Frugal Keeps You Poor

broke budget budgeting cheap coupons debt finance frugal investment save wealth Feb 04, 2023

Me: Being Frugal won’t make you rich. Actually, it will keep you poor.

You: WHAT?????

Me: Yep, it won't make you rich and keeps you poor.

You: Shut up, you're wrong.

Me: Keep reading. I'll explain my friend.

Saving money on a product or service we use is a great thing. It helps us get out of debt sooner and work towards financial security.

That has nothing to do with building wealth. No one has ever saved their way to wealth. Frugal and cheap are different. Whereas cheap is a negative word, frugal is supposedly a more neutral word. I disagree.

Frugal bloggers who tell you their path to financial independence was through frugal living are lying to you. They became financially independent through investments. Whether it was through real estate or the stock market but it wasn't by saving .75 cents on a roll of toilet paper. 

When paying off debt, you must be frugal and watch every dollar. It’s the stepping stone we need to help us. But it is not going to make you wealthy.

When I wasn’t making enough money, I started couponing. I wasn’t one of those insane extreme couponers but I was good. With the one exception of the time I purchased 48 bottles of laundry detergent to go with the 19 I had at home. But that's a crazy story for another time.

Being frugal and couponing really helped me stretch my dollar. I was able to coupon like a boss because I lived in a building that had trash and recycling rooms on each floor. I would grab the Sunday coupons. I would shop the grocery store flier and use coupon sites that did match ups. I was in a position where I had to do this. It became a fun game to see how much I could save. My goal was to save 40% on my grocery bill. Most weeks I did it, sometimes even more.

Did this make me rich? No it didn’t. It did help me get on my feet – yes. I would save anywhere from $200 to $300 a month. When I’m working an hourly temp job, that’s a huge amount. It was my car payment.

A frugal mindset will have you look at things differently. You will start to become more aware of what you are spending your money on. We need to spend money on things to survive, spending money isn’t a bad thing. Spending money when you don’t have it on things you don’t need is a bad thing.

Why is a frugal mindset not always a good thing? 

Let’s first define what frugal means. I consulted the expert – google.

Per It’s an adjective

  1. economical in use or expenditure; prudently saving or sparing; not wasteful
  2. entailing little expense; requiring few resources; meager; scanty; a frugal meal.

Focusing too much on saving .75 cents on toilet paper puts you in a scarcity mindset. You want to be in an abundance mindset. If you’ve spent your entire life in that scarcity mindset, you’re going to have to change it. That will keep you poor.

Sometimes going for the less expensive item ends up costing you more. I picked a cheaper version of a cereal just because it was on sale. It wasn’t the generic store brand. We had one bowl of it. Had I spent the money on the more expensive one, we would have eaten it all. I threw money out because I was trying to save .75 cents.

You want to go out with friends but your broke butt won’t let you. How about having a game night. Everyone brings something. You have fun, connect with people you like, and don’t break your bank.

We all have seen the “feel good” story on the news about the sweet, unassuming woman who lived alone her entire life and passed with 4.2 million dollars that she’s donating to scholarship fund or to build a library.

She lived modestly, always shopped second hand and made the best sweet and sour meatballs that she bought to the church potluck every holiday. On the surface it’s a nice thing to do with her estate.

When we look at the story with critical thinking skills, it makes me sad on so many different levels.

All those children who are getting the scholarships is a wonderful thing. How many may not have been able to attend college without this wonderful woman’s help.

What makes me sad about the story is that she really didn’t live her life. She went to work every day, never bought anything fancy. I picture her home having doilies on the side tables that she crotched herself. A cup of tea in a beautiful china cup next to her. 

They always refer to her 4.2 million dollars as savings. It wasn’t savings that she put in the bank. She invested it!

If she saved her 4.2 million, that means she put around 100K a year in the bank for 30 yrs. I doubt she did that. She probably maxed out her 401K, invested in mutual funds, stocks, bonds, whatever. Maybe she had an advisor or maybe she did it on her own. The point is she did not save the money and put it into a savings account, she invested it and made it grow.

Saving money on some of the things you use is fantastic but it’s not going to make you rich. Investing is how you get rich and grow your wealth. It’s that simple.

That’s really it. It’s that simple. Yes yes some win the lottery and others inherit it. Chances are if you’re reading this, you’re not in that inheritance boat. I don't say that in a judgy way. I'm also not in that boat.

I've stopped following frugal bloggers and You Tubers. My mind went from scarcity to abundance. There was a time I needed to follow them but don't any more.

Once I realized that many lie about how they got financially free, I felt great about not following them.

What about you? Are you ready to go from frugal to wealthy? If you are, I will hold your hand and help you through the process.