For anyone who has taken an in interest in personal finance, you’ve likely considered how living a frugal life might lower your monthly expenses.
And it’s true. In theory, the idea of spending less leaves you with more money in savings at the end of the month.
But is frugality really worth it?
In many, if not most instances, being frugal requires a significant amount of time to really make a positive impact on your finances. Is the time spent practicing frugality really going to improve your budget?
Considering Opportunity Cost
One prime example of frugality vs. time is couponing. Most of the time, in order to save any notable amount of money through couponing, people spend hours scouring ads for the latest deals and coupons. Some even take it to the extreme and purchase coupons and spend hours a day clipping, organizing, and planning out their shopping trip.
And often times, these trips result in scoring hundreds of dollars of groceries for nearly free. Was it worth it? Maybe.
To consider if frugality is really worth the time involved, you can estimate what you earn per hour of working to obtain frugality by doing simple math. To demonstrate, say you spent an hour clipping coupons and saved $5 at the store. That’s an average hourly rate of $5 per hour, which is significantly below minimum wage.
Frugality may be worth it if you have no opportunity cost. If you have no other means of earning money and have unlimited time, then frugality could be a great option.
But as we know, there are a plethora of ways you can side hustle and earn extra money. Is saving $5 for an hour of work clipping coupons worth it when you could be spending that time earning an extra $10, $20, or even $50 an hour by side hustling or finding a higher paying job?
When Frugality is Worth It
All of this isn’t to say that frugality can be worth it, even for people who are extremely busy. There are some instances of frugality that can pay off significantly over a course of time. For example, calling to ask for a discount on your cell phone or internet bill could be well worth it. Sure, it it can require a long phone conversation with your provider, but the monthly savings could be worth it. For example, say you were on the phone with your cellular provider for an hour but could talk them into giving you a $10 a month discount. That adds up to a $120 a year savings, all for one hour of work.
You can also exercise frugality by choosing to cook at home instead of going out to eat. Each takes about the same amount of time. Instead of spending $30 by going out to eat for two people, you can cook at home for $5 or so total. That decision earns you $25 per hour or so.
There are also a number of ways you can practice frugality that take very little time. You can turn off the lights when you leave a room. You can eat lunch at work instead of driving home and save on gas. You can sign up for grocery store membership cards in order to save money. These little decisions might not save you a lot of money in the long-run, but they also don’t require much time or thought. The best thing we can do to practice frugality is to tune into our everyday habits.
Constantly auditing your expenses takes very little time, but it can keep your lifestyle at as small of a cost as possible. This is true frugality.
Are there alternatives to frugality?
One of the biggest issues with frugality is that it is limited. There is only so much money you can save by trying to be frugal. Some extreme couponers might argue this concept, but in most cases, extreme couponers aren’t purchasing simply what they need for nearly free. They have to purchase mass quantities of a product and stock up in order for couponing to be effective. Many times, they have to buy products they didn’t even want or need in order to utilize the coupon.
On the other hand, earning extra money is limitless. Instead of focusing on saving every penny you can, you can spend your time trying to earn as much extra money as you can. The best part about earning more money versus saving money through frugality is that earning money empowers you and your finances instead of restricting it.
As someone who has tried both frugality and earning more, I can personally attest to this. I certainly don’t think couponing is bad. If I happen to have a coupon for a product I use, I will clip it and use it. But I also know that I can earn significantly more money through side hustles than I could save through extreme frugality. And it’s much more fun to focus on earning more instead of penny-pinching.
Anyone can make extra money through side hustles. You can start a blog or start your own freelance writing, lawn care, babysitting, photography, or other type of business. The possibilities and income potential are limitless.
The Point of Frugality
This post isn’t to dismiss frugality in its entirety. In fact, adopting a frugal lifestyle is one of the best ways to take control of your finances and live a secure life for the long-term. But frugality is only one factor in the equation.
Yes, we can control our spending, but we can also control our income. And growing income can offer more stability and financial advancement than extreme frugality can. Plus, working a side hustle offers many additional benefits, such as increased skill, developing a community of people you work alongside, and more.
Consider how you are spending your time. Frugality may be of some benefit to you, but it may also be time to evaluate how your time is used most effectively in order to achieve wealth.
Why Frugality Isn’t Enough
7 Ways to Save Money Without Realizing It
Am I Being Frugal or Cheap?
How to be Frugal Without Being Boring
7 Ways to Save More Money Next Year
What are your thoughts on frugality? Is it worth the time required? What other tactics do you use to build wealth (ie side hustles, investing, etc)?
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I don’t believe in sacrificing opportunities for frugality. For example, why spend hours couponing when I can instead work the few hours and double my money? I can still find great deals on food (our budget is $300 for 3), but I’m not sacrificing my time to save a few bucks. However, I agree that there are tons of ways to save cash here and there, even when you’re busy!
I think a lot of people simply don’t have that “go to” side hustle that they can substitute for couponing. Couponing is very much on your own time and schedule, which only some side hustles align to (yes, there are still many options). I also think it can be a catch-22 where at first you don’t save much per hour but once you are better at it you can justify the per hour savings.
Completely agreed on the aspect on frugality only being one part of the equation Rachel. Improving your finances is more than just one part so you can only go so far with frugality. I believe the key to frugality is finding that balance and working it towards what you value so it really doesn’t take much time or effort. That’s the basic philosophy my wife and I follow, finding what gives us a solid measurable return (ie. cutting cable as opposed to clipping coupons) as it gives us a return that requires little time/effort instead of wasting a lot of time for little return.
Completely agreed on the aspect on frugality only being one part of the equation Rachel. Improving your finances is more than just one part so you can only go so far with frugality. I believe the key to frugality is finding that balance and working it towards what you value so it really doesn’t take much time or effort. That’s the basic philosophy my wife and I follow, finding what gives us a solid measurable return (ie. cutting cable as opposed to clipping coupons) as it gives us a return that requires little time/effort instead of wasting a lot of time for little return.
Have a frugal life can be a good choice to understand difference between needs and wants but became a true extreme cheapskaters could be not so good deal….great post thanks for sharing!
One thing with frugality – and this goes for side hustles as well – is that there’s normally a larger time commitment when starting a frugal habit than when the frugal habit is more developed. This often has to do with the learning curves involved. For instance, if you do like couponing, you might not initially know where the best coupons are. So you spend an hour looking for a 50 cent coupon, which is a horrible rate. But later, you know when and where that 50 cent coupon will be – maybe the newspaper isn’t the best place, but eCoupons are – and now it only takes a minute to find that 50 cent coupon. What was once was $0.50 / hour is now $30 / hour ($0.50 x 60 minutes).
I actually said something similar in another comment! Definitely a larger time commitment at first for many money-saving activities. A lot in common with side hustles that make money.
Frugality is worth it when you do things like negotiate your bills (cell phone, auto insurance, internet) and cook at home vs. eating out, like you mentioned.
Clipping coupons isn’t really my thing and I always tell people to utilize FinTech services to help them save more. Things like RetailMeNot, Honey App, Ebates, and Ibotta can get you cash back or save you money without having to go through all the work that couponing would require.
Frugality to me means cutting out costs and expenses that aren’t important to you and making better spending choices. However when someone starts spending too much time trying to save a little money or doing things that really won’t save much…I think they start moving from being frugal to being cheap. At least that’s my definition. Frugality is great foundation but ultimately it can be limiting. The next step is to increase your income by learning a new skill, investing or starting a side hustle or business.
Those are great points, Andrew. I think mindful frugality is worth the effort. For instance, if I see a coupon for a product I regularly buy, of course I will use it. I try to unplug appliances when we aren’t using them and I try to go as long as I can without turning on heat or air conditioning. Because those things are all easy for me to do. But for me personally, it is more worthwhile to invest my time making more money instead of practicing extreme frugality. Thanks for your comment!