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!“, Â “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. Â 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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“You’re not Saving Money if You’re Spending It”, ok, you’re creeping me out. Do you have my house wiretapped?? I use this one with my wife a lot!! Tee hee.
Great post. You and I think a lot alike (I have a post in draft called “Why I’m not buying anymore clothes”. It could have been written by you! Great reminder to us all!
I guess nowadays you just never know who might be wiretapping your house! 🙂 I’ll admit that it was a lesson that took a while to learn. For a while I had fun with extreme couponing, but eventually I came to realize it was much easier to just focus on spending as little as possible.
I think the most prevalent one for me was (okay…is) buying clothes that I don’t love because they’re cheap. I really don’t enjoy shopping, so if I see a shirt on the clearance rack or on sale at Target when I’m there for other things. The result is that I have a closet full of clothes that I don’t love and don’t wear. I’m working on this one though!
I’ve done that before too! I’m much better about it now but it took a while. Now I only have clothes I wear a lot, and I’ve gotten rid of the extras.
Every cashier at Kroger tells me how much money I saved at checkout every single time I am there. I am actually really impressed with how consistently management trained those teens. Anyway cashier says “You saved $18.65 with your Kroger card today.” I reply “That’s funny. It feels like I spent $63.45.” They never get it. They usually look confused and shoot a polite brief smile.
Ha I’ve had that happen too! I don’t care if I saved $50 on my groceries if I really spent $200!
Congratulations on your 100th post! What an accomplishment! I completely agree with you on this post. I feel like I’ve really gotten a lot better at it over time (slowwwwlllly), as I’ve realized, since getting rid of a lot of clothes that were “bargains” that I often buy things because they’re a good deal. But if I hold onto them for six months, and my cost per wear is $5 per, they’re a waste of my dinero.
The exact same thing happened to me! I’ve gotten so much pickier about things I used to get a lot of-clothes and books being big ones. Now I don’t buy them most of the time, and when I do buy them I need to really want to use them. Even inexpensive items are a waste of money if I don’t use them!
“cost per wear” I love it.
I just vaguely touched on that 2 days ago when thanking my daughter for her helping so many times to fix my clothes.
I was folding a shirt she altered for me 5 years ago when I got it from the thrift store.
I was talking about how I’d gotten it for just a couple bucks and worn it more than any other dress shirt I’ve ever owned.
Bet it’s cost per wear is sitting at just a few cents.
I’m so going to ask myself to speculate a cost per wear of an item be purchasing it from now on.
“Black Belt level frugality” I love that line. I definitely fall in the passive frugality group. If there is a chance I can get by without something I will.
That said, one of the things that drives me nuts is when we take the kids to the museum during one of the free admission days and then end up spending money on food or something while we’re out.
-Stafford
Ah yes, the free museum trap. My kids are always trying to get me to fall into that one! “Oh, while we’re here let’s get lunch/a souvenir!” 😀
Those coupon shows drive me insane. Consumerism is still consumerism, even when it is discounted. I agree whole heartedly, don’t buy stuff you do not need. Even if it is 50% off.
Actually that is why they make it 50% off. So you buy it. Nice post!
DIY toys with stuff around the house is fun to do. We are big fort builders in our home. Oh and we play the spoons. Lots of spoon playing.
Exactly-would you rather buy something for 50% off $200, or pay $75 for it? If you get it for $75, you don’t “save” as much money but you spend less.
Great post. I have caught myself pretty often making the same false savings arguments. Or another all-time favorite: I can spend money on this because I the credit card points/miles. There is only one way around those fallacies: constant reminders. 🙂
By the way, another master of disguising more spending and calling it savings: The government. “Cut Spending” usually means more spending, just at a slower (but still positive) rate of growth.
Yes, that’s a good one. “I can spend this because I get cash back!” It’s only a good deal if you would have bought it anyway 😀
I think I’ve mentioned before that sites like Hip2Save were favorites of mine in the not-to-recent past. Like you, after a while I realized that I was tempted and sometimes even fell victim to buying stuff just because it was an awesome deal or even free with coupons. I was even giving away laundry detergent and shampoo and the like to family members because I couldn’t resist the deals and I figure it helped them reduce their spending too. It was an evolution and we don’t even get the newspaper any longer so no clipping paper coupons for us now. When we were living on one income though – they were more essential to us and worth my time.
I still do want to save on my grocery bill but like someone said above, I don’t really care if my receipt tells me I save 30, 40, 50% after those ‘store savings’ – I really only care about the total amount actually spent at the end.
And clothes pricing in the U.S. is ridiculous. Does anyone ever buy clothes when it’s not on sale? It seems the minute they put it out on the rack, it’s already discounted 10-20%? Really – why not just price it for what you expect to get in the first place and drop the charade?
I think couponing and deal strategies on a spectrum, where you may need to be more extreme some times (like when income is low) than other times. And I’m so with you on those fake discounts-they drive me crazy!
I like how you framed active vs. passive frugality, great post! Since I’m a numbers geek, I always leaned towards passive frugality by nature.
It’s much easier!
Having worked retail loss prevention for a number of years, extreme couponers trigger this irrational, deep-seated anger in me that wells up from my very core. I know not all of them of thieves (which is what I spent my time dealing with), but there’s just no polite way to tell someone, “I’m sorry, you don’t need 75 trial-sized tubes of toothpaste. Please put them back so that people who will actually use them can buy them with actual money.”
I think the consumerism that feeds off of coupons, sales, and “hacks” is what ultimately leads to a lot of our financial woes, and you hit the nail on the head with your antidote: just genuinely don’t spend as much. Trying to finagle your way into still having the same amount of stuff without paying as much is just hard work! If you live a simpler, more purposeful life, you’ll probably enjoy it more, and there’s a really cool side effect: it costs less!
Right-just get the big pack of toothpaste from Costco or BJs and call it a day. It must have taken forever to cut those 75 coupons!
The one that always frustrates me is when sites like Amazon change the base price to MSRP and then report you have saved X%. Never mind that the price is the same as it was last week and the same everywhere else, you have to hurry as its X% off MSRP. The “Deal” is an excellent marketing ploy.
What’s interesting to me is just how many people really like getting that X percent off. Remember how JC Penny switched from all those sales gimmicks to everyday low prices, and people stopped shopping there?
I LOVE this post. In fact I wrote a post similar to it earlier this week – the best way to save money is not by hunting for deals, but by simply not buying stuff! The term ‘passive frugality’ is a great way to describe this approach of less spending, and it’s certainly more effective than spending money to save money.
It’s more effective and easier – unfortunately it makes for boring stories and media, so it’s not mentioned as often as active frugality.
I try to avoid spending money and not even noticing sales. However, sometimes I think strategic frugality is warranted. For example, wife tells me kids need Ipad for school for third grade. I have a hard time imagining this is a must, but I am told it is and kids school programs only run on Ios. On black Friday, an I pad air is on sale for $400. We bought it, one year ahead of time, mostly because the sale was $150 less than anywhere else. It’s true it may still go down in price, but I didn’t want to take the chance of losing this sale, and spending more later.
Same question comes up with kids soccer. We get a discount if we sign up early. We aren’t 100% sure they will want to play, but given their interest I find it a safe bet. If my kids find out they hate soccer later on, we will stop signing them up.