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I started writing this blog roughly two years ago, and ever since I’ve devoted myself to live in a more frugal and minimalistic manner.
Telling people that I write articles on how to make and save money brings about some interesting conversation, and I often come across people who also mention that they like to live a similar lifestyle.
Most of them are making fairly sound financial decisions, yet there are still some major “mistakes” that I see people making when managing their money.
1. Confusing The Difference Between Frugal And Cheap
There’s a huge difference when it comes to living frugally versus living cheaply. Cheap people will strive to get the best price no matter what the cost. This includes time, comfort, energy, money and health.
For example, a close friend of mine will spend an extra 30 – 60 minutes finding a free parking spot instead of paying $2 – $3 at the meter. While I can understand trying to save a bit of extra cash, it’s not only an inconvenience to him, but also to his car and his friend (myself).
The 60 minutes he spent driving around cost him a few extra dollars in gas, caused minor wear on his engine, and only resulted in him stressing out and being frustrated while driving around. Not only that, but often when we make plans to go do something together, most of our time is spent in the car instead of at the event we had planned for, and we’re late because of it.
What he could’ve done instead is spend an extra 5 – 10 minutes driving around the block a couple of times only to realize that more than likely parking wasn’t going to open up for a while. In the long run, spending the $2 from the get-go would’ve saved him money, time, stress and comfort, while still allowing him to be more punctual.
A frugal person will always look for the best deal, but takes into consideration all factors when it comes to saving money. A frugal person realizes that outside of money there are also other aspects that impact your financial well-being.
I rarely eat junk food or buy pre-made meals that you can heat up in the microwave in just a couple of minutes. While it may save me a bit of extra time in terms of cooking, I’m not willing to sacrifice my health or my energy.
Eating these types of foods makes me feel tired, and I don’t feel like getting much done until the sugar crash or sluggishness wears off. When I eat healthy, I feel more motivated to get things done, know I’m treating my body right and overall enjoy life a lot more.
I also don’t want to have to end up paying huge medical bills in the future because all I ate was processed foods when I was younger. Especially for those living in the United States, these bills can add up fast, and financial stress is one of the worst types of stress that you can have.
By living frugally over living cheaply, you will get a lot more out of life, even though in the short-term it may not seem like it.
2. Not Using A Cash Back Credit Card
I still hear the complaint from most of my friends that credit cards are dangerous and are too much work to keep track of how much you’re spending. In fact, it’s the complete opposite. Using a credit card is one of the safest and simplest things you can use when making a transaction.
Let’s say you make a purchase for a computer that costs $1,000 and a week later it goes on sale for $800. If you’ve been in this situation before like I have, then you’d probably be slightly annoyed that the store coincidentally decided to have a sale immediately after you spend a large amount of cash.
By making this purchase in cash, I’d have to go through the process of going to the store, waiting in line to return the item, make the purchase again and drive back home. Not only did I spend an extra hour doing so, but I spent money driving to the store and risk getting into an accident.
With price protection, all you have to do is call up the number on the back of your credit card and tell them the situation. Usually within 30 – 60 days they’ll refund the difference, as long as you mention to them the change of price within 30 days of making a purchase.
Using Cash Is Troublesome
I hate carrying around cash. It’s incredibly easy to lose, and if I’m not traveling, I don’t really see a need for it now that almost every store in developed countries will take them.
Lose your credit card? Not a problem. Call up your credit card company and tell them what happened. They’ll send you a replacement right away, often with overnight shipping. Credit card companies want to keep your business, and more often than not they’ll be willing to bend over backwards to keep you satisfied. After all, each time you swipe your card they get a minor commission.
If I lose cash, it’s going to be incredibly difficult to get back. I’d have to go through the process of asking everyone around me if they’ve seen the money that I lost, and even if they have there’s a good chance they might not give it back.
If someone makes a purchase using your credit card while it’s lost, tell the credit card company the purchases you didn’t make and get them refunded. As long as it’s not occurring on a consistent basis, 99% of the time they’ll refund you the money.
Cash back is huge, and it adds up to more than you think. My Citi Double Cash Card gets me 2% cash back on all purchases, and it’s no work at all. All I have to do is pull out my card and hand it to the cashier. With paper money, I may actually be spending more time by having to find all the bills and count out the money by hand.
Some credit cards will give you bonuses depending on the category as well. For example, the Discover It Card gives 5% back on gas from the months of April to June. Every quarter there’s a new category that gives you an increase in the amount of normal cash back earned.
Keeping track of this amount is also incredibly easy since it shows up on your statement. With cash you either have to remember how much you spent or write it down each time after making a purchase.
3. Thinking Making Money Is Easier Than Saving Money
This tip I actually came across on Neil Patel’s Quicksprout blog, and it makes a lot of sense. For the average person, it’s a lot more difficult to earn money than it is to save it, and that goes without saying.
Even if you do truly believe that you can earn a lot more than you spend, you’re most likely only going to be in a more stressful situation financially. For most people, you’ll have to either work extra hours or cut down on other essentials.
I also notice a huge difference in my happiness levels when I start spending more, and I ironically start enjoying life less. Although I’m enjoying more luxuries on a consistent basis, my standards for happiness are increasing.
For example, there was a time when I was going out to fancy restaurants on a daily basis. Not only was it costing me a lot of extra money, but I really wasn’t getting much enjoyment out of it. I felt a little anxious by having to hold my fork a certain way all the time or else be instantly judged by those around me.
I can still enjoy life by going to inexpensive restaurants and eating healthy foods, and I’ve come to realize that more times than not it’s who you’re with that makes the difference.
If I had been to a five-star restaurant the day before, going to another one the next day won’t feel quite as special. Contrary to popular belief, living a rich lifestyle may not be so rich after all (unless your wallet can keep up with it).
While there are exceptions to this rule, for the majority it’s not. Live below your means, save money, and make a good life for yourself by not having to constantly worry where that next dollar goes.
If you have any discrepancies to the 3 points mentioned above or would like to add onto them, I’d love to hear about it in the comments below. Thanks for reading and happy frugaling!
My name is Jason Wuerch and I'm currently located in Madrid, Spain running a personal finance blog called Frugal For Less. My goal is to help everyone and anyone willing to make and save money through easy and simple ways that don't require much effort. Just because you're frugal doesn't mean you have to give up life's luxuries.