What does Frugal mean to you?

Frugal

Today’s topic is frugality, a concept that is hard to pin down. We look at what it means to be frugal in the UK in 2016.

What does frugal mean?

Frugal is one of those words whose meaning is subjective.

  • One man’s frugal is another man’s extravagant, and a third person’s cheapskate.

The dictionary definition includes words like sparing or economical, thrifty and prudent, simple and plain, but none of those are quite right.

  • For me, it’s about priorities and long-term thinking, not just doing without to keep within a budget.
  • It’s also about self-sufficiency – it’s a philosophy which says that you know best what is right for you.

Your money needs to be spent in the end, but you need to know when and where to use it, and on what.

  • You can’t spend it twice, so you need to make it count.

Let’s take a look at some of the variations in “frugal” behaviour, and try to decide where the boundaries lie.

Priorities

Most things in life are a trade-off between time and money. Quality comes into it, too.

  • There’s a famous triangle used in many lines of business that has time, cost and quality at its corners.

It shows the impossibility of trying to achieve all three in one solution.

  • If you want something cheap and quick, it won’t be high quality.
  • If you want something good and quick, it won’t be cheap.
  • And if you want something cheap but high quality, it will take a long time.

Being frugal is all about setting priorities.

  • You need to decide what you are trying to achieve with each frugal act.

Broadly speaking, you are frugal in one area of life so that you can be less frugal in another.

[Tweet “Being frugal is about priorities. Stop wasting money where you won’t notice the difference.”]

There’s no point in living a hair-shirt existence where you never get to have fun.

  • And knowing that there’s a reward at the end of the journey will make it much easier to keep going.

You need to decide what you get the most out of and put that first.

  • Stop wasting money on the things where you won’t notice the difference.

Another thing to look at is how much time you spend using or doing something.

  • Nobody ever saved enough money to justify sleeping in an uncomfortable or unhealthy bed.
  • Someone who drives hundreds of miles a week for work will care much more about what car they drive than someone who works from home and just uses a car to shop for groceries.

Looking at things this way can also help you to identify things that you don’t really need at all. Don’t spend money on things that don’t add to your quality of life.

  • Don’t spend money on things that don’t add to your quality of life.

Things that aren’t used very often can be avoided, or in some cases rented when they are required.

  • Less really is more when it comes to frugality.

The same thing goes for money as for time. It’s not much use being frugal in areas where you don’t spend much money if you remain

It’s not much use being frugal in areas where you don’t spend much money if you remain extravagant in areas where you spend much more.

  • You can’t pay for Michelin-starred dinners by saving on dishwasher tablets.

To make sure you’re getting you priorities right, and getting the most out of being frugal, it needs to be part of your financial plan.

You need a budget, you need to track your spending, and you need a financial road map for life. You need an emergency fund to take advantage of opportunities that arise.

  • You need to know where you are now, where you are heading, and how you’re going to get there.
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Inputs and outputs

To be frugal normally takes time.

  • Going the frugal route may make the task itself longer (or maybe just feel like it!)
  • Or it may take time to research the frugal option.
  • You might need to spend time learning a new skill.

So you have to know how you value your time, in order to work out which things are worth doing.

And it works both ways – spending money on something that will save you time every day can still be frugal.

Think long-term when you look at the inputs and outputs. Try to analyse things over the whole lifetime of the item or activity you’re considering.

  • Try to analyse things over the whole lifetime of the item or activity you’re considering.
Things that aren’t frugal

Just spending less than someone else isn’t frugal.

  • People on low incomes have little money to spend, but if they spend it badly (fags, booze, junk food and the bookies) they aren’t being frugal, no matter how little they get through in a week.

In the same way, sometimes spending a bit more can work out frugal (see below for examples).

  • Cheap things can end up costing more in the long run.
  • A tool that you plan to use once and throw away – say a paintbrush – (not eco, I know, but possibly frugal) can be cheap as chips.
  • Something that you plan to use every day, or for years to come (pruning shears, or a laptop) will need to be of better quality.
Things that go beyond frugality

Let’s start with the obvious – you need to eat properly, and you need to live in a safe, warm, dry home. You need to stay healthy.

Some things are not worth skimping on – this goes beyond frugality.

Attempting to do things that you don’t have the skills for is also not frugal.

  • I like to do wood work and general home maintenance, but I’m not a plumber or electrician, and I wouldn’t try to fix a leak or a serious electrical problem.
  • I will also never cut my own hair.

Saving money when there is no need – or no real saving – also goes beyond frugality.

As an example, let’s take clothing. When I was a kid, clothes were expensive. People looked after them, they knew how to repair them, and they handed them down through the family.

But forty years later, clothes are cheap. Nobody mends socks anymore, they just buy some new ones. People own fifty T-shirts, not five.

So mending clothes or forcing the kids to wear hand-me-downs is not frugality. You won’t be saving enough money to make it worthwhile. The time you spend fixing up your clothes could be better used

You might still want to repair your clothes, or to buy second-hand – to conserve the earth’s resources, say – but that’s being eco-friendly, not frugal.

Being green has a lot in common with frugality as an attitude, but unless it saves significant money for the time involved, it’s not the same thing.

You can still follow the old habit of keeping your best clothes for special occasions (not just Sunday, these days). Wearing old clothes to do the gardening or repair your bike is common sense, and frugal.

Another good example is growing your own food. It just isn’t worth your while to grow your own potatoes, tomatoes or onions. Other people can do this far more efficiently that you. It wil cost you more than a trip to the supermarket.

If you want to be frugal and grow things, grow expensive things. Herbs are a good example.

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Frugal ways

Sometimes, it’s not what you do, it’s the way that you do it. Let’s say that you’ve decided to buy a new washing machine. It’s energy-efficient, but you don’t have enough cash to pay for it right now.

  • Should you put it on your credit card, or should you save until you have enough cash?

Well, that depends. How much cheaper to run is the new model? How long will it take you save?

  • Is the new machine on sale right now, or is its price likely to fall while you are saving up to pay cash?

All these things need to go into the mix for you to decide what to do, but usually saving up to pay cash is the right way to go.

  • Buying things on credit cards (unless you always pay off the balance at the end of the month), or – even worse – paying for things in instalments usually works out more expensive.
The sweet spot – Frugal UK 2016

I think it’s clear by now that under our definition of frugal we’re looking for efficiency:

  • things that have a lot of return for the time involved
  • or a low return but require little effort on your part
  • even things where you spend more money but get a lot of time back in return.

Technology is a great help here, so long as you look at the lifetime costs.

  • New things tend to be more powerful but also smaller and more energy-efficient.
  • So sometimes hanging on to an old and trusted technology can be a mistake.

A great example is LED lightbulbs.

  • They cost a bit more, so they don’t seem so frugal, but they last forever and use much less power than even compact fluorescents.

The second big area is self-sufficiency. Technology is so complicated these days that there are fewer and fewer things you can fix at home, but there are still useful skills that you can develop.

  • Technology is so complicated these days that there are fewer and fewer things you can fix at home, but there are still useful skills that you can develop.
  • The more you can learn to do for yourself, the less you have to pay for others to do.
  • You’ll also get a lot of satisfaction from doing things yourself.

Here’s a list of the different ways to be frugal here in the UK in 2016, some easier than others:

  1. cooking your own meals, and making the most of cheaper cuts and ingredients, seasonal items and leftovers, and cooking in bulk
  2. use a weekly menu, a shopping list, a store cupboard and a freezer to avoid buying what you don’t need
  3. DIY and home maintenance
  4. LED lightbulbs
  5. don’t buy expensive branded goods
  6. buying second-hand for most things
  7. re-use what you can
  8. buy things (not food) off-season when they are cheaper
  9. use the internet to research cheaper options before you spend
  10. look for special deals and coupons, and stock up
  11. keep clothes for Sunday best
  12. insulating your home
  13. composting (assuming you have a garden)
  14. growing herbs
  15. home brewing, baking, preserving and cheese-making
  16. making candles and cleansers
  17. take your own lunch and drinks into work
  18. build a gym at home, or learn bodyweight exercises
  19. bartering with your friends and neighbours
  20. learn to make home-made gifts, and be generous with your time instead
  21. look into free rather than paid activities, including nature and the seasons

We’ll look at some of these in more detail in future posts.

Can you think of any more things to add to the list?

  • Let me know in the comments.

Until next time.

Mike Rawson

Mike is the owner of 7 Circles, and a private investor living in London. He has been managing his own money for 35 years, with some success.

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2 Responses

  1. Avatar weenie says:

    As with number 13, assuming you have a garden, use water butts to collect rainwater to water flowers/lawn to keep your water bill down.

    I do about half of those things on your list, so not doing too badly in the frugal stakes!

  2. Mike Rawson Mike Rawson says:

    I do have a pair of water butts – I guess I’d never made the connection with saving money off a metered water bill.

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