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Most people may find this association hard to grasp because the initial impression when it comes to frugality is restriction and deprivation. If that is how you view frugal living, then you are probably doing it wrong. If you are not enjoying this lifestyle, then there is something wrong with the way you are implementing it in your life.
You see, frugal living is not about deprivation. It is also not about restricting yourself to the point of insanity. It is actually knowing what you want out of life and focusing on the priority expenses that will give you just that. It is choosing not to waste your money on unnecessary expenses that is only meant to satisfy the trends in society. While these trends seem like a good upgrade for your lifestyle, it is rarely necessary to improve your life. You need to learn how to filter these upgrades to what is really necessary so that you can focus your limited resources on what is essential. Everything that will be left unspent can be used to grow your personal net worth.
That is how you can find abundance despite frugality. If you find that hard to believe, then reading the story of Ronald Read may change your mind about living a frugal lifestyle.
Story of a man who used frugality to get rich
The story of Ronald Read is strong evidence that frugality can really help you get rich. Being told by financial experts that it works is one thing. Reading about the story of how this lifestyle made one man rich is much more convincing.
An article published on WSJ.com tells us the story of how being frugal led to one man’s hidden riches. When Ronald Read passed away at the age of 92, his family and friends were surprised to find that he was actually worth $8 million. Since he was already widowed and he only had 2 stepchildren, he left the bulk of his riches to the local hospital and library in Brattleboro, Vt.
After the surprise wore off, his friends realized that he possessed three characteristics led to his wealth. He was a good stock picker, he was very patient, and lastly, he was frugal.
It was his frugal lifestyle that made all his wealth come as a big surprise. According to the article, he lived a very modest life. He first started working at a service station that was owned by his brother. Then, he worked as a janitor and maintenance worker at a store owned by J.C. Penney.
Nobody really thought that Mr. Read, a person who sometimes used safety pins to hold his coat together is actually a millionaire. He drove a 2007 Toyota Yaris and he did not hesitate to park it far from his work if it meant he can avoid paying the parking meter.
The bulk of his wealth, as the article revealed, was actually in the stock certificates hidden in a safety deposit box. It was so much that it ended up being a five-inch stack of certificates. Mr. Read owned 95 stocks when he passed away. Most of these were stocks that he held on to for a very long time. For instance, back in 1959, he bought 39 shares of Pacific Gas & Electric. The shares were worth $2,380 back then. Since what he owned went through stock splits of 2-for-1 and 3-for-1, his total shares went up to 578 and was now worth more than $26,500.
If you think about it, Mr. Read may be a great stock picker but most of his wealth is really thanks to his frugal ways. It may not be the thing that made him rich but it can sure be the reason why he amassed so much in his lifetime.
After all, how can someone living on a janitor’s salary end up with $8 million upon his death? His salary may be a bit higher because of the length of his tenure and him being the maintenance worker too – but you cannot save that much and still live a modest lifestyle. According to Mr. Read’s friends, he lived a modest life with his salary and still ended up with a lot of wealth in his old age.
Here are some of the reasons why frugality can help you amass so much wealth too.It trains you to focus on what is essential.
Mr. Read did not go without the basic needs. He owned his house. He drove a car. He lived a modest lifestyle. It is not extravagant but it was not poor either. His frugal lifestyle trained him to focus on what is essential. He saved every penny he could but he did not do so at the expense of a modest lifestyle. He spent but only on what he believed will make his life comfortable.It gives you the money to invest.
Thanks to his frugal ways, Mr. Read is able to set aside some cash that he uses to invest. He can buy stocks and shares without breaking the bank. He probably had savings for emergency expenses too. That way, he did not have to use the money he invested whenever he needed to spend on something unexpected.It teaches you how to be patient.
One of the characteristics that were believed to help Mr. Read amass so much wealth is his patience. He probably did not have to borrow too much money in his day. He probably patiently waited for his savings to grow – just like how he waited for his stocks to gain value over the years. Frugality teaches you that patience will always win out in the end. Sure you can borrow cash to purchase something immediately. But you will just waste money paying for the interest of that loan. By being patient and waiting before you buy something, you get to spend more time thinking about that purchase. You can decide if you really need it and if you do, you will only pay for its actual value – and not the price plus interest that credit purchases will bring.It forces you to be creative.
If you do your research, you will find that there are some successful individuals who credit frugality for their financial success. Jeff Bezos, the founder of Amazon is one of these people. In an article published on Entrepreneur.com, he was quoted to say, “I think frugality drives innovation, just like other constraints do. One of the only ways to get out of a tight box is to invent your way out.” When your frugal lifestyle tells you that you cannot afford to pay for something, you are forced to use your creativity to acquire that without diverting from your budget.
There are several other financially successful people who are known to be quite frugal. You have Warren Buffett and Mark Zuckerberg. These people chose to live a modest lifestyle even if they are worth billions of dollars.
How to live a frugal life
Do not be fooled into thinking that you need to be cheap to be frugal. That is a popular misconception about frugality. What it will teach you above all is that you should never be careless with your money. There are many ways that a frugal budget can help improve your life – you just have to learn how to embrace it.
It seems that the Great Recession taught a lot of Millennials how to be frugal. This generation is not perfect. They left school with loads of student loan debt and entered a professional world that is crippled by high unemployment rates and a shaky economy. Because of that, they learned how spending should be done – the frugal way.
According to an article published on USNews.com, Millennials define frugality in a different way. With lesser spending power, they are forced to become frugal shoppers. But if you think that this means they prefer low priced products, think again. For them, it is all about maximizing the value of their expenses.
The article revealed that young adults prefer experience over material possession – something that is strongly frugal. They would prefer to spend on a vacation with friend over an expensive designer outfit. This mindset is a great starting point for a lot of people who wish to start living a frugal lifestyle. Here are some important tips when transitioning to a frugal way of living.
- Declutter your home. Start by removing the clutter from your home. Frugal living is about simplicity and minimalism. You get by with only a few possessions. Go through all your stuff and get rid of the things that you do not really need and use anymore.
- Sell what you do not need. This is a great way to remove the clutter from your home and at the same time, earn some extra money.
- Downsize your lifestyle. Since you have less possessions you can probably transfer to a smaller home. While big homes may be a sign of success, it is quite expensive to maintain. If you have a small family anyway, you may want to just live in a smaller home. The same is true for the other aspects in your life.
- Identify your priority expenses. Frugality is about spending on your priorities and not allowing even a penny to go to waste. Identify what will really make your life worth living and concentrate on that.
A frugal lifestyle, when done correctly, will not only improve your financial situation. It will also improve your outlook on what a quality lifestyle is all about.