now. If you are being frugal for the main purpose of achieving financial independence 10 years from today but you are not happy today due being frugal, what makes you think you will be happy all of a sudden when you reach financial independence?

You don’t magically become happy because you possess something.

You don’t magically become happy because you reach a major milestone.

Life would be way too easy if that was the case.

So don’t be afraid to treat yourself from time to time and make what is important for you to be happy a priority in your life. If the math works out and you have considered all the different factors – spend that money and be happy.

It is too tough to live your day-to-day life constantly thinking about how to save money so you can get ahead. Find the right mix between saving and spending that will work for you and stick with it. Find your own personal balance.


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  • Reply
    Mr. Tako
    July 17, 2017 at 9:22 am

    Couldn’t agree more Tawcan! I try to be frugal everywhere — the big stuff and small stuff alike. But when it comes to spending the money that make us happy (like the ingredients for a delicious meal, or plane tickets traveling), we don’t skip it.

    Sure, we’ll try to eliminate unnecessary waste in those areas, but spending on happiness is key.

    • Reply
      July 17, 2017 at 9:56 am

      Mr. Tako, seems that we are best friends separated at birth. We definitely think alike. 😀

  • Reply
    Mrs. Adventure Rich
    July 17, 2017 at 10:11 am

    Yes! “Let frugality be a lifestyle, not a fad”. That sums it up right there. If you work to implement frugality in all areas of life, it becomes much more habitual and easier to stick with. It becomes the norm vs the tool you implement only for big purchases. Thank you for the great post!

    • Reply
      July 17, 2017 at 3:53 pm

      Exactly, in order for frugality to work, it needs to be a part of your lifestyle. But just because you are frugal, it doesn’t mean you can’t spend any money ever. Spending money and being frugal aren’t mutually exclusive.

  • Reply
    Mrs. Picky Pincher
    July 17, 2017 at 11:37 am

    Yaaas! This is why there are so many “What is frugality” searches on Google. It’s hard for us to collectively define exactly what frugality is. For me, it’s spending money better. Sometimes that means spending less or spending more, depending on where the money is going.

    • Reply
      July 17, 2017 at 3:53 pm

      Exactly, your definition of being frugal is probably different than my definition. That’s what makes personal finance so interesting. 🙂

  • Reply
    Lance @ My Strategic Dollar
    July 17, 2017 at 11:47 am

    Great break down! I think starting with the big things is best. Make sure you aren’t spending lavishly on your home, car, food, etc…then make sure the little purchases aren’t adding up. And never cut out things that truly make you happy.

    • Reply
      July 17, 2017 at 3:54 pm

      Thanks Lance. Yes for people starting out it’s probably best to start with the big things do get the most savings possible.

  • Reply
    July 17, 2017 at 12:42 pm

    So right on topic. We actually started out with being frugal on the small things before we hit the big ticket items, like our car. We were always naturally frugal, but only on a daily basis. Since our FI journey we try to look at all our expenses. If it’s worth the money we spend it, otherwise… not so much. Doesn’t mean we don’t have any luxury, just in a way that we feel comfortable with it 🙂 (and still save a lot of money)

    • Reply
      July 17, 2017 at 3:55 pm

      Exactly, it all comes down to what you feel comfortable with (on luxury) and saving a lot of money at the same time.

  • Reply
    July 17, 2017 at 4:50 pm

    Nice post. Im sure im one of those guys who pointed out the cost per unit thing. I agree with you everyone has a different definition of frugal. The latte factor is very real. Nice buy on the garden i miss growing our own vegetables. (Exterior under construction so we didnt this yr)

    • Reply
      July 17, 2017 at 9:19 pm

      Thanks and the latte factor is definitely very real. But if you’re only saving on the small stuff and not being frugal on the big stuff, it won’t matter in the long run. 🙂

  • Reply
    July 17, 2017 at 5:45 pm

    Nicely said Bob. I’d like to see more people in the FI community talk about the differing standards of frugality. What is frugal to you may not be frugal to me. And vice versa. Happiness is the most important standard. If you are hitting your personal definition of frugality you will be happy, even if that definition would make another feel like a spendthrift and thus, unhappy. And that is ok.

    • Reply
      July 17, 2017 at 9:21 pm

      I love how you summarize it, use happiness to determine your personal definition of frugality. When that happens you’ll be happy with your life regardless what other people are doing.

  • Reply
    No Nonsense Landlord
    July 17, 2017 at 10:04 pm

    If you want to FIRE, you have to have the drive and ambition to save. Far too many people think that money has a expiration date on it and it must be spent.

    • Reply
      July 18, 2017 at 9:08 am

      Money doesn’t have an expiration date. Nothing wrong with passing that to your kids and their kids. 🙂

  • Reply
    Lily He-Prudhomme
    July 17, 2017 at 10:33 pm

    “Life would be way too easy if that was the case.”
    Sneaky little life suckered me in again. I was just having a conversation with my husband about how we have it good considering how bad life could get – but I was sad the whole day for no reason and trying to figure out why. There’s no magic formula to be happy just because you have X or Y and that makes me feel a little better about the “down” day I had.

    A greenhouse sounds like a great idea! We should look into that – I wonder if groceries will ever be balanced by the initial investment.

    • Reply
      July 18, 2017 at 9:10 am

      Life would be too easy if you have X or Y. That’s also why being alive is so much fun. 🙂

      There are lots of non-momentary benefits with having a greenhouse. It’s hard to put everything into dollars and cents.

  • Reply
    Ms. Frugal Asian Finance
    July 18, 2017 at 4:43 am

    I totally agree with you that we should try to be frugal on everything. I myself feel tempted to drop a couple of dollars here and there on chewing gum or discounted items. But I always have to tree remind myself that those things do add up.

    Yet, like you said, there are things in life we should enjoy a little. Traveling with family and enjoying delicious food every once is a while are two things Mr. FAF and I highly value.

    • Reply
      July 18, 2017 at 9:11 am

      I used to be the type of person that would eat cheap food when I’m traveling. But now I’m on the opposite spectrum. Say you’re in Italy. Wouldn’t it be a shame to not try the delicious authentic Italian pasta and pizza? If you tell yourself, I’ll try next time… when do you think you’ll be back in Italy?

  • Reply
    Dividend Family Guy
    July 18, 2017 at 7:47 am

    There is definitely a balance as you point out T. I have learned that I can be happy and live off of near nothing but that doesn’t mean the rest of my family is happy. One must take into account the whole (I am no longer a singular).

    • Reply
      July 18, 2017 at 9:12 am

      Exactly. Maybe it’s easier when you’re single and by yourself. But now you have family you need to look at things from everyone’s perspective.

  • Reply
    July 18, 2017 at 6:06 pm

    I’ve always thought of frugality as spending in alignment with what I really value, instead of on stuff that I don’t value. Many times if you ask someone what their goals or dreams are, they might say creating experiences with their family, or sending their kids to college, or retiring at 50 to travel the world. But instead of saving for those goals, or spending towards them, they’re spending on eating out/SUV’s/drinks/etc. Minimizing the cost of unimportant things in order to maximize available funds for my goals and dreams is what I think of as frugality

    • Reply
      July 18, 2017 at 8:07 pm

      Very well put. Focus on minimizing the cost fo unimportant things so you can maximize on things that you enjoy.

  • Reply
    Dividend Diplomats
    July 18, 2017 at 6:54 pm

    Tawcan –

    It goes back to the saying – EVERY DOLLAR COUNTS IN THIS!! Further – the other thing that makes me mad – is that people say with frugality you are sacrificing… that drives me NUTS!


    • Reply
      July 18, 2017 at 8:08 pm

      If you feel that you’re sacrificing something because you’re frugal, then obviously there’s something you’re missing.

  • Reply
    Palmetto Millennial
    July 18, 2017 at 8:54 pm

    I agree with your logic. Everything has an opportunity cost associated with it. I think experiences are more important than things or sugary drinks! To use your latte example…I’d rather have a nice vacation at the beach than a $4 latte each day!

    • Reply
      July 19, 2017 at 1:10 pm

      Experiences definitely should outweigh things or sugary drinks. 🙂

  • Reply
    k. mcgarrett
    July 19, 2017 at 5:58 am

    You just have to watch your good intentions and, for example, be firm with yourself about following through on growing vegetables in your greenhouse. Kind of like taking out gym membership, the best laid plans of mice and men . . .

    • Reply
      July 19, 2017 at 1:11 pm

      Very good point, can’t agree more.

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