I recently attended a conference for work and in a session on personal finance, the speaker espoused that one cannot get rich by cutting out small luxuries because “necessities” are so expensive. This speaker went on to say that you’ll never “save your way to financial stability” and that the best thing to do is focus on making more money. Needless to say, I disagree with this stance for a number of reasons:

1) In fact you CAN save a great deal by living frugally and carefully monitoring your expenditures. We save over 65% of our take-home pay every year (that’s after we max out our 401ks).

2) Necessities don’t need to cost an arm and a leg. This speaker talked about cars, houses, and groceries as if they were immutable costs. I wholeheartedly disagree. A large, expensive, fuel-guzzling car is not a necessity. An enormous, energy-inefficient house is not a necessity. And it’s easy to frugalize your grocery bill and still enjoy great foods.

3) Now if you love working and want to work every day until you’re 65+, that is a totally fine path. But, if you’re interested in gaining financial independence and the freedom to pursue your passions, don’t loose heart–it is possible and you don’t need to make a million bucks a year.

4) I should add that the Frugalwoods Family goal is not to be rich,but to save enough money that our lives aren’t ruled by needing a paycheck.

At age 30, Mr. Frugalwoods and I are well on our well to financial independence and neither of us:

Frugal Hound Says: Bee Smart About Your Finances
Frugal Hound Says: Bee Smart About Your Finances!
  • Inherited money
  • Makes a ton of money annually (we have normal jobs with standard salaries)
  • Won the lottery
  • Knows the one weird old trick to retire early

Here’s what we have done:

  • Not accumulated debt.
    • This started early for us and neither of us incurred any higher education debt (for undergrad or grad school).
  • Lived below our means.
    • When we started working right after college, we had about $800 in the bank. While we weren’t able to save all that much in our early years, we saved as much as we possibly could and then, as we got raises at work, we didn’t fall victim to lifestyle inflation.
    • Though we’ve gradually ramped up our spending in some areas (primarily the purchase of our home), for the most part we live the same lifestyle we lived right after college. We cook at home, we entertain ourselves on the cheap, we drive an old car, we shop used, and we have a great time doing it!
    • If, on the other hand, a person increases their spending at the same rate as their salary increases, their savings rate will similarly not increase.
  • Invested our money.
    • Frugal Husband started investing our money immediately (yes, our sad little $800 was marched off to the stock market right away).
    • Money ain’t gonna make more money by sitting on its lonesome in your bank account. You need to let it run free with all the other monies in the market. Yes, this does entail putting your faith in the mercurial markets, but, history demonstrates that the stock market yields, on average, about an 8%-10% return annually (your bank account/mattress on the other hand yields 0%).
    • What liquid cash you do keep on hand should be in an interest-earning money market account (we use Fidelity). No checking accounts, please!
  • Contributed to our 401ks.
    • From our very first jobs, Frugal Husband and I contributed to our 401ks each month. If your company offers a matching retirement plan, contribute now! This is literally free money that your employer will give you. If you don’t have access to an employer account, get an IRA.
  • Focused on enjoying life without materialism.
    • We don’t live a deprived, starved, or sad life. Rather, we feel free because we’re not bound by consumerism. We don’t feel compelled to rush out and buy the latest clothes, cars, or gadgets. We don’t need to eat at restaurants every week or entertain ourselves with expensive pastimes. We have what we need and are content to live a simple but meaningful life.
    • It’s all about what really matters to you: decide what it’s worth to achieve that.
  • Only spend money when it brings value to your life.
    • Don’t fritter money away on things you don’t need or won’t care about a year from now. Expend your resources when it matters.
    • Here are some things we’ve decided to spend money on over the years: buying our house, renovating our house, foreign travel, getting a dog (yes, pets are an expense), dinners at nice restaurants (just not every month, ok?).

While our culture is one of accumulation and consumerism, we’re content to buck the trend and live a simpler, happier, more purpose-filled life.

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  1. Love your post. Saw your website from a Mr. 1500 tweet and I thought I would check it out. All of the points you make are spot on. Its funny how less is more. It certainly has made me a lot happier to live with my means and invest for the future. Good luck to you with the blog and saving!

    1. Thank you! I totally agree–we’re much less stressed and more content not being wrapped up in the spend, spend, spend cycle. Awesome to hear we’re not the only ones!

  2. Yup, same comment as Davey Pockets. Followed Mr. 1500 to your blog. Love your philosophy on life and spending and I’m emulating it one step at a time. Need to bring the Mr. along-with which may take some coaxing.

    1. Thanks for reading and best of luck to you. I have to admit, it’s definitely easier when you’re on the same page as your partner/spouse. I think it is all about your long-term goals and what you hope your life together will be like. I’m sure that with persistence, you can get your Mr. on board :)! All my best to you!

  3. I’ve made big changes to our lives for the better this year and added huge chunks to our retirement fund. BUT it’s not enough for me. I’m getting super anxious to retire like last year. I’m 36 and hoping to retire in 3 years but that seems too far away… what do I do now?

    1. Good question! I think it depends on your specific financial position. Have you taken a hard look at your monthly expenditures? Are you saving as much as you possibly can? If you haven’t done a deep exploration of your spending lately, I’d recommend starting there as it’s often an eye-opener. You could also look for ways to boost your current income, by taking on a side job or seeking out alternate revenue streams (like renting out a room on Airbnb), though this will clearly depend on your specific situation. Also, are you planning on an income of $0 post-early retirement? Or, could you do part time work that you enjoy? You’re clearly on the right track and sometimes the best thing to do is keep earning and saving until you’re in the optimum position to retire early. Best of luck and thank you for reading!

  4. I just started reading your pieces and I agree with a lot of what you say, but I think it’s almost easier to be frugal/not waste money on going out when you have someone to come home to. Obviously, I’m still hung up the cultural norms of dating, but it seems like even if I cut back on the makeup and restricted myself to free dates, it’s a bit harder to maintain the frugal lifestyle without someone to pitch in with the cooking, etc. Any thoughts or tips?

    1. It’s definitely true that living cheap is easier when you have a partner. But it’s not a requirement.

      A good roommate is 80% of a partner 🙂 In the past I shared cooking, cleaning, and other duties with roommates and it was a great deal. And hanging out with roommates was a great way to frugally entertain. Plus their friends have a tendency to become your future partner…

      And while it can be a bummer to not yet have a partner to come home to, just think how lucky you are that you can choose a partner with frugality in mind! Way too many people only realize after they are married that being financially responsible is important to them. Money is the #1 reason for divorce, but you can reduce that risk by going into it with clear communication and shared financial goals. And you are already thinking about that!

  5. Can you explain using a money market fund in place of a checking account? Can you buy groceries or gas with it?

    1. Hey Aaron –

      A money market account functions similar to a checking account except you can earn a bit more interest. These days it’s not much since interest rates are so low… but you might as well earn what you can, right? 🙂

      Many brokerages will offer a money market accounts along with the actual brokerage account.

  6. “I recently attended a conference for work and in a session on personal finance, the speaker espoused that one cannot get rich by cutting out small luxuries because “necessities” are so expensive. This speaker went on to say that you’ll never “save your way to financial stability” and that the best thing to do is focus on making more money.”

    Do you remember the name of the speaker? You could now direct them to your log to show them that it is indeed possible to “save your way to financial stability”. 😀

  7. I recently read a book about FIRE in Korea. I just knew about what FIRE is. I am from Korea, by the way. I am really glad that I could read your postings. I hope I can be FIRE after I save up 60~80% of my income. I am willing to be frugal. I think this is my strength. I know it will be difficult at first, but after i achieve goals I’ve wanted to achieve, it will be super awesome!!!

    go go go

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