When I volunteered to send greeting cards to members of the congregation as part of our church’s “encouragement team,” the team leader told me that the church could stamp
the envelopes if it was a financial hardship for my family. “We can manage it,” I said a bit sheepishly (as I do when I don’t know someone else’s views on saving money), “as long as people don’t mind having more than one stamp on their envelopes. I buy them at a discount on the Internet.”
As it turned out, I needn’t have worried about sounding cheap. The team leader replied, “I understand completely. We raised six kids on a single income.” She, like so many of the best money managers I know, had learned to be frugal out of necessity. In comparison to being frugal by choice, learning to be frugal out of necessity is a bit like being thrown into a swimming pool instead of taking lessons.
Those who are frugal by choice know that, no matter how high their income is, saving a portion of that income is wise. They recognize that in retirement or at some other point in their lives, their income will not be so high as it is now, and they do their homework, reading up on saving methods and then choosing and implementing those that work best for them. These savers often live comfortably and, realizing that their income is high enough that they don’t need to cut corners, avoid savings methods that have a relatively low payoff. (For example, they might not clip coupons because the time it takes to organize them could be better spent making business contacts that will help them earn more.)
Meanwhile, those who are frugal by necessity do the math and discover that in order to avoid calls from bill collectors (and eventual bankruptcy), they have to cut expenses — sometimes in ways that seem drastic to others — in order to keep their spending below their income. Due to limited opportunities or additional responsibilities, those who are frugal by necessity can’t easily increase their income, so they work hard to make or save small amounts of money. This type of frugal living wouldn’t make sense for high-income earners who are frugal by choice, but every little bit of savings counts when your income is on the low end of the scale.
I always considered myself frugal by choice. Our household income is slightly below average for the country, but we always have had more than enough to pay the bills, including full credit card balances, on time. Some of the things I do to save money — like buying discount stamps — appear absurd or desperate to others, but I do them because I know that every bit of saving counts, and I want to invest as much as I can for the future. Plus, I enjoy finding new ways to save money; it’s like a game.
A few months ago, however, things changed. We had a few unexpected car bills and suddenly our expenses exceeded our income. We hadn’t started spending mindlessly. In fact, we still appeared to our friends and family to be excessively thrifty. Yet, we were living with negative savings. We had become frugal by necessity, rather than frugal by choice. Thankfully, we had saved when money was not tight, and we could still pay all the bills on time.
Not wanting to start living beyond our means, my mind immediately turned to ways to cut expenses if any more unexpected bills arose. Ideas I hadn’t considered before suddenly became more appealing — I could make my own baby wipes; we could cut out the one or two meals we ate in restaurants each week; we could stop using paper towels and buy cloth napkins; I could stop drinking soda; I could keep the kids busy at home instead of driving them somewhere just to get out of the house.
I was glad I had learned to live frugally when frugal living was a choice. Because I read a lot about how others save money, I was able to think instantly of several ways to cut expenses that others who had never tried to save would not have known existed. Living frugally by choice prepared me to live better when I had to live frugally by necessity.
Likewise, those who are thrown in the water — who learn to live frugally out of necessity — have some advantages when their financial circumstances improve. As their income increases, they know how to maintain low expenses and may find that saving is much easier for them than for those who never had to pinch pennies to survive. Often, they wind up having more money by retirement than those who made twice as much during their working years. The woman who raised six kids on a single income? She and her husband just started a real estate investment business, which is something that even many double income families don’t have the capital to do.
Image courtesy of fuzzbabble