America was built on frugality. The original settlers were not wealthy, and they used as much of every resource as they could. Eventually they built a prosperous land, but again, the people were essentially frugal. Was there wasteful spending? Sure. Was there ridiculous wealth? Of course. But the economy wasn’t backed by spending. Then something changed and now we find ourselves mired in debt and struggling to climb out. Six months ago I asked if frugality was in the air. It was and still is. It’s time to return to the fundamentals of frugality. Here’s why and how:
Frugality Can Be Sustained Long-Term
True, frugality doesn’t produce insane wealth, but it can be sustained over several decades. The same is true of our economy as a whole. Fantastic growth driven by spending and speculation can’t be sustained forever and is always followed by a crash. In contrast, slow and steady growth backed by fundamentals like hard work, patience, and prudence creates a stable economy that can withstand the small reversals that are part of any cycle. Yes, there will always be a cycle of boom and bust, but the highs and lows are gentler when rampant spending isn’t both the cause and the solution.
Frugality Shifts Wealth Rather than Debt to the Future
If you spend less than you earn, and save the difference, you’ll (hopefully) end this life with more money than you started it with. You can leave that to your heirs, to charity, to whomever. It doesn’t matter who you leave it to, just that prosperity is passed forward rather than debt. The same can be said of the government: a frugal government passes a surplus to future generations. A wasteful government passes a massive debt that our children must pay off.
Frugality Shifts Value to People Rather than Things
We’ve reached a point where the things define people rather than their character. Owning the latest gizmo doesn’t reflect your personal value, though. It doesn’t tell anyone else what you consider important. It just says that you have enough money (or enough credit) to buy that thing. If instead we focus on defining people by their character rather than their possessions, then we won’t need “stuff” to give us meaning.
Frugality Gives You Options
Eventually, every economic cycle ends. If you practice frugality, you have options during any economy. You don’t have to cling to a bad job in a failing company because you won’t be able to pay the bills without it. You don’t have to pull your kids out of private school or move into a trailer because the money dried up. You don’t have to start selling things to pay the bills. If the economy is doing well, you can take that dream trip or donate money to a cause you support and trust that your savings will continue to grow. When you’re frugal, your ability to make choices isn’t governed by the economy, it’s governed by your values.
How America Can Learn to Be Frugal
For a lot of people, a continued spending spree is simply not an option. While our government throws money at a problem a few of us created but all of us are paying for, we have to tighten our belts. Rather than make this a temporary change until things loosen up, take this as an opportunity to say no.
Say no to the clamor for the new iPod.
Say no to trading in your three-year-old car for a new lease.
Say no to buying new clothes just because fashions changed a little.
Say no to expensive convenience foods.
Say no to higher student loan debt.
Say yes to using the stuff you already own until it’s worn out.
Say yes to cooking at home.
Say yes to quality time with friends and family.
Say yes to spending less than what you earn.
Say yes to choosing a more affordable college.
Some people worry that the economy would go into a tailspin if people suddenly stopped spending. Guess what? If you believe our leaders, it already has. The answer is not for us to spend more; it’s for all of us to save more. Start with 1% of your income. Then next month, go to 2%. If you get a raise, put the whole thing into savings right away.
There was a time not too long ago when people saved more than 10% of their income, and yet they lived perfectly comfortable lives. We can do that again. The government isn’t going to take the lead here. It’s up to us, the people, the show our government and our children the kind of world we want to live in.
We start by just spending a little less and saving a little more. I promise, that never hurt anyone.