When my wife and I first committed to living more frugally, we did it for the reason that many people do: We were in financial trouble. The biggest initial benefit of frugality is that it reduces your expenses, making it easier to keep the bills paid, get rid of debts, and eventually start saving for our future. Over time, we achieved those things. We got out of our debt crisis, bought a home and paid it off, and began to save for retirement.
Of course, the challenge of frugality became apparent as well. Modern life offers lots of expensive temptations and treats, and there can be social pressure to enjoy them as well. There’s also a fear of being “cheap,” where our desire to be more frugal negatively impacts our friends and family.
At first, we persisted with frugal living solely because of our immediate financial goals, but over time we began to appreciate the many hidden benefits of frugal living. Here, I go into the hidden benefits of frugal living.
No. 1: Frugal living is good for the environment
One aspect of spending less money is that you’re accumulating less stuff and using fewer services. Frugality is not minimalism, though they have similar practices and they often result in the same outcome: fewer possessions. Less stuff means fewer fossil fuels are used in the manufacture of goods that you use and in bringing them to your local store or to your home.
It’s also easy to simply buy less physical goods, too. A simple choice like simply giving yourself a “waiting period” for every non-essential purchase — if you want something, you just wait a few days before buying it and then reconsider whether you still want it or can borrow it or buy it used elsewhere. That simple step alone, if applied consistently to your life, saves you a lot of money and cuts down on waste while still letting you have everything you genuinely want.
No. 2: Frugal living can reduce stress
Some 73% of Americans identify money as a major cause of stress in their life, according to a recent Capital One CreditWise survey. Money was indicated as a stressor for more people than any other life factor in the survey. Simply put, money causes stress.
Frugality is a great solution to this stressor. Finding simple ways to spend less money doesn’t require you to chase more income, and if you focus on frugal moves that don’t disrupt your way of life, it won’t have an impact on the things you enjoy doing, either.
A practical way of doing this is to make some specific frugal changes in your life, like switching to less expensive auto insurance or cutting your energy spending, and calculating how much you save with that move. Instead of just spending it, intentionally start putting that money aside automatically for a financial goal. So, if you save £40 a month on insurance and find you’re spending £35 less on your energy bill, you now have £75 a month you didn’t have before. Bump up your monthly retirement contributions by £75.
What happens if you do that? You feel less financial stress from retirement and you’re not adversely affecting your day-to-day life in any negative way.
One of the most powerful ways to save money is to share things. Share possessions, share activities, share ideas. Share babysitting duties with the parents of your children’s friends. Share garden tools with your neighbors — they borrow your shovel, and then you borrow their rake a few weeks later. Share meals with friends by having a potluck dinner.
What do these things have in common? They’re all social. They involve interacting with people — your neighbors, your friends, people in community groups, and so on.
One of the most powerful things I discovered during our early frugal days was how much I enjoyed participating in community groups. I started going to lunch presentations at a local library. I started participating in a local chess club and a community board gaming group. I started doing some volunteer work. I just tried things out, simply to see what was interesting. Some of them didn’t click, but quite a few of them did. Not only were they free, they also helped me build some friendships and a lot of acquaintances in the community.
You can also make frugal projects social. Let’s say you’re making “make ahead” meals, so that you have meals stocked away in the freezer to cut on food costs. Instead of a boring afternoon at home alone, do it with a friend. You might invite them over to help, or you could agree to do it with a remote friend where you start a voice chat and talk while you’re both meal-prepping.
No. 4: Frugal living can give you a sense of larger purpose
For many, the initial draw of frugality is that it provides a practical strategy for achieving immediate financial goals. If you’re in a financial pinch, it’s time to look for clever ways to cut back on spending so you can pay the bills.
As you see those steps succeeding and you start developing frugality into a normal habit, it’s easy to think about how those steps could apply to bigger goals. What about paying off all of your debt? What about actually having an emergency fund? What about saving for retirement, or kicking that savings into high gear? What about a house down payment?
Frugality is a tool that you can use to start chipping away at those big life-changing things. When you begin to see the tie between a simple act of frugality, like getting a book from the library instead of from Amazon, and the big goals you have in life, it gives your everyday choices a much deeper purpose. You feel like the choices you make on things like grocery store selections really matter in terms of a broader life purpose, and that’s a powerful feeling.
No. 5: Frugal living can give you more time for the important things
Many people perceive frugality as time consuming, but projects like clipping coupons don’t have to be a part of your frugality. You can simply skip over the time-consuming ones and enjoy the aspects of frugality that save time as well.
For example, if you’re committed to buying less stuff, you’ll simply spend less time shopping. A great example comes from my own work commute. When I was a big overspender, I often stopped at the bookstore on my way home or popped into the electronics store. This meant that I’d often burn an hour or more of extra time during my commute spending money, but spending time as well.
What did that time become? Some days, I spent it reading a good book. Other days, I’d take my kids to the park. The point’s simple: It turned into time that provided more value to me than time spent in a shop looking at things to want and to spend my money on.
No. 6: Frugal living makes it easier to help the causes you care about
Frugality cuts through this like a hot knife through butter. Simply finding ways to spend less gives you the resources you need to donate to whatever causes are important to you.
Simply knowing that you’re furthering a cause you care about is nice, but it turns out that contributing to charity has a whole host of additional life benefits, including health benefits and a lasting sense of joy. That feeling can be evoked simply by being a little frugal and giving some of the fruits of that frugality to a cause you care about.
No. 7: Frugal living can help you retire earlier
Let’s say, for example, that you’re 25 years old, and you find a way to easily cut £100 from your monthly spending without really affecting your life. You decide to contribute that to retirement in an aggressive investment that averages a 9% annual return over the long run. At age 65, you have £468,000 extra in your retirement fund.