I suggest you not to confuse or mis-interpret ‘Frugal’ with ‘Being Cheap’ or ‘Miser’.
If we go by literal meaning then Frugal means “sparing or economical as regards food or money”.
Although I have known this for a long time. But I did not feel the need to follow this route till late 2013.
Early 2014 I experienced a personal financial downturn. In a matter of a few months I was under huge debt resulting from my failed venture.
I was forced to think of ways to minimise the casualty. Hence, I started researching ways to overcome the financial debt.
One thing I came across a number of times was ‘being frugal’ or ‘living frugally’. I learnt that it is not a new thing invented in this internet age.
I learnt that a lot of influential people had been practicing this since ages. Many stoics have also mentioned this in their process of practicing stoicism.
But do you think living frugally is going to help or alleviate the situation?
The answer is yes. Living frugally can have multiple meanings and can differ from person to person. First, because it allows you to spend less than you earn, and use the difference to pay off debt, save or invest.
This is going to work in my situation. Because for me it was to come out of debt quickly and bring my life back on track.
Interestingly, in the process I also discovered many famous personalities, although they have more than they can spend, they too live frugally.
Let’s quickly have a look at a few examples.
1. Pierre Omidyar – Founder & Chairman, eBay
With a net worth of $8.1 BN, Omidyar became a billionaire in 1998 when eBay went public. Yet, he maintains that with such wealth, he could buy all expensive cars “but as soon as you realize that you can buy all of them, then none of them are particularly interesting”.
2. Mark Zuckerberg – Founder & CEO, Facebook
He is worth $32.4 BN, but cites “minimalism” and “eliminating desire” among his interests on his Facebook profile. He’s either in T-shirt or a hoodie and can be seen driving around in a Volkswagen GTI that typically costs less than $30,000.
3. Tim Cook – CEO, Apple
They say he is worth $400 million. We say he doesn’t spend a dime. He may have a 2,095 sq. ft. condo in Palo Alto but at $1.9 million, it is a relatively low price for the neighborhood. As he puts it: “I like to be reminded where I came from and putting myself in modest surroundings helps me do that.”
4. David Karp – Founder & CEO, Tumblr
The blogging platform Karp founded may be worth $1.1 BN, but Karp is known for his Sartan living, often getting surprised over people filling their homes up with “stuff”.
5. Azim Premji – Chairman, Wipro
At $15.4 BN, he is India’s wealthiest tech tycoon but routinely flies coach and takes an autorickshaw from airport to Wipro offices. He used to monitor toilet paper at Wipro Offices and routinely tells people to switch off the lights at Wipro facilities.
Another burning question is how do we do this? Below are a few ideas that you can employ to make this work for you too.
- Start with making a budget
Every action should start with a strategy. Hence, to stay frugal first you have to budget your spending. Please note it down on paper. This will have a domino effect. First it will help your brain rewire and second you will have a point of reference, in case you need while practicing them.
While budgeting, budget everything from your daily spend to monthly spend, from groceries to medicines and from travelling to entertainment. Put the budget to the items or expenses that are mandatory. Even you can ask yourself whether you need that particular spend. If you can do without that particular spend then you can strike out that expense.
- Seek out freebies and coupons
I am the late adopter of this. I have made a rule of thumb that if finding a coupon or an offer is taking time then I drop it. Because I make more money in those windows of time than from an offer.
However, I have created several folders in my email and save the offer sent. Plus I ensure that I pay all my utility bills over the weekend. Similarly, if a purchase can wait till weekend I make them wait. Because on the weekends I have more window to avail the offers and if required put that extra time to get the benefit.
- Less eating out and eating more at home
I am a sort of foodie but not a big fan of eating out. Once I started practicing frugality, I started trying recipes at home. This again had a domino effect.
First, my wife was happy that now at least twice a week I am preparing dinner for the family. Secondly, it helped me beat the stress arising due to my hectic office schedule. It was kind of a win-win situation. I was not only saving huge but also interacting with family and spending quality time with them.
- Drink plain water
Unknowingly we end up spending a lot of our pocket money in water. We spend a huge amount on refrigerated waters, flavoured waters, carbonated drinks and other processed drinks to quench our thirst. This not only adds burden to our pocket but also has an adverse effect on our health.
We can completely avoid this by opting to have plain drinking water. Plain drinking water matching your body temperature has many benefits. Primary of which is related to better health and improved immunity. Nevertheless it will help you to save huge amounts of money.
- Indulging in non-essential habits
This can mean different things to different people. Here by non-essential habits I mean cigarettes and alcohol. These habits are not only bad but can also have a toll on your financial health.
If it is part of your culture then you can limit the use. You can enjoy a couple of drinks.
Reduce or stop paying interest
This can be discouraged if you completely stop using credit cards. If you have loans then even the installments or their interest can be re-negotiated. In some cases you can shift your loan to some other financial institution by transferring the balance at a lower interest rate.