Quit work and live. Frugalism: less expenses and more time for you

Turn your back on the world of work as soon as possible and enjoy a financially independent early retirement sounds good. No wonder more and more people are striving to achieve this ambitious goal. Unless they have amassed a small fortune, to achieve this, more and more people are willing to change their lifestyle and adopt frugalism. Saving, investing and giving up consumerism are its main characteristics.

What is frugalism?

The term frugalism derives from the Latin frugalitas, which meant sobriety, moderation. A basic principle of this lifestyle is save much of the income. If possible, financial investments are also made.

The trend emerged in the United States in 2008 with the so-called FIRE movements (Financial Independence, Retire Early“financial independence, early retirement”).

The frugal forget going out to dinner, having a coffee away from home, shopping, going to the movies or the hairdresser or expensive weekend trips.

Instead, they drink tap water, cook and only consume what is really necessary, to name just the obvious savings aspects. Some frugalists don’t even have a washing machine, washing their clothes in the shower by hand in the sink.

What is the difference between frugalism and minimalism?

The two ways of life, frugalism and minimalism, share the same basic idea: living without consuming resources and focus on the essentials.

The resignation is in the foreground for both, but in no way is it seen as something negative. Rather, both lifestyles also aim obtain satisfaction from intimate achievements, not from the materials, and from appreciating what you have.

The difference between frugalism and minimalism is the motivation behind it. In frugalism, the lifestyle Helps achieve financial independence. The focus of minimalism, on the other hand, is more on distancing yourself from the consumer society and practicing sustainability across the board.

Save money, but how much?

Financial freedom sounds good. But when can one speak of such independence? There is no single definition of financial freedom, nor is there a specific amount that frugalists save on average that can be used as a guide.

In frugalism one speaks of financial independence as soon as the ongoing monthly costs of groceries, rent, electricity, etc. can be paid only with savings, interest income and dividends.

That is, when you no longer depend on a fixed income in exchange for work. So everyone has to find out individually when he has achieved his own financial freedom.

Therefore, if you want to live frugally, you must first create a realistic financial plan. It makes sense to record ongoing consumption costs in writing over several months. This way, you can see how much money you need and how much you can save each month.

Frugalists set a savings goal. To do this, they consider how much money they want to have available each month in the future and how many years they want to live on savings.

However, when setting a savings goal, it quickly becomes clear that it’s not that easy. Because how much will be spent each month in the future depends on external and unforeseeable factors such as inflation and it can be strongly influenced by relevant events (such as the birth of a child or a serious illness). In addition, the age that we will reach cannot be calculated.

This is how the frugal save

To achieve their savings goal, frugalists save everywhere. While food, rent, taxes, and insurance cannot be removed, there are many other areas where there is great savings potential.

One principle is that spontaneous purchases are not possible. In order to consume more carefully and spend less money, frugal people think about long-term purchases.

Some adhere to 30 day rule: if you want something after a month of reflection, you buy it.

But there are many other austerity measures that play a role in frugalism:

the use of discounts and special offers.Periodic review of fixed costs, such as insurance and subscriptions.Planning accurate purchases.borrow raw materials instead of buying them.Abandonment of luxury goods.Give up a car.

Can everyone live frugally?

Those who live frugally save 50 to 80% of their income each month and invest it. It is obvious that not everyone can afford it. In order to reserve a large part of the income, you must first have enough money in your account.

the frugalists mostly belong to the upper middle class and, thanks to a good (above-average) income, they can afford to save enough money so that they do not have to work before reaching the legal retirement age.