Frugal living doesn’t mean cheap

Being frugal means different things to different people. Personally, it means being careful in the use of material resources and of course money. So it is also synonymous with being economical, prudent and thrifty. On the negative side, other people may see it as being stingy, cheap and miserly. Well, money or material things carry different weights for different people. Some prefer to keep money while others prefer to keep material things.

This article will look at the positive side of being frugal. My family chose to live frugally and it has benefited us in three main ways.

Save a “comfortable” amount of money

The first is it has enabled us to save a ‘comfortable’ amount of money. That money will be used to provide a good education for the children and to raise them until adulthood. In addition, a comfortable retirement is a definite goal. The accumulated money from living frugally now will be invested to let it grow and make it work for us.

According to Jamie McIntyre, the author of the book “What I Didn’t Learn At School But Wish I Had”, Financial Security is one of the things we should aim for. He gave the definition of Financial Security as ‘Current investments that is able to produce an income equal to your Financial Protection figure, (basic necessities)’. Financial Protection is the amount of money needed to cover the monthly expenses. This includes living expenses and bills like the mortgage, utilities, transportation, food and insurance cost.

For example, let’s say my monthly living expenses are $4000 per month. My Financial Protection goal is to have enough money to cover 6 months of basic overhead, i.e. 6 x $4000 = $24,000. For Financial Security, instead of 6 months I use 12 months to calculate, i.e. 12 x $4000 = $48,000. Therefore my available investments need to produce the annual income of $48,000 to create Financial Security for life. By the time I retire, my investment will be generating sufficient income to provide Financial Security. This of course assumes that my basic living expenses remain unchanged at retirement. So, being frugal and saving money now is bringing my family closer to achieving our Financial Security goal.

Good Habit of not Wasting Resources

The second benefit is we learn the habit of not wasting resources. We purchase and acquire material things based on needs and necessity. We do not buy just for the sake of spending.

For example, clothing are used and maintained properly and continued to be used as long as they are clean and presentable. Clothes are normally purchased once a year usually around festive season when big discounts are offered.

Food stuffs bought are consumed and none goes to waste. We are lucky that we live near a fresh market and therefore we can purchase fresh produce at least twice a week. When we use papers, we used both sides of the paper before throwing it away. These are only three basic examples and there are many more one can do to preserve resources around us.

Set a Good Example for your Children

The third benefit is we set a good example for the children who are the next generation. They learn that money does not come freely without any efforts to plan and accumulate. My son commented to me once that it was so easy to get money, ‘Just go to the bank and ask for it’, he said. Well, it took awhile to explain to him again the idea of saving money in the bank. My eldest son developed his own way of saving money. He reserved one piggy bank for money meant for depositing into the bank and another piggy bank meant for his school pocket money. Once the school pocket money ran out, he would ask us to top it up. The other piggy bank was untouchable as he put it,’ It is savings for the bank and cannot be used’.

Creative Commons License photo credit: A Touch of Glass

When the children want something like a toy, we limit the quantity to only two each and we teach them the idea of delayed gratification. They would normally have to wait for special occasions to get the things like during birthdays or Christmas time. As you can see, frugal living need not be bad or hard. It is just a more responsible and moderate way of living life and anybody can do it.

This article is shared by Jacquelyn Wong, a regular contributor for KCLau’s Money Tips.


  • Jean

    Reply Reply August 11, 2008

    Good article!

  • Esky

    Reply Reply August 12, 2008

    I live thriftily, because I don't have a hi income, and also to save as much as possible. I also minimise wastage on everything, especially on food. Those around me think I'm stingy, it's okay, I'm used to it, laugh at me lah, it's okay, as long as I get the last laugh when I get to be the first among them to live comfortably with my passive income instead of being forced to work for an income and can't afford to retire even after reaching retirement age ^_^

  • Ana Shakirah

    Reply Reply August 16, 2008

    Excellent Personal Financial Tips…I am Malay and finance professional worker and i hope you will give some tips how to do the budget and at the same time i can saving money during the fasting month..

  • Andy

    Reply Reply August 20, 2008

    Some great points and advice here, espically the part of acting like a good financial role model for children.

  • Jean Louis R

    Reply Reply September 29, 2008

    Great post and great tips! I think that frugal living makes you appreciate what you have. Thanks!

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