In order to master your financial life, you need to spend less than you make – right? Interestingly, there are two ways to do that, and one might lead to higher spending than the other.
When people talk about saving money, what are they usually referring to?
- Saving money on a vacation
- Using coupons to save on groceries
- Buying a new cell phone to get a cheaper cell phone plan
- Picking up a great new purse at a thrift store
- Making a sword for the kids out of paper towel tubes (No? Just me?)
- Buying a Roku so they can cut cable
- Hanging up laundry to dry
- Sewing a new outfit for your dog
- Going to the library to get books and movies instead of buying new
- Protip – Make sure you don’t have a new dog that will eat all your library books when you do this. Made that mistake four years ago when we had a new young dog in the house!
- Making your kids birthday cakes (Just me again?)
All those are great ways to save, and they can help you use your latte factor to save millions over time. But these types of activities aren’t the only way to practice frugality. And some of them don’t actually save you money, they just cause you to spend. Let me show you how, and then talk about passive frugality a bit.
The Draw Of Active Frugality
So-called Active frugality is what people usually talk – and blog – about. “10 ways to save money on groceries!”, “Cut cable now!“, “How I saved $100 on my cell phone bill!”. These are exciting and interesting activities. You can take pictures of them, make TV shows about them (Extreme Couponing, anyone?), talk about how to do them to others. They make frugality seem exciting, interesting, and full of activities.
But some of these active frugality activities may be driving you to spend more money than you could otherwise. Or they may not be actually saving you any money.
For example, lets take grocery shopping. Yes, you could save a ton of money using coupons. You too could be one of those people that gets stuff for free. But is it stuff you need? Or want?
When I got serious about living a debt-free life after my husband almost died of septic shock five years ago, I started following all the couponing sites. Hip2Save, Krazy Coupon Lady, Fatwallet, Retail Me Not – all great sites where you can find excellent bargains. But as I followed them, I would find that I was getting things because I could get them for free-not because I wanted them. Or that I was spending money I wouldn’t have otherwise in order to get something at a great price.
Getting things for free that you don’t actually want is a waste of your time.
I can vividly remember when I stopped pursing the free things. I had found a deal at our local grocery store to get a free pouch of Campbells crockpot slow cooker sauces. Now, I love my crockpot, but usually I would just put in some beef or chicken bouillon, the meat & veggies, and call it a day. Then I would make the liquid into a gravy by adding flour after it was done cooking. I thought since I could get a free slow cooker sauce, I could save on the cost of a cube of bouillon and the flour (probably 5 cents?). No – it was the most awful thing I’ve eaten! We could barely eat the pot roast. So this “free” sauce had almost caused us to waste the cost of an entire roast.
You’re not Saving Money if You’re Spending It
This is something to remember if you’re on the hunt for great deals.Lets say that you find a hotel that costs $200 per night, and you manage to find a sale and spend only $150. So you think you saved $50. But did you really?
What if you could have found a hotel in the area that would have served your needs just fine for $100 a night? Then you didn’t really save $50. You actually spent $50 more than you needed to.
This is something important to remember, especially if you’re someone that gets caught up in deals or bargains. Getting something that costs $5 for 10 cents might seem like a great bargain, but is actually a waste of money if it’s something you won’t use or don’t need. Getting a name brand product on sale and discounted with coupons might feel like a good bargain, but was the generic version of the product actually still cheaper? Did you get that pack of cookies because it was on sale, but if it wasn’t, you just wouldn’t have gotten any cookies? Then you didn’t really save money, you spent it.
Making It Yourself Only Saves Money If You Would Have Bought It Anyway
You’ll want to remember this, because it destroys a lot of the “money saving” tips you’ll read in books and on the internet. For this example, lets take the paper towel tube sword I made for my one year old.
I could write a blog post about “Five Things You Can Make For Your Kids With Stuff Around the House!” (maybe I will one day-I can do a lot with boxes, old containers, and paper towel tubes). And I could claim that making your own paper towel tube sword saves you $5 or $10 over buying one at Target or Walmart. But it only saved you money if you were going to go out and buy that sword. If you weren’t planning to go out and get it, then you didn’t really save anything.
That’s not to say that these things are not worth doing-not at all! I find it fun to try and find new uses for old things, rather than just tossing them in the trash or recycling. And little ones find it just as much fun as a new shiny plastic thing from the store (especially when I tape streamers to the end of the “sword”). But I wouldn’t say it really saves money, because I wasn’t going to go out and buy a plastic sword anyway.
A Different Path – Passive Frugality
This is a concept that’s simple, but can be difficult in practice. The simplest, best, easiest, and most effective way to save money is…to not spend it.
Rather than saving money by using coupons while grocery shopping, eat what you already have in the house.
Instead of saving money by using a coupon to a restaurant, you eat dinner at home.
You don’t spend the weekend at the mall, shopping for bargains-you spend it at home with Netflix and a good book. Or going hiking at a nearby trail.
As opposed to saving money on your landline, you get rid of it.
You want new clothes, but instead of using coupons to get items on discount, you decide to make your existing wardrobe last another year.
There are millions of examples, but they all boil down to simply trying to spend money as infrequently as possible. This is “black belt” level frugality, where you just spend less overall. It doesn’t make for interesting pictures, and it’s not as “fun” as active frugality. But it’s extremely effective. You might not “save” as much, but you’ll certainly spend less overall.
Hanging around the house might not “save” as much money as getting half off of an expensive vacation, but you’ll certainly spend less overall
So next time you’re contemplating saving money by spending it, ask yourself if you’re truly saving money. Is this something you need to buy anyway? Are you already paying for something and what you’re contemplating will help you spend less? If so, great! You’re really saving money. But if not, and you’re just getting something because it’s a bargain, then you’re really spending money you don’t need to.
Do you tend toward active or passive frugality? Have you ever made a purchase that you thought saved you money, but actually ended up costing you money? Let me know in the comments!
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