Frugal living is often touted as a way to save money and become wealthy. While it is true that frugal living can help you save money, it is not the guaranteed path to riches. However, there are some ways in which frugal living can help you build wealth over time.
For starters, living frugally typically means spending less than you earn. This means that you will have more money available to invest and grow your wealth over time. Additionally, by staying mindful of your spending and only purchasing what you need, you can free up additional funds to invest in assets such as stocks, real estate or mutual funds.
As there are certain principles in making a sandwich, there are also essential parts to accruing wealth. Except instead of bread, a toaster, and the desired topping you have your incoming money, saving money, and an investment of your choice. And while that may be an analogy only a truly hungry person can make, it still stands as rock-solid truth. Without the staples of getting rich, it is very hard to do so.
When you learn that the basics are all you need, you stop worrying about unimportant minutia. Stick long enough with what’s giving you the majority of results, and enjoy them.
In this article, we are not dropping any hidden secrets on you, as there are none. Instead, I hope that this will be an honest reminder of what we are all chasing after.
Why The Rich Live Like They Are Poor, And The Poor Live Like They Are The Rich
Knowing that showing off and flashing money is equal to flushing it down the toilet, the rich have a calm approach to their assets. The goal is to be wealthy, not to look wealthy. When you have reached your goals, you can loosen up and get the prize you were after, but what’s the point of shooting your own tire if you are in for the long run, and not the drivers around you paying attention. In the end, you want to be the one who reaches your destination, and unless it includes all the other drivers staring at you in the process, it’s pointless.
The poor live like they are rich because they are desperate for the now. They want high-end fashion clothing, the best cuisine their city has to offer, and everything they might show off to others like them. Those who are truly rich wouldn’t care if you wear a Gucci or a Guess bag, but your bank account will. Such a phenomenon is commonly seen in people who have “just made it”, coming from a poor background and not understanding what money is about.
This is why all the coming-up rappers buy gold chains and rings to put all over their body- those who are already settled in their success often come in with a cracked phone and a plain-black T-shirt with zero expensive accessories hanging from their neck. They would rather these thousands sit in a well-off dividend stock profile.
Imitate The Rich
With modern technology, come modern solutions. And while the time-trialed fundamentals will always work, picking up the lowest hanging fruit will also yield results. There are now many apps, blogs, and even Instagram pages dedicated to managing finances. While a hundred years ago these principles may have not been available to the public, they certainly are now. It’s all up to the inquiring person to learn them and apply them properly to their life.
We know that some nations are definitely more well-off than others. And even if you compare the most affluent ones, there are still noticeable gaps between them. Let’s take a look at the US and Japan. The average working hours per week are forty to be exact. Seems parallel? These statistics are until you hear what’s covering under that average.
A whooping quarter or more of the Japanese workforce work more than one hundred hours a week of overtime. How many Americans do you think make that commitment? There isn’t even a statistic for these kinds of numbers. This is the difference we are talking about. But while they are earning plenty of cash counting their high salaries plus long working weeks, they don’t get to spend a whole lot of it.
Life expenses in Japan are considerably higher than in the US, and thus it leaves its citizens with two options. Either live below your means, save money in smart money, or fashionably spend all of your salaries each month living paycheck to paycheck. Luckily, the Japanese have a culture of frugality and long-term strategy. This is why they are fired up about saving money and investing it in long-term opportunities.
The Difference Between Frugal And Greedy
The main difference between frugality and greed is that frugality is about making the most of what you have, while greed is about accumulating as much wealth as possible.
Frugality is about being resourceful and not wasting things, whereas greed is all about hoarding money or possessions. Frugal people are typically happy with what they have, while greedy people always want more.
Frugality is a healthy habit that can lead to financial stability, while greed can quickly lead to debt and financial ruin.
While frugality has to do with knowing what you pay for, greed is about being unwilling to pay a fair price for something. This is why greedy people are not likely to become successful at all. They don’t understand that everything has a price, including success. And if you don’t pay it, you will be left with only bitterness.
The main point here is that frugality is a healthy habit that can lead to financial stability, while greed can quickly lead to debt and financial ruin.
Bio: David is a freelance writer who specializes in finance, tech, business and real estate investments. Born in Russia but now living in the Midwest, he brings a unique perspective to his writing on Eastern European business culture and current trends. When he’s not writing, David enjoys spending time with his wife and two young children. He is also the football coach of his son’s team and spends a lot of time hiking in his home state of Chicago.