Finding the right balance between frugality and living life can be tough. Early in the savings journey the choices are clearer. If one has no savings at all, the most frugal measures are necessary until one’s position improves at least past the point of immediate danger. Restaurant meals, even expensive ingredients for homemade meals, are off limits. New cars are out of the question. Vacations are replaced by stay-cations or by an additional part-time job.
As stability returns to the finances there might be bit of wiggle room. If there is at least a small emergency fund, the bills are current and being paid on time, and debt is slowly but surely being reduced, one might make room in the budget for a small, rare splurge. Perhaps there will be a nicer cut of meat for a celebratory meal at home or some other treat. Then as things settle into a long-term stable pattern with a fully funded emergency fund, all debts (except for perhaps a mortgage) eliminated, all bills being paid on time, and appropriate percentages of income being set aside for retirement and education funds, a new question presents itself.
How much is enough?
There are several ways to approach this question, but today I’d like to consider it from a point of frugality. How frugal should one be when living in a position of relative stability? Let’s first acknowledge that “stability” can be hard to define. Some people feel very stable living paycheck-to-paycheck with enough money to service their debt. If you’ve been reading “A Chat Over Coffee” for any length of time then you probably know that’s not what I’m talking about. I’m referring to a level of stability that includes a fully funded emergency fund, no debt except perhaps a mortgage, and money regularly being set aside for retirement and children’s education. Once that level is achieved…then what? How frugal should one be and how much should one spend on lifestyle?
Since I manage the day-to-day household expenses for our family, I often find myself doing an informal cost-benefit analysis before spending money. My goal is to spend as little as possible while maintaining a reasonable quality of life for our family. There are loads of blogs out there that give advice on being ultra-frugal and I appreciate the wisdom, often born of hard knocks, that the authors have to share.
I also acknowledge that my time is worth something, even if I don’t formally draw a paycheck for it. So I must balance the value of my contributions to whatever task is demanding my attention and the value of my work at home to prevent spending money on something I can do myself.
For example, homemade bread and tortillas are cheaper, and in my opinion healthier, than store-bought versions, but they take time to prepare. Ditto most homemade food. Doing laundry at home takes time and can age clothing but professional dry cleaning keeps clothes looking great…for a price. Home canning yields delicious, healthy food but requires supplies and time in addition to the cost of the food to be canned. You can probably think of similar areas where one must choose to spend a bit more money in order to save time or spend more time in order to save money.
So how much money and time do I need?
I think the cost-benefit analysis comes out differently for each family and we all pick our own areas where we’re willing to spend and where we think it’s vital to save. For example, I cook at home almost exclusively, and with inexpensive ingredients, but I don’t make all of our bread from scratch because it’s so affordable to buy. There are other areas where Jay & I spend a little in order to avoid spending a lot.
- We have Amazon Prime because we have found many items, including university textbooks, are less expensive on Amazon with free Prime shipping. We also enjoy watching the included Prime Instant Video movies and shows rather than paying for satellite television or movie theater tickets.
- We spend the time to save money by doing many home projects ourselves, then save time and more money on supplies by going through Ebates, ordering online, and picking up our assembled order in the store.
- We compound our savings by doing our online shopping using gift cards we buy at a local grocery store that gives double rewards points on gift card purchases.
- We rarely eat at restaurants and we almost never eat out at fancy places, including turning down invitations from family and church members when it isn’t in the budget.
Contentment + Cash = Simplified Saving
We use cash for most of our day-to-day spending. If the cash is gone then it’s a clear indication that we need to reconsider our intended purchase. And don’t we all have times when cash is hard to come by?
Somewhat out of necessity at first, Jay & I tried to model and teach our children contentment from the time they were very young. We gave thanks for what we had rather than focusing on what we couldn’t afford. Then when we saved up for restaurant meals or trips to the movies or new technology, it was even more special and appreciated. We (and the kids) have discovered that we are happier living a life of contentment rather than entitlement. Being content with simple things has made it easier to save (and give!) when it’s important.
If you’re in panic mode because there is way too much month left at the end of the money, take heart! There are steps you can take to improve your situation. If you are in a season where the bills are getting paid but there’s not a lot of luxury leeway, don’t give up! Smart decisions now will pay off later. And if you’re living in a time of plenty, congratulations! Enjoy your blessings. Wherever you are financially, please look for opportunities to bless others with your time and talent as well as your finances.
A Personal Note
My daughter asked if she could write an article for the 52 Week Challenge series because she’d like to give you her perspective on growing up with many of the practices we’ve chatted about here. Of course I’d be delighted to have her as the author of the first ever guest post on the blog! She wants to put some thought into it, but we hope you’ll get to hear from her next week.
This is the part where I remind you that I’m not a financial advisor, just a mom who is sharing her experience in the spirit of having a chat with a friend over a cup of coffee. Your investment results may vary from the examples given. If you require financial or investment advice, please seek the counsel of a professional advisor.
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