More and more people are aware of the problems that the extreme consumerism that we have reached in first world countries brings with it. Not only does it make people poorer, but it also makes them unhappy and wastes our planet's resources. But did you know that there is a movement completely opposed to consumerism? Yes that's how it is. It's called frugalism and we are going to explain what it is and what it consists of in this article.
Maybe you already know some people who follow a frugal lifestyle, or maybe you even do it yourself but without knowing what it is called that. To find out more about this topic, I recommend that you keep reading.
What is it to be frugalist?
First we are going to explain what frugalism is, what it means and what it implies. This word comes from Latin frugalis and, according to the RAE, a frugal person is "sparing in eating and drinking." Although in this dictionary we only find the definition that refers to eating without excesses, frugalism also has another meaning. Basically this concept is extended to more areas of the day-to-day life of each person. It could be said that it is an opposition to consumerism. In fact, frugalism was generated in the United States to combat the exorbitant consumerism that was taking place in that country.
From American lands, this movement has been gaining more and more popularity, especially among young people, until reaching Europe. Currently, the country that is leading in terms of the number of frugalists is Germany. It is not a hippie movement nor does it try to promote ideas, it simply raises the "lack of consumption" to achieve a better life. By having a lower consumption, savings and investments increase considerably.
There is a formulation of frugalism whose objective is to achieve financial independence as soon as possible, of young people. It is known as FIRE strategy, an acronym that stands for "Financial Independence, Retire Early." The translation would be "Financial independence, early retirement" or "Financial independence, early retirement."
Frugalism: The opposite of consumerism
Today, the economic model established throughout the world is based on consumption. What does this imply? All of us are constantly exposed to different goods and services that are spent every day competing with each other in order to make our next purchase with them. We are so used to this show that we no longer wonder if we should buy it or not, if not which one we should buy. We do not stop to think if what they offer us we really need or not.
It is a sad but undeniable reality. This global economic model is reaching alarming extremes. Our drive is to buy and acquire new products in an insatiable way, we always want more and more and more. It seems that humans have completely forgotten that the goal of any good or service is to satisfy a need, or at least it should be.
If that impulse to buy is repeated day after day over many years, the economic cost is very noticeable. Much of people's income goes into completely unnecessary products and services. Another consequence of extreme consumerism is the worrying waste of resources that this planet offers us.
What is it to live frugally?
What many people live today is called rat races, which translated means "rat race." It is defined as the indefinite follow-up at a temporary level of an exhausting daily routine. This is mainly focused on work activity, where the objective is to compete against the rest of the world in a rather suffocating urban environment. This work activity is characterized by very long working hours and little free time. Looks familiar, right?
In these cases, which are the majority in the world, people work to obtain money with which they cover their vital needs, at least in theory. On a practical level, things get a bit complicated, since the consumer model invites to spend all the salary earned in zero coma. In this way, people absorbed by this economic model are not able to save and live from day to day, completely depending on your income each month, which will end up wearing you out.
Contrary to what many people believe, a promotion and the respective salary increase does not solve this problem. The majority of people who earn more or who get a salary increase also end up raising the level in terms of consumption, establishing a higher standard of living and / or simply buying more whims and unnecessary things. Sometimes people even turn to credit, thus spending more than they can afford. But for what? We are going to ask some questions and reflect on the answer we should give:
- Is the latest mobile phone model that they have released really so good as to change the one I already have?
- My car no longer works so well that I get into debt and buy a new one?
- Isn't the clothes I already have in the closet enough for me?
The key to frugalism: «Deconsume»
In order to become frugalists, it is best to follow the key of frugalism that consists of "deconsuming." The people who follow this movement they avoid the consumption of unjustified products and services. As they usually start at a young age to pursue this goal, they can achieve significant savings while still living with their parents, thus considerably reducing the costs of becoming independent.
Therefore, if we want to reach their savings level, we must completely change our mentality and deprive ourselves of many things that are part of our daily lives. Let's put some examples:
- Going out for lunch, dinner, a coffee or a few drinks outside every day.
- Have pets.
- Smoking, if we get too strict.
- Have a car or motorcycle, unless it is essential due to work. And, in that case, it would have to be second-hand, of course.
- Subscriptions to magazines, collections, online shopping or streaming platforms, etc.
Remember that it is not about not living or isolating yourself socially. It's okay to go out to dinner with friends sometime or have another kind of experience, Well, maintaining mental health is also important. But never in excess and trying to spend as little as possible.
Frugalists don't have to be rich or stingy
People who follow frugalism are not necessarily stingy. Your goal is to spend only what is just and necessary to be able to maximize your savings in order to be able to live without depending on a salary and, therefore, not having to work. In fact, frugalists do not lock themselves at home without doing any activity or buying a whim. What they do is ration the products and services that are unnecessary for their survival and enjoy them as part of their leisure.
It should also be noted that frugalists who have already achieved a lifestyle free from work obligations need not be rich. The capital that these people can raise has nothing to do with luck or an inheritance, it is the fruit of their great effort to stay frugal and their hard work. What the frugalists try is not to reduce that capital as time goes by, if not the opposite. They usually invest it to keep getting enough money to be able to live each month. That is to say: Your goal is to earn enough passive income each month to be able to live, What is known as Financial Freedom.
Now the big question: How do they get it? We are going to give an example of some steps that a frugalist would follow. Is about a very simple strategy:
- During a stage of life, which could be ten to fifteen years, work as hard as possible.
- Spend only the money you need. Thus, savings rates increase, and can reach up to 60-80%.
- As you save, invest that money. With compound interest, the principal will be increased even more.
- Reach the calculated figure to obtain financial freedom. This figure is the invested capital whose profitability allows the person in question to lead the life they want without having to work. In the case of frugalists, they are content with being able to cover basic expenses.
- Get on with life without being obliged to work, since you no longer depend on any salary.
- Staying with passive income, but avoiding that the capital is reduced a lot. To achieve this, the interest obtained from the investments must cover what is spent on a monthly basis.
Although everything sounds very nice and easy, in the consumer world we live in, it is quite difficult to get rid of the need to acquire whims that we do not need at all. Following this path requires a lot of willpower and perseverance. If we are not capable of being frugalists, nothing happens. We can still achieve financial freedom by following a savings plan and making smart, long-term investments. Of course, we will probably take a few more years.