Updated: April 23, 2022
What is frugality? Wikipedia defines it as having “the quality of being frugal, sparing, thrifty, prudent or economical.”
Some people see it negatively as being misers or cheap, or in Filipino… kuripot. While some, see it more positively as being prudent or smart about spending… matipid.
And still, some, don’t think about it at all – meaning they see frugality as a “poor way to build wealth” and thus, not worth their time.
Too often, I read advice and meet people who think being frugal is not a good mindset to have. They say that it’s limiting and time-consuming; and sometimes, the money you do get to save is insignificant when you look at your overall finances.
A friend of mine shares, “If I can afford it, I buy it already; rather than spending an hour or so going around looking for the cheapest deal. Time is gold for me.”
He also tells, “Saving is for losers. It’s a slow and painful way to get rich. I’d rather learn how to invest rather than learn how to save.”
I find his points valid; because indeed, being frugal consumes time that could otherwise be spent on making money. And also, I agree that investing is the best way to build wealth.
You could say that it is the shocking truth – frugality won’t make you rich.
One of the earliest personal finance books I’ve read was “The Millionaire Next Door: The Surprising Secrets of America’s Wealthy”. The book features research done on Americans whose net worth exceeds one million dollars.
The authors profiled those millionaires and found many surprising facts about them which they published in the book. Two of the many discoveries that they had was that:
- Millionaires spend less than what they earn. That they are in fact, “prugal” or a combination of prudent and frugal;
- And most of those millionaires avoid buying status objects or leading a status lifestyle.
That’s why the book was entitled, “The Millionaire Next Door” because they found that most of America’s wealthy are not CEOs and company VP’s, nor are they venture capitalists and investors. A huge percentage of them are “ordinary people”.
Here’s a summary excerpt from the book:
The flashy millionaires glamorized by the media actually represent only a tiny minority of America’s rich. Most of the truly wealthy in this country don’t live in Beverly Hills or on Park Avenue — they live next door.
The typical wealthy individual is a businessman who has lived in the same town for all of his adult life and owns a small factory, a chain of stores, or a service company. He lives next door to people with a fraction of his wealth.
While the paycheck-to-paycheck crowd drives new cars, most millionaires don’t. They’re not wearing expensive clothes and watches and their houses are relatively modest compared to their financial status.
What does this all mean?
It means that while frugality itself will not make you rich. It does, however, increase the possibility of getting rich through other means.
Savers are not losers. In fact, they’re winners who create opportunities for themselves.
Being frugal allows you to pay off your debts. It enables you to save money quicker. But more importantly, it teaches you how to manage your money, despite how little it is now.
I’m a firm believer that if you can’t manage your cash flow when it’s “just enough”; then you won’t be able to manage a million more of it when it comes to your lap.
Perhaps that the reason why most lottery winners lose all their money a few years or even just months after they hit the jackpot.
In the end, I’d say that being frugal is important and it is a mindset that you should not ignore. Being prudent with your finances is the first step in learning how to build wealth – and when it comes to getting rich, there certainly are no shortcuts.
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great post again, as usual. very entertaining and educational indeed. eventhough for people who are into investing knows this truth, reading your post makes me feel that I’m reading about it the first time. thanks again Fritz!
This book (Millionaire Next Door) is really amazing! And this has totally changed my mindset! I used to think that people who wear expensive things, own luxurious cars, live in a prestigious subdivision and above average house are all rich. I used to be like this. I buy expensive leather and rubber shoes, cell phone, clothes, wrist watch, go to fancy restaurants and eat expensive meals, just to look and feel rich… Now, I am really determined to look after for my future.. to take advantage of my young body to do all the hard work to accumulate wealth so that I can retire comfortably.. I really hope Pinoys think like this..to be honest, the concept of building wealth for the retirement as early as possible is really not popular here in the Philippines.. I am still 24, but I really feel that I have wasted the first 2 years of my working life doing nothing for my future, for the long term..it was always for a short term, for temporary satisfaction. but i started saving last year (starting from June 2011), and now, i have already began investing. I am in the process of gathering personal financial experiences and I am self-educating about managing finances so that I will be someday like you Fitz, imparting to the Filipino communities the essence of attaining financial freedom.
Thank you Fitz, you are one of my inspirations =) I have just discovered your blog site after I have searched the words “BDO EIP”. And oh yeah, I have learned a lot from you since then. Thank you! =)
Thanks Enzo for the comment. I wish you all the best in your new found goal of building personal wealth. 😀
hanep sa raket, chong.
samut-saring ‘wealth experts’ tulad mo ang kumakalat sa internet sa panahong ito, kahit walang sariling basehan sa pagsusulat ng tips upang yumaman.
di lang alam ng mga nakakatagpo sa websites na ganito na yung web traffic nila sa site mo ang nagbibigay sayo ng online ads income. in US dollars pa.
kundi lang ako uto-uto, di ako mapapadpad sa mga website na tulad nito.
ang pagiging mayaman ay hindi makabuluhan sa tunay na buhay. magbago ka na.
I don’t claim to be a “wealth expert” and what I write here are my personal thoughts, opinion and experiences which I’ve learned in my own pursuit of financial freedom – that is my basis for my writings.
Also, I have always been open with the fact that I earn from ads through this website. I’ve even shared my Google Adsense story here and have constantly helped people how to earn from blogging as well, through occasional posts that I write about blogging.
In any case, I still thank you for taking the time to leave a comment. And I sincerely hope that you were able to find what you were looking for which initially brought you to my site.
Haha.. another clear cut example of “Crab Mentality”..Anyway, I admire you Fitz for keeping your cool. I’ve got a lot of things I wanna say about this guy in my meanest, uncivilized way, but hey! we’re professionals, right? It’s best to listen and answer to critics in a professional way. And, we should be thankful for having critics like this guy since they can make you smile or laugh because you find them funny. Or they can help you improve better.
Thanks Enzo for the kind words.
He did raise valid concerns – particularly on being a wealth expert and non-disclosure of income – because there are sadly, other people who are like that.
That’s why I really felt the need to reply to his comment so as to clarify matters – specially for other people who might see and read his comment.
Anyway, “All is well” now… let’s move on and focus on how to build more wealth for us. 😀
I have only just discovered your blog recently, and I find it very helpful! I sincerely think that being “rich” does not only mean having heaps of money, but more importantly, knowing how to use them in meaningful and efficient ways.
It’s sad to see that many people in our country seem to think that:
(a) Being rich means driving expensive cars and wearing flashy clothes.
(b) Only “bad” people get rich because all they care about it money.
These indicate a very narrow view of what “wealth” truly means. I for one believe that the key to an abundant life is possible for all of us, if we only know how to manage our time, health, talents, and all the resources available to us. And when one is truly “rich,” one is also capable of giving and sharing to others.
Kudos to you and all the writers who have greatly contributed to this blog!
I don’t know why, but when I first saw this movie called Penny Pinchers (http://asianwiki.com/Penny_Pinchers_(Korean_Movie)) I immediately aspired to become a cheapskate, and I am still now. At the age of 21, I got a full-time job on weekdays, a part-time job on weekends, and I run 3 blogs which give me profit. I stopped renting that 5k bedspace and slept in the office instead which is free, and told them “tumatambay lang po ako, kasi boring sa bahay”. I attended events to get free food, and I also cut contact with friends and family who could potentially ask me for money. I do give money from my parents when they NEED it though. I don’t text, I don’t call, and I don’t want to own a credit card. I am now beginning to invest the money that I have saved in UITFs and time deposits. And when I get enough money, I might open up a new business. Yay!!! Proud to be koripot! 😀
We are frugal in some ways not because we are saving nor we want to get rich but because we just have enouh for our needs. Personally, there’s nothing wrong with it. Kesa mangutang ng mangutang, spend wisely na lang, I already forgot the time we splurge on things that we don’t really need, kahit sa kids they are not deprived but I don’t buy them toys, they are guardian angels who provide for them. 🙂
I’m a proud kuripot too.. I don’t own flashy cars and expensive condos… and this lifestyle has led me to travel to many countries instead 😀
Great post Fitz. I believe some of the secrets to a great life is knowing how to live well on the cheap. Finding a great deal on products that are well made and last. If you need (not just want) an automobile, save up “car payments” and find a super deal for cash. As much as possible, become your own bank. There is a lot on-line about this last topic. In short, learn to handle your money the way the wealthy do and you can live a better quality of life “while you are getting there.”