The Joy of Frugality

joy of frugality

The Joy of Frugality: A guest post by Pat Chiappa

I love that the word frugal is popping up everywhere. In late 2009, a friend who is a book buyer for a large independent bookstore in our town told me, “Frugal is the new black.” I think he was onto something.

In my mind being frugal simply means being smart. It’s not about depravation, or being stingy or cheap or having a poverty consciousness. It has to do with being aware, being conscious, being smart by making informed decisions based on information, and feeling good about your decisions. You can (and should) still spend money while being frugal minded, as long as you pay attention while doing it.

 Saving vs. Spending

 One way to save money is not to spend money – a simple concept, right?  But for those who find pleasure in shopping, it can be a challenge to save.  Becoming aware and recognizing that money = life energy is useful in terms of how you spend and save.

 If you have read Your Money or Your Life, a New York Times bestseller, you will be familiar with the concept of your “real hourly rate.”  Once I read this and incorporated it into my life – I seldom make a purchase without doing a quick calculation.

Calculating Your Real Hourly rate

Perhaps you’ve never considered that it costs you money to go to a job. Once you know how much it does cost, you can calculate your “real hourly rate.” To find it, compile a list of what you spend on clothes for your job, gift pools, lunches eaten out, gas or commuting fees, including insurance, registration, repairs and maintenance, etc. It is easier to obtain this figure on a weekly or monthly basis, as it is too difficult to measure hourly.  Once you have your number, break it down to an hourly rate.

As an example, if you were to do your calculation weekly, and you spend $30 in gas, $125 for car payment/gas/insurance, $55 for lunch and coffee, and $80 on clothes, then you are spending $290 per week to work at your job. Now divide the $290 by how many hours a week you work, say 40 hours, which is $7.25 per hour. That figure is what it costs you per hour to go to your job. Next, figure out what your salary is when broken down to an hourly rate. Say you earn $25 per hour. Now subtract the $7.25 figure that it costs you to go to your job – you may be surprised to discover that your new and real hourly rate is $17.75.

Now imagine that money equals life energy, and since you now know your real hourly rate – in terms of what you are paid at your job in exchange for your time – consider that every item you buy is not costing you money, but life energy.  So if you want a new i-Phone that costs $300 and your real hourly rate is $17.75, then you need to be willing to trade almost 17 hours of your life energy to own that i-Phone.  If you want a new pair of jeans that cost $40, then you will have to trade 2¼ hours of your life energy for that purchase. 

By taking the time to do these calculations, you will become conscious of your spending. There is no judgment here, only a new awareness of where you are spending your money/life energy. You may not realize it, but you’re actually making these choices many times a day – and now you have a little more information and insight into helping you make your purchasing decisions.

Knowledge is power. If you want to buy a new gadget and it will cost you 17 hours of your life energy, you can decide whether or not the item is worth it to you – if it is, go for it and enjoy your purchase.

Enjoy your purchase.  That’s the hidden message in this post.  Why bother with any of this talk of money and saving and spending and working if you’re not going to enjoy yourself? 

Be frugal and smart, spend without guilt, remember to save and enjoy life.

This has been a guest post from Pat Chiappa of PlanYourBestYear.com. You can also find her on Twitter at twitter.com/pchiappa.

 Photo Credit: Richard O

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