The quickest way to double your money is to fold it in half and put it in your back pocket. -Will Rogers
The Millionaire Next Door, written by Stanley and Danko, is full of surprises. The authors’ massive research project sought to determine the profile of the average American family that had a financial net worth of at least a million dollars. They discovered that typical millionaire family members:
- Do not wear designer watches
- Buy clothes at stores like Dillard’s and J.C. Penney
- Drive cars that are 3-5 years old; usually a domestic model
- Do not live in an upscale neighborhood
One of the key commonalities among this group is that they are frugal and live well below their means.
It pays to be frugal.
Both my wife and I grew up poor, so being frugal was embedded in our lifestyle from childhood. I’m so frugal that I’ve been banned from eating at all-you-can-eat restaurants in 35 states.
- We still use coupons, shop for good deals, wear clothes a long time, and drive our cars to exhaustion.
- Every year of our marriage (36 and counting) we have lived by an annual budget. It’s the best way to manage money (which does need to be managed).
- Every December we do an audit of our expenses, looking for areas that we can tweak and save money.
- As our income has risen, we’ve kept our living expenses the same and we save the difference.
We’ve discovered that small savings add up to significant amounts of money. Our frugality has paid off. We’re one of the families that Stanley and Danko talk about in their book.
On a commercial level, the benefit of being frugal can be profound. An article in the New York Times magazine noted: “While working the line at Harley-Davidson’s factory in York, Pa., Mark Dettinger noticed a small problem. The plastic piece that held electrical parts to the front of a motorcycle, a piece about the size of a hardcover book, wasn’t fitting correctly. Every time a new bike came down the line, it took a few extra shoves to push it into place. In fact, it took an extra 1.2 seconds.
Dettinger, who had spent some 20 years at the York plant, knew that every second counted. With 400 motorcycles built each shift, on two shifts a day, an extra 1.2 seconds per bike added up to 2,200 lost bikes annually. Millions could be lost in revenue. Maybe it wasn’t such a small problem. [New York Times Magazine, Feb. 2, 2014, pages 16-17, by Adam Davidson]
Benjamin Franklin said, “The way to wealth depends on just two words, industry and frugality.” Stanley and Danko would agree, and so would I.
[reminder]Are there any downsides to being frugal?[/reminder]
Summary
What? – Frugality is a good thing and longterm, it makes a huge difference.
So what? – Be careful with your finances. A few good practices (abide by a budget, always get multiple bids, audit expenses, etc.) can make a big difference. It’s never too late to start being financially prudent.
Now what? – Gain control of your finances and be thrifty.
Leaders – When was the last time you intentionally and thoroughly looked at your organization’s expenses with the goal of saving money? Is frugality part of your organization’s culture?
Thanks for adding that comment link in your email, Don! Makes commenting much easier. 🙂
Done with your help. Thanks.
Loved your thoughts on being frugal.
Thanks, John. Over the years, it truly does pay to be careful with our money.
Yes, I think sometimes that my frugality and been translated into being stingy, selfish, or being a cheapskate rather than trying to be careful. Although I love to know where our money is going and stick with a budget, I also feel like sometimes I am fearful of spending money and get carried away with saving. I find that is where prayer comes into play and abiding in Jesus. I know there are times that He encourages me to share with others and not hold too tightly to my savings account. I am thankful that He cares for every detail of our lives and that I can trust Him with my money.
Cheri, thanks for sharing your thoughts. I think it’s much better to struggle with being too frugal than to be profligate with our money. I affirm your care and concern about your finances.
I liked your article, “Be frugal – get rich slowly”. A couple of things that I do are:
1. I am kind of old fashioned, I use a check book. In the front of the check book there is a page called, “Deposit Record”, that page becomes my hideaway. Each pay period I put money there (usually $100.00) and as it grows I have money for emergencies that I can pay cash for instead of buying on credit. I have had numerous things come up (as many of us do) and the cash was there and also it allows me to shop around for the best deal. It would probably require some self-discipline for some but it is a good way to pay yourself and it provides huge benefits.
Another thing I do is save my daily change in a jar and twice a year (June and during the holidays) I take it to my bank and get it counted (free) and get it exchanged into green cash. This is “give away money” that is above my regular giving. I even carry two wallets to keep it separated. There are many opportunities to help others and this is a way a person can “personalize” their giving. Don these are just a couple of things that have worked for me over the years.
Great article!
In Him,
don
There is a difference between being mean and being frugal. However, not everyone knows the difference. Elderly people who die of hyperthermia because they wouldn’t turn up the heating are not frugal, they are suicidal.
Thanks, for your thoughts. True, frugality, taken to an extreme, can be unwise. But, I think the large majority of people suffer from a lack of frugality rather than from being extreme.
Don, thanks for sharing your thoughts. We can all benefit from personalized techniques that underscore frugality. Personally, I try to minimize my use of credit cards and pay cash as often as possible. Didn’t everyone used to do that before the advent of credit cards?
Over the years my wife and I have joked that she is frugal and I’m just cheap. But God has blessed us in many ways including financially. Now comes the challenge of being generous. Being frugal is such a habit that we have to remind ourselves to be generous with others and with causes that glorify God. After all, they aren’t our resources but just ones that God lets us manage for a while.
Bob, I’m glad to hear that your frugality (and cheapness; I love that) has paid off. It’s amazing what can happen if we abide by a few, sound financial principles. I agree with you about the need for us to be generous…to whom much is given…