Frugality means the nature of being economical at spending money. It is a quality of being very cautious while spending money on food or purchasing anything. Generally, the habit of spending is learnt from childhood from parents or relatives. Spending frugally also is learnt from parents or friends or sometimes the situations of life. Spending wisely and economically is an art where the expenditure will not increase highly and become a burden for resource management. Frugality is a way to use money economically and avoid wastage of resources and avoid lavish spending.
If you are thinking of making money by tightening your financial expenses then you will not gain financial independence. You will always keep compromising your life in search of achieving something in life.
Frugality and Financial independence
It has been observed that after graduation, young people get into jobs, they buy a home, car and get into a lot of debt. They will realise the real problems when loan EMIs, debt payments will take away their major portion of salary. With the remaining amount of money they try to manage the expenses for the whole month with frugality.
They cut down the expenses and sometimes compromise on the quality of purchases so that they can spend less money for their needs. Spending thriftly will restrict financial independence. Living with controlled expenses and sacrificing wants and postponing desires for the future will not give a satisfactory life. If you have a goal of reducing your loan burden then you can spend less by cutting down on expenses and paying your loans.
Frugality will limit your ability to enjoy financial freedom. It curtails your ability to spend beyond your budgets. However there is a benefit of frugality spending, you can have extra income on hand with the savings. By reducing your unnecessary expenses you can save little money. This will not work out in the long run as expenses will not reduce. The price inflation will increase and you cannot control expenses for a longer period of time.
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Frugality is not key to Financial independence
It is Hard to live on tight budgets
Consistently living life on tight budgets is not easy. Reducing your expenses on food, movies and outings for a short period of time is good and manageable. If you are shutting down your life completely and consistently planning to live life on a tight budget is stressful. Money gives comforts and pleasures. Thinking of saving money if you cut down cable expenses without any alternative arrangements then you will feel bored and stressed. You should not deny happiness in life with the intention of saving money.
Spending less is not enough
Cutting down unnecessary expenses is a very good money management skill. You should not cut down expenses so much that your lifestyle and living habits are difficult to manage. Spending less will not help you to achieve financial independence. There is a limit on every expenditure that you can plan to cut down. There are some expenses which cannot be reduced. These fixed expenses are rent, loan EMI payment, utility bills, grocery payment and other living expenses. You cannot cut down fixed expenses and spending less is not always enough.
Compromising on everything
By cutting down every possible expense you will start compromising your life for every little thing. You will not achieve your goal of financial independence with frugality. It is difficult to live by compromising on everything. Spending less with limited money will not help you in achieving your financial goals. If you are spending money by searching for alternatives at a lower price then you will compromise on quality.
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Frugality and Passive income
Frugality will not make you financially independent. It will make you miser and you will spend less. It is not the key to financial independence, you should have an alternative earning arrangement along with your main source of income. Passive income is income from other sources such as rental income, income from investments, income from alternative jobs and other income.
If you have passive income then you can have good money rotation on hand. If you start earning more money then it will give you financial independence. With extra money on hand and with frugality spending you can earn and save a good amount of money.
You can get ahead of financial burden payoff debts, save more money and build good wealth by making investments. When you are in a position to earn, save, invest and generate passive income then you have financial independence. This is the key towards achieving financial freedom, increasing wealth and becoming financially independent.
Frugality can be used as a tool which can help you cut down your expenses and achieve your goals faster. A wise investment on one side, good savings on the other and frugality spending will definitely help you to achieve financial independence. You can make more through the right investment and build wealth for the future.
Frugality can help you in cutting down your expenses. If you effectively manage your expenses and use frugality as a tool you can get financial independence. Invest your money wisely and spend with frugality. If you are doing frugality spending with limited income by segregating money for fixed expenses then it is difficult to manage. Having active income and passive income with frugality can be effective in managing your expenses and achieving financial independence.