Why go out of your way to save $20 when you can make it back in a few minutes of work? What’s the point in shopping for a deal when you have extra income? The difference between being frugal and being cheap is caring about value as opposed to caring about cost.
Retirement is Coming
Whether it’s 5 years or 25 years away, your dream of retirement is coming. If you’re living the life of luxury now instead of pushing money into your retirement plan, you may end up having to pinch pennies during retirement. Do what you can to cut your costs now, while still living comfortably, so you can live with less financial worry during retirement. Talk with your CFP® about about your plans to help get you on the right path for a comfortable retirement.
The Thrill of the Chase
There’s often an irreplaceable joy of finding a quality product at a lower price. Sure it may take a bit of extra time, but it feels good to know you saved a few bucks. Of course you need to factor in the value of your time, but if you are able to save on products you regularly purchase with a little creativity and time, why not? Many stores and websites will offer a discount by subscribing to regular orders. For example, you know you go through so much dish soap every month, subscribe to have it automatically sent to you and save a percentage on the regular price. Another way to save is to see if the stores you regularly shop at will give you a discount for using their store card. Many of these stores will let you use a debit card as your store card and still save a percentage on each purchase.
Setting a Good Example
Often times, individuals develop their money habits at a young age. In order to teach your children the value of a dollar, set a good example. Demonstrate the difference between want and need by holding off on making purchases. Show children how important it is to save by creating a family coin jar. Explain why you are saving money and why you make the money decisions you do. Being transparent about money and money decisions with your children can help them understand how to properly manage their own money. Most importantly, remember your children are always watching, even when they’re older, to see how you choose to spend.
The Potential Rainy Day
It’s not fun to think about, but things could take a turn for the worse at any time. You could lose your job for a variety of reasons outside of your control. You or someone in the family could get sick and build up hefty medical bills. By spending below your means, you won’t have to stress (as much) if the worst happens. Set a spending limit and split the excess income between retirement and savings so you’ll be protected. Talk to your CFP® about how much you should plan to have saved in the event of a rainy day.
It’s Good for Your Heart
Is a sports car really going to make you happier than the reliable sedan you have now? You already have extra bedrooms in your home, do you truly need more? It can be easy to get carried away with spending when you can afford it but does the excitement of buying all the stuff last? Living a frugal lifestyle and choosing to spend less isn’t necessarily glamorous, but it can feel good and really help with the finances later on. A good solution may be a balance that works for you and your family.
There can be many reasons to be frugal even as you see your income increase. If you’re interested in seeing how frugality can help increase your retirement savings, schedule a complimentary consultation today.