Michelle and I are frugal. If you read this blog much, you know that I rarely make such bold statements. I aspire to critical thought, which leads me to tempered, nuanced language, rather than generalized pronouncements. But in this case, I stand behind my statement.
Indeed, I don’t always consider us a frugal household, because I’m geared toward seeking how we might improve rather than congratulating ourselves on how well we’re doing. When I feel that I’m spending extravagantly, I forget that by most standards, we’re still spending less than “normal” in our culture.
Nevertheless, we’ve been asked to describe our frugal practices (see Homestead Core Values) so I’ll try. As with every topic covered on this blog, we can only offer our own experience as an example from which others might learn.
Being frugal has set us free—it’s really that simple. Frugality helped us save the money to buy our first home, then remote property, and, ultimately, our homestead. Frugality continues to allow us to live here. Without it, we would have to return to life on grid.
Our frugality directly stems from our upbringing. Our parents instilled frugality in us so much that it makes up part of our very nature. This gives us a huge advantage over those who might decide to adopt a frugal lifestyle later in life. I won’t say it can’t be done. For details, see Frugal Family History: Upbringing.
The key to our frugality lies in attitude, a topic on which I have too much to say to cover here. For that, see Feeling Frugal: It’s All in the Attitude.
Not surprisingly, money management is key to frugality. How we regard and use money guides much of our life (see “It’s Only Money!”).
We don’t normally keep a formal budget; thankfully, our lifestyle frees us of that chore. The discipline enforced by a budget is, as I say, engrained.
We create small budgets for specific reasons when necessary. We might foresee a lean period, or decide a high ticket item must be purchased. We often set budgets at Christmas time, to ensure that money trouble won’t cause stress during the season.
Rather than a budget, we live by a set of guidelines or precepts. These include the following:
Family unity: Michelle and I don’t keep separate bank accounts. We don’t consider money as “yours” or “mine”. Sure, we each have a few bucks in our wallet, and my business has its own account for tax requirements, but all of our funds are household resources, accessible to us both. We make our purchasing decisions as a family in almost every case. We’d almost never make a purchase over $100 without consulting on it together. This may have many disadvantages, but it works for us.
Avoid debt: We live within our means. We may not earn more than we spend each and every month now that we live on the homestead; often, we dip into savings to make ends meet, but orienting toward bringing in more than we spend helps keep our costs low. When we lived on the grid, we never spent more than we earned.
My grandfather always said “pay as you go.” He advocated saving up the purchase price of large ticket items before buying. That way, we could pay a lump cash sum or take out a loan. If we borrowed, we already had the money set aside, and could make payments as required. The main advantage of doing this would be to establish credit history.
Track all money movement: We learned this and many other frugal strategies from the excellent book, Your Money or Your life (see The Homestead Reference Library: Your Money or Your Life). We record every penny, from regular earning and spending to finding change on the ground, or losing it out of a pocket. Many people would consider this too finicky, but we find it really does make a difference in how we view and use money. It isn’t easy, but I’m proof that such habits can be learned.
Exploit every advantage from financial institutions: Banking gets hard when banks offer so few incentives. Interest rates remain laughably low. Most financial institutions charge clients for any and every service, so that a bank account bleeds money. This in itself encourages frugality. The higher our balance, the more fees get waived. In the old days, a larger chunk of savings generated interest income; today it merely reduces administrative charges. Still it’s a small savings.
We use credit cards often, always making sure we never carry a balance. This accrues air miles, cash rebates, or other benefits from the credit companies. This dangerous game requires strict attention to detail (see “Abusing” Credit Cards to Add Value).
Don’t automatically spend windfalls: Many people treat unexpected income as free spending money. Not us.Whenever relatives gift us money, they stipulate that we spend it on non-essentials. They know we’re far more likely to put it into the general household fund rather than purchase nonessentials. We do try to respect their wishes, although we make the most of it (see Anticipation). We also try to spend a little bit of each windfall on luxuries, particularly our Permanent Fund Dividends (see Alaska Permanent Fund Dividend: It’s Not Just Free Money) but the bulk of unexpected income goes toward necessities.
Many times, when faced with an unexpected expense, we puzzle and fret over it far too long before realizing that it coincides with our income tax refund or permanent fund dividend. We don’t look to windfalls to rescue us; sometimes, we might be happier if we did!
Other ways we live frugally include our purchasing practices, another long essay. Briefly, we price shop, buy in bulk when applicable (see Buying Bulk: The “New” Investment Strategy) try to buy secondhand before new, and pay attention to unit pricing information on store shelves.
We also try to look to the future even as we live in the moment. We assume that unexpected expenses will arise, and spend cautiously on that assumption. This goes far beyond money matters! See Upterrlainarluta: “Always Getting Ready”.
This then, comprises the barest outline of how we live frugally. I’ve written much in the past on this topic, and will write more in the future as well. And, as with all our homestead core values, many of our thoughts on frugality are contained in my book, Sacred Coffee: A “Homesteader’s” Paradigm.