I’m not frugal. Far from it. I’m a spender who loves saving money. I also get a kick out of watching my saving and investment accounts grow.
Talk about a contradiction.
Spenders come up with many excuses. I know, I’m one of them.
I really need that new dress (because I don’t have 10 others in the wardrobe already!)
Spending maintains the economy. Thanks to me you have a job.
You only live once. Why shouldn’t I enjoy my hard-earned cash?
Retirement is too far away. I can save later.
Can you think of any others?
Better still, do you use excuses to spend, spend, spend?
Or are you frugal and focus on minimalism?
The thing with theses excuses is that most have an element of truth.
Sometimes you really do need that dress to make you feel sexy when you go on that date with your hubby.
Spending is good for the economy and it does keep people in jobs. What would happen if we all stopped spending? The shops would close. People would lose their jobs.
And yes, regardless if you believe in reincarnation (not a topic for this joint), you only live this life once. You should enjoy your hard-earned cash in any way you desire. It’s yours. Who gives what anyone else thinks.
Retirement for many of us is far away. You can wait to save later and if that’s what works for you then that is perfectly fine.
What is important to remember is that each action has a reaction. Our choices have consequences.
Are you happy to live with them?
If you say yes to the dress too many times then you might find yourself checking your account and realising that you could have started a share portfolio with the amount of dresses in your wardrobe.
You wanted to keep the economy going but you forgot to look after yourself. Shit hit the fan, you got fired, and there’s $1 in your savings account.
Live only once? Sure do.
But your life expectancy is likely to be 80+ but do you want to work that long? Can you work that long? What if illness strikes? That’s a long time to be living pay to pay.
You need a back up plan matey!
You reach retirement and realise there’s not enough in your superannuation (AUS) or 401k (US) and you realise that the measly pension isn’t going to maintain your lifestyle. Oh well, it looks like it’s canned beans on toast for the last twenty years of your life.
So you see, there are pros and cons to our choices. It comes down to gratification. Do we want to be gratified instantly or are we happy to delay it for a few years or decades?
Personally, I’m not good at delaying gratification. If I want something, I want it now.
But what is different these days compared to my twenties is that I’m focusing on things that I really want.
I’m choosing to be frugal in some areas whilst spending in others. There are just certain things that I will not deprive myself of and others that I just don’t need or want.
* I refuse to give up buying my coffee at the weekend. But I don’t need to during the week.
* I’ll buy less clothes, but when I spend I choose quality over quantity. This generally means I pay a premium but I always shop for sales. For example, the majority of my shoes are Nine West, the average pair costs $150, I’ve never spent more than $80 on them. More often than not they cost me between $60-$70. I simply wait till they go on sale. If they don’t have my size at that point it means that I wasn’t meant to have them.
* Once a year, my family and I must have a holiday together. This is a non-negotiable. My husband tried. I told him if he doesn’t want to go, he’s more than welcome to stay home. He chose wisely to go with us. (Before you say that’s just nasty, if I left it up to him we’d probably never go anywhere!). We work hard, I love to travel, and seeing places around the world is a must.
* I want a nice house. So I’m spending big to build in an area that is close to the right schools, ten minutes from the beach, fifteen minutes from the mountains, and close to family and friends. I want the lifestyle. I like nice things. Yes, it’s going to cost me, but it’s also going to make me money.
So where does saving come in to play? It sounds like all I’m doing is spending.
I’m still saving and investing and paying down the mortgage.
Because I’m never going to be frugal – I don’t want to be. I’m going to spend money for as long as I have it. But I’m not going to spend all of it.
I simply created a $0 balance budget and automated my bills and savings.
There’s X amount going into savings.
Some extra dollars into the travel account.
Another % into the mortgage.
A few dollars each month to my son’s bank account.
Another portion towards regular bills and expenses.
What remains I get to play with on anything I want.
I think that sounds like a pretty decent deal.
- Increase my cash savings to $10,000
- Increase my share portfolio to $12,000
- Decrease my mortgage by 10% (it’s a huge fucking mortgage – more on this in a future post)
- Increase my income by 50%
Why not put everything into the mortgage?
The share portfolio will have an average return of about 6-8%. My mortgage interest rate is about 4-4.5%. As soon as I finish building I’ll be switching lenders and fixing a portion of my loan so that it’s sitting at no more than 4%.
The cash savings will get placed in the offset account along with the extra repayments we’ll make which means they will reduce the interest I pay on the loan but be accessible should I need them, without any extra charges.
Well doesn’t that sound selfish. What about helping others?
Yes, we should think of others. We should help others. But only with how much we are comfortable with. Not what your third cousin on your father’s side expects of you.
I’ve given charities and continue to do so. A few dollars each year gets donated from my salary. I give donations to volunteers on the streets. I’ve even been known to buy a sandwich for the homeless. A few years ago, I sponsored two children through World Vision until they could earn for themselves.
In the future I’d like to find a charity I could donate my time to rather than money. It’s easy to give money, time is a much harder commodity to part with. I’m still searching for the type of volunteering I’d like to do and trying to figure out how to fit something like that in to my already insane schedule. It’ll happen.
I also like the idea of teaching a man to finish to feed him for a lifetime rather than giving a man a fish to feed himfor a day. I’d love to find a way to help others that would give them the tools they need to create a life they dream of. How? How? How? Any ideas?
What about retirement? Shouldn’t you be maxing out your retirement account like everyone recommends?
But you need to do what works for you, your goals and your family.
My employer currently contributes 9.5% of my income to superannuation each month (this will increase to 12% by 2025). That’s enough for now. Should my income increase to a level where extra contributions would give me decent tax savings then I will reconsider. But I don’t like the idea of locking away my spare cash for the next thirty years.
I’m more interested in building my cash savings, share investments, paying down the mortgage and creating multiple income streams that will maintain my lifestyle of choice for however long they need to.
What if something serious happens? I have sufficient insurance in place to cover it.
You can’t have your cake and eat it too, you know?
Actually, you can have it all. You just can’t have it all at once.
So I am going to bake that cake and I’m going to eat it and enjoy every mouthful. I don’t work my ass off to clip coupons or forego holidays. I don’t work my ass off to always say no to the little indulgences that make me happy. I don’t work my ass off to never enjoy the fruits of my labor.
But I’m willing to work smarter to earn more money so that all of my buckets – saving, investing, spending, retirement, giving etc – get filled at the ratio that works for me and my family.
Frugality is not for me. Creating the life of my dreams is.
Are you frugal or do you prefer to spend, spend, spend? What are you doing to create the life of your dreams?