A huge number of Americans live from one paycheck to the next, 80% to be precise. This means that saving isn’t in their vocabulary because according to many of them, saving is “boring.”
But isn’t it your desire to live the life you’ve always dreamt of? Pay off that student loan, clear other loans you might have, and even build your dream home. However, many people who want this don’t take the steps needed, and that is where frugal living comes in.
In this article, you’ll learn the reasons why you should incorporate frugal living and why it is an investment.
Why Go for Frugal Living?
Various reasons can lead one to frugal living:
- External factors. This can be due to a job loss, which means that you can no longer sustain your lifestyle and that you have to make financial cuts in certain areas of your life.
- Individual choices. Frugal living can also come as one’s own initiative to reduce spending on unnecessary stuff in a bid to save for a certain goal.
- Frugal Living as a strategy. There are many ways people save money for a specific target such as paying off student loans. One of these ways is frugal living.
Apart from patience, this is the basic principle of frugal living. However, it doesn’t mean that you shouldn’t have fun while at it. For anyone seeking financial freedom, frugality means cutting down expenses on less important stuff.
It means smarter finance management, smarter spending habits and most of all, digging deeper into your creativity bank to come up with creative financial solutions. What follows are some of the ways frugality can open doors to multiple investments.
Frugality as an Eye-Opener
Frugality opens your eyes to new opportunities that you wouldn’t have seen if you hadn’t gone frugal. How? You might ask. You see, when you cut back on unnecessary expenses, you have some leftover money you can invest.
As a result, the most obvious thought would be to look for a suitable investment. This is how frugal living can open new frontiers. Apart from working your 9-5 job, you can spend a portion of your remaining hours doing one of the following side jobs:
- Starting a blog
- Freelancing to sell your services to prospective clients
- Start an online business
- Drive a taxi
Such revenue streams can be quite satisfying in the long run in various ways. One, you now have more income from your side job,; that can help you invest further or clear some loans taken from nation21loans.
Spending Will Kill Your Morale and Dreams
Your earnings are not insurance against hard times. Remember that your income is subject to a tax of at least 30%, which includes federal and state taxes. Even a pay rise won’t cushion you when a financial storm hits your pockets.
This is why. Let’s say that you earn $60,000 per annum with a 10% raise. That amounts to an increase of $6,000 every year. But that’s only before taxes. You’ll only remain with $4,200 after taxes.
However, what if you decided to cut back on your transport costs by cycling to work or walking to that nearby store you always drive to. You could end up saving the $6,000 and now truly earn $6,000 more every year.
Understand that a raise isn’t bad, but it’s crazy trying to achieve financial freedom. You work all week, earning the same taxable raise for next year. Instead, you can work out ways of saving the money.
Seeking Opportunities by Being Frugal
Limiting your mindset is one of the costliest mistakes you can ever commit in your life. You don’t get a chance to expand your horizons because you are tied down to your full-time job. Don’t get it confused, though, because a salary is one way to unlocking financial freedom.
However, financial experts urge you to break your boundaries and build more revenue streams. Don’t just sit behind the desk from morning to evening. Many experts acquired their wealth by working multiple jobs, which is why you’ll never get to their level if you simply stick to your day job.
You’d rather keep your 9-5 job because you cannot think of how you’d survive without your regular income. In fact, if you have had no experience in being frugal, it means that you have no savings to cushion you, even from a light financial crisis.
By being frugal, you get to spot opportunities because you are ready financially. With that said, you need to understand that you’ll need to sacrifice in the short-term for long-term rewards.
If you are a 9-5 employee, your main focus should be on:
- Frugality as a starter
- Savings being better than earnings
- Opportunity coming to those who practice frugal living.
Remember, seeking a pay raise is something you should advocate for in order to increase your revenue. Nevertheless, the greatest impact lies in saving what you already earn.
Financial freedom is all about making smart moves in the world of finances. One smart move is spending less and saving more and investing the same.
With that said, it is crucial to understand that no one will get rich by saving alone. Rather, a frugal lifestyle that will enable you to invest your savings in something worthwhile.