Friday, December 3, 2010

Ways To Live The Frugal Life

ceramic piggy bankImage via Wikipedia

Is the new frugality a fad or a new way of life for Americans. What is it like to practice frugality? Does it mean sitting in your home wearing tattered clothes and making your own soap? Or is it about having a different view on life and money. Frugality isn't just about pinching pennies. We all know people who can pinch a penny till the the Brylcreem comes out of Lincolns hair. My wife is like that and she's taught it to me. Thank you, Dear. 

1. Frugality means consumers are putting needs above wants, sticking to budgets, deferring purchases and spending less — and they aren't shy about letting others know about it. In fact, those who have embraced the new frugal mindset are proud of their accomplishments, and they should be.

2. People with a frugal mindset view money as a tool, not a status symbol. They don't see money as the end result but rather as a means to help achieve a more balanced, comfortable life. So they tend to transfer their spending from things that are less important, such as brand-name products and luxury items, to things that are more meaningful, such as freedom from debt, a home or an emergency fund.

3. Those who practice frugality more effectively distinguish wants from needs. They don't interpret essential needs — food, water, clothing, shelter and transportation — as their more upscale counterparts — eating out, Perrier, designer clothing, luxury homes and new cars each year. Instead, they look for value when purchasing necessities. They also recognize extras, like cable TV and magazine subscriptions, as desires — not must haves.

4. Frugal people track their bills and manage their cash flow. Disciplined spending and budget tracking are at the core of the frugal mindset. Every dollar and expense is accounted for. Saving before spending is the norm. And credit is a last resort.

People who are frugal focus on their long-term goals instead of short-term indulgences. They rarely spend money on immaterial purchases that give them immediate satisfaction. Instead, they are committed to saving for future financial goals, such as college for their children or retirement.

For consumers who embrace it, frugality has an upside. It's a shift to a new value system and provides relief from the burden of "keeping up with the Joneses." It's even helping to bring some households closer, with more opportunities to spend time together at home playing board games, participating in outdoor activities, preparing meals and watching TV as a family. And here’s one ancillary benefit to this lifestyle: Parents are leading by example, teaching their children how to save and spend more responsibly.

So is the era of conspicuous consumption gone forever? Evidence suggests that, as with the Great Depression, this change in consumer behavior toward frugality will last even after the economy gets back on its feet, largely because consumers have less confidence in the economy and are less willing to run up debt. But only time will tell if the new frugal mindset is permanent. One thing is for certain: Living within our means could be a very good thing.

3 comments:

  1. I hear rumblings of a new retailing pitch called "frugality fatigue," another appeal to try to keep up with the Joneses.

    ReplyDelete
  2. They rarely spend money on immaterial purchases that give them immediate satisfaction. Instead, they are committed to saving for future financial goals, such as college for their children or retirement.

    ReplyDelete

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