Why Frugality Alone Will Never Make You Rich

by Vincent King · 19 comments

No more greasy burgers for you. No more frothy Frappucinos, hold the whip. No more fresh new duds just because you deserve it.

All great decisions, but you must also ask yourself, “how much am I really saving?”

Are you saving enough to pay off all your bills? Are you significantly reducing the strain on your wallet?

Probably not. Saving $10-15 a week will never make you rich. It will help to ease your burden a bit, but little else.

The Fact


Frugality gets billed as a well built road that will move you from rags to riches when traveled, but if you look deeper into the stories behind the people who pulled off amazing feats of frugality that left them swimming in riches, you’ll find far more than squeezing extra life from a few hundred pennies.

Sure, these people scrimped and saved, but they did a whole lot more. Whether their secret was having their own business, or investing in someone else’s, they were smart enough to invest in a better tomorrow.

And more often than not, their investment was nothing more complicated then the intelligent use of their time. They took the time to grow themselves, then continued to work hard while they waited for their investment to pay off.

We’ve Been Duped

Many smart consumers have fallen for the thin strategies of our latest recession. Save this. Save that. Dig your family from their massive hole by _______________. (Fill in the blank with the latest scheme you read on Facebook.)

But desperation isn’t unwarranted. Because we want so badly to provide a life of comfort for our family, or to know we’ll have enough saved to take care of ourselves even if our country’s entitlement programs run dry after retirement, we reach even the thinnest straws of broken hope.

Unfortunately, all that grasping isn’t helping us a bit. False starts and empty hopes encourage the decay of precious time and energy we should be using to invest in ourselves and move our lives forward.

Wake Up

You must wake up. The solution is already inside you, as it has been since always. And the solution isn’t in what you eliminate.

Yes, keeping the ban on the coffees and the extra spending helps.

But you want, and deserve, more.

You want piece of mind for your family and your well-being. You want to rest at night knowing you did everything possible to build the strongest foundation of support.

Investing in yourself enables you to build that support.

How much of your time do you invest in making your finances grow the way you should? How much time do you invest in learning and growing yourself so that you can take your business further?

If you don’t have your own business, what part of you can you focus on and improve on to move ahead in your job? We all have some skill that makes us unique. Honing your skills to improve what you already have pays off.

Move Ahead

Taking courses, getting coaching, learning new tricks of your trade will all get you noticed by bosses and clients alike. Fresh knowledge will opens closed doors of opportunity, which can lead to more dollars.

When you prove your worth to those in power, make yourself irreplaceable. This means the most lucrative positions will become available to you, offering higher salaries, additional benefits, or both.

A higher salary, along with a continued Frappuccino restriction, is what will make the biggest difference to your bank account.

What You Can Do Today

Look at your business’ strengths and weaknesses. Decide on what you need to improve to make it the best in its market. Improve it by taking what you know and putting it to better use.

If you don’t have a side business, look at yourself and what you have to offer others (particularly bosses and superiors). Focus on ways to make yourself stronger in your field.

Perhaps you need marketing training. Maybe you need to learn to better people skills, or leadership training. Listen to what is being said around you, keeping your ears perked for new opportunities.

Do your best to improve your position through continuous learning and constant growth. Take what you learn and move forward by creating earning opportunities for yourself.

Add that to what you’ve subtracted through being intelligently frugal, and watch your savings grow.

Money Saving Tip: An incredibly effective way to save more is to reduce your monthly Internet and TV costs. Click here for the current Verizon FiOS promotion codes and promos to see if you can save more money every month from now on.

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{ 19 comments… read them below or add one }

Lance@MoneyLife&More June 25, 2012 at 11:24 am

Frugality definitely won’t make you rich but can help your situation only if you don’t spend that money elsewhere and instead invest or truly save it. For most people there is much more potential in increasing your income but that takes work.

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Shane June 25, 2012 at 1:10 pm

The only time cutting back helps is if you do it right and stick to it, cancelling cable, getting rid of home phone and limiting your cell minutes, not going out to eat, buying store brand instead of name brand. If you just cut out things like soda at the gas station you are right you will never save much.

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Jean June 25, 2012 at 3:36 pm

It is true that just frugality isn’t the be all and end all. Do it but at the same time, also do your best to bolster your life and work as much as possible.

-Jean

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MoneySmartGuides June 25, 2012 at 6:22 pm

When you look at the rich, they became that way through earning a good salary and living within their means. Most didn’t cut every possible expense to save that last $0.50. But they spend wisely. They research before they buy. They make smart decisions with their money and they invest in the market and themselves to continually grow their wealth.

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Charlotte@EverythingFinance June 25, 2012 at 6:52 pm

Good advice. Imagine what saving a little every week will add up to in 20-30 years. You have to start somewhere, so why not start by cutting out the Frappucinos,

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Kate June 28, 2012 at 3:22 pm

What saving a little every week added up to for me was two successive market crashes, two good jobs lost through the firm being taken over by a larger outfit that promptly told us we “would never get another raise because you’re already making too much money” and back to square one.

Far better to save toward something you can enjoy, be it travel, special meals in special places, or enough change to take the kids to their favourite ice cream stand (even if you have to tell them exactly what they can order), and build beautiful memories for the family of something besides a fat bankbook. Prudence and temperance are one thing; parsimony and stinginess are quite something else. Priorities — set them and if they are making your family unhappy, change them.

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Paula June 28, 2012 at 10:03 pm

Kate I’m sorry about what you went through. You are right too. Thanks for putting things in perspective that we also need to create memories for our family and to enjoy this gift of life. Balance is important. We save but recognize that we also need to enjoy life.

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Arminius Aurelius July 2, 2012 at 9:09 am

Kate , you say it did not pay because of 2 successive market crashes . You then say , spend and enjoy now and be happy . Take the kids to their favorite ice cream stand [ and pay top dollar ] . That alone is foolish when you can buy Ice Cream in the supermarket at less than half the price . Cable television has about 25 to 30 minutes of commercials every hour and movies are repeated over and over again unless you pay $ $ $ $ extra for better films . I signed up for NetFlix , unlimited movies with NO commercials . The cost a bit over $8.00 a month . No they are not the latest / newest movies but it is enjoyable entertainment . The savings are between $ 50.00
to $ 90.00 a month . That is a savings of over $ 1000.00 a year X 20 years is $ 20,000.00 in entertainment alone . By your living the ” good life ” now will cost you dearly a few years down the road . There are a multitude of ways to cut costs which in 30 or 40 years makes all the difference between success and total failure. As the old saying goes ………………………….
” A Fool and his money are soon parted ”
P.S. I owned numerous coffee shops and had a number of customers who came in and bought a cup of coffee 4 to 5 times a week , it cost them $ 1.00 a cup and my [ material cost ] was about 12 cents . Because of them , I am now financially well off. I now brew my coffee at home .

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Well Kept Wallet June 26, 2012 at 6:20 am

I agree that Frugality is not enough, in and of itself. I consider myself a life-long learner and desire to be the best at what I do. I have watched others who have this same mentality do great things and it seems the money naturally follows. Great post!

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Monroe on a Budget June 28, 2012 at 7:15 am

This is a good point, but, I would argue that in today’s world the frugality followers are those who are not those who are trying to become rich. They are middle class and working class families who are trying to make ends meet when unemployment, low-paying jobs, furlough days and dropping home values have eroded their cash flow and savings.

College expenses also have become a huge burden at a time when scholarships and grants are increasingly competitive, and student internships have turned into unpaid opportunities rather than summer jobs.

Is it a good idea to learn new job skills? Absolutely. But sometimes what happens is that you retain the job or salary range you have, rather than move up the corporate or business ladder. There aren’t many white or blue-collar jobs where the skill set or education level that was expected 10 to 15 years ago would be acceptable today.

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Holly Thrifty June 28, 2012 at 7:45 am

Remember Christmas? It’s a big deal because it doesn’t happen every day. Treat your purchases or splurges like Christmas purchase today, but not everyday. It makes your purchase feel more special. (Ok, maybe it’s not the same emotion for a new water heater or car repair.) Frugality is about setting priorities. I’ll buy expensive seafood and cook it at home. That’s about having your cake (or seafood) and eating it too.

But today, too many people want it all, want it now and will worry about paying for it later.

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Paula June 28, 2012 at 12:10 pm

My husband and I were discussing this very issue recently. At this time we live on his income alone. However, even though that has improved somewhat since he changed jobs we still feel like we are not saving enough and barely scraping by. We have slashed everything we possibly can. We do not have cable but instead use netflix and view tv local channels. We joined bj’s to reduce our gas and grocery bills but still go to Walmart and make the most of our coupons (manufacturer and store) at Target. We mainly buy our daughter’s clothes when Bealls has their coupon and deep discount sales. Even as we cut expenses, the cost of living is going up. Our health insurance premiums increased by $60, our internet bill increased, car insurance is up (we have geico and get the best rates here) and we expect rent to go up with when our lease has expired. So I believe you are right. Cutting expenses alone won’t help us. Additionally, there comes a time when you cannot cut out anything else. Furthermore, as we cut, other costs beyond our control go up.

People the author is not saying cutting out the frap won’t help you. It will. However, he is also saying that we are being tricked into believing that reducing expenses alone is enough. It is not. He is suggesting that we need to invest in ourselves, our skills or our business if we have one. So my husband has decided that he needs to start improving his skills with an associate degree in computers and build on his future from there. This degree will open up a new career and the opportunity to work less hours for the same pay. From there he can continue his studies with a Bachelors degree. After that he may be eligible for a promotion. Once we try aggressively to keep our expenses low and have the increased earning power we can better save for our family’s future. Investing in himself also offers my husband additional perks as he will have more time with his family.

This is what we dream about. It may be idealistic. But we have to try because simply cutting expenses will only take us so far. Consider cutting expenses as step number 1. For those struggling I believe an investment in education will help. It is achievable. The plan so far is for him to attend Saturday classes at our local community college. He is eligible for a Pell Grant based on our income which should take care of most of the tuition costs. We would also be responsible for gas to drive to school and books. On my side I am looking into pursuing a human resources certificate that I can do online with a payment plan and still be at home with our daughter. After that I’m job hunting. I’m thinking positive. Wish us luck. You can do it too!

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Arminius Aurelius July 2, 2012 at 8:29 am

I would say that frugality is ABSOLUTELY the first step toward financial independence . I learned this from my parents who came to this country about 4 years before the 1929 market crash . They came here to the U.S. with no money but my father did have a trade . He worked 40 hours a week until the Great Depression when his hours were cut back to 20 hours a week. He then went from door to door [ in the wealthier areas ] looking for odd jobs in order to earn extra money . Thru thrift and savings he was able to buy a duplex house in the late 1930’s and the rent from the other half of the house helped pay the mortgage . By the mid 1940’s they were able to afford to buy a summer cottage in the Catskills in N.Y. Other neighbors who were born and educated in the U.S. struggled all their lives because the never learned to save . I started with nothing , joined the Navy for 4 years and saved some money , learned a trade and saved money and finally ended up buying a bankrupt business [ that’s all I could afford ] . Eventually I bought 4 more businesses and had 9 multi family rental properties . How was it possible , THRIFT and hard work [ I worked 12 hours a day for 34 years, but I enjoyed the challenge ] . Now I can sit back and enjoy the problem free rental income. Prosperity , the answer was ………………
education [ learn a trade ] , thrift , hard work , common sense . By the way , even though I am financially well off , I still buy low mileage used cars . My last car , a 2008 Lincoln Town Car with 13,900 miles on it . I paid $ 22,999.00,
which I bought in April 2008 . A new 2008 would cost about $ 42,000.00 .
I saved about $ 20,000.00 . That October / November 2008 the stock market crashed and I was able to buy shares of stock for about 50 % less. The $ 20,000.00 I saved and then invested at the right time was now worth over $40,000.00 . And so it goes ………common sense and thrift.

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Whitney July 5, 2012 at 2:39 pm

I like what you said about retirement. It is kinda scary to think if government programs will still be in place when we retire. I do know that it’s not worth relying on. My husband and I have the same thought about providing for ourselves, and you’re right about the $10-$15 not getting us there. Great post!

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Canadianbudgetbinder July 5, 2012 at 2:40 pm

I’ve been frugal all of my life but I’ve also went on at least 5 vacations per year all over Europe and then some simply by being smart with my money. I don’t eat out every week nor do I try to keep up with my friends and neighbours. I’m in my early thirties and well ahead most my age and have immigrated to a new country and went back to school for 5 years of education. I believe the key is balance in life.

Has being frugal help? You bet it has and there is a big difference between frugal and cheap. I did a true co-worker comparison blog post on 2 workers one who brought a lunch and coffee (me) and the other who bought it. I’m sure those small numbers you talk of that won’t add up to much will shock you in that post.

I agree investing in yourself is extremely important and continuing to upgrade skills is important to be competitive in the market. As with anything else when someone spends more than they earn it won’t make a lick of difference.

There are plenty of millionaires who are sinking faster than they can swim because they don’t know how to say NO or decide between a need or a want. People simply make bad financial choices. There are plenty of failing businesses because of lack of upgrading, marketing and proper yearly budgets.

At the end of the day every penny counts and success is in the eye of the beholder. I earned and saved every penny I have and I invest in myself with my career. I’ve never been given anything from anyone in my life. I’m no millionaire but I’m certainly sleeping well at night and know that the investments I make in myself will only help to further my career.

Some good points to ponder.
Cheers,
Mr.CBB

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Mary F Campbell July 5, 2012 at 5:34 pm

I agree with the statement that frugality alone won’t make you rich…but when combined with a whole host of other choices, it certainly helps.

Starting an RRSP & maxing it out every working year of your life, no matter how much you have to work to accomplish that is one aspect. I worked 2 full time jobs when my husband re-trained so we could do just that.

A business of your own, in addition to a “salaried position with benefits” is another method of creating wealth. Although I say I am retired, I continue to run a business of my own in the hopes that I can grow it enough to give my husband a 2nd career when he retires, should he so choose. In the interim, my “job” is to grow both our personal & business assets. My husband has marketable skills & could definitely work on a consulting basis, but he may not choose to work beyond 65 – time will tell.

Educating yourself on investments & working hard to grow what you do have is another portion of the picture. I never walk away from our investments…no matter where I am in the world, I hands on manage our portfolio – vacation time or not.

Good tax advice, retirement and estate planning are also key but this doesn’t come cheap & you need to be a knowledgeable enough participant in the process to be able to tell the wheat from the chaff. Just because someone is supposed to be a specialist in a given field, doesn’t actually mean they know their a** from their elbow. Money Sense just ran an article about some ignorant investment advisor recommending to a wife that she liquidate her RRSP & put it into a non-sheltered account with him. Rubbish!

Unfortunately, you can’t understand how to most effectively run your own business (which is “you” by the way) unless you study business & as such, I recommend basic business courses…accounting, statistics, marketing, organizational behavior. It doesn’t hurt to study real estate & get your license so that you understand the legalities & then stay current with your licensing as a fallback 2nd income if need be.

A Canadian Securities course will do wonders on the basics of understanding the market and again, would get your foot in the door at a bank, brokerage firm or insurance company.

Tax courses and gobs & gobs of daily reading to stay current are also useful. I would say I spend at least 3-4 hours a day on this process and have my entire life. A lot can be read online now & it’s really very convenient. Best of all, all these courses & readings can be taken on a part time basis.

In a partnership like husband & wife…play to your strengths. My husband can build anything, fix anything and is extremely computer literate. I too have a background in computer science but the accounting/investments/running of a business/bringing companies public are really my strength. We each do what we are good at & thereby have access to twice the number of skills.

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Early Financial Freedom July 6, 2012 at 1:06 pm

Many people’s main expenses are under the two categories: 1) housing and 2) transportation. If you can get a handle on these two, you are on a solid plan to achieve your financial goals. Skipping that latte alone is not going to cut it. You need to focus on the forest rather than an individual tree.

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Mike January 27, 2013 at 1:41 pm

Money is quantifiable. Work some numbers if you think you can stack cheese by saving. BUT… odds are… if you are reading this article, you are an advice seeking category not the advice giving one.

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Paula January 27, 2013 at 1:48 pm

Mike is one sour grape. But even sour grapes are entitled to their opinions.

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