Frugality

Among investing and personal finance, frugality is one of my favorite topics to talk about. Here is my definition of frugality:

"To be frugal means to have the discipline to spend as little of a given currency (time, money, stress) as absolutely necessary for things and experiences that bring long-term value to your life."

Now, I understand my definition sparks a very important, fundamental and rather personal question: What truly brings value to my life? If you think about it, the answer to that question changes at every stage of your life. If you asked me what brings value to my life 20 years ago, I would have probably said "computer games, new mouse and keyboard" as this is when I was in my gaming years and nothing else mattered to me. If you ask me the same question now, I would say "a book, a robot lawn mower, a family trip somewhere" as now more than ever I value knowledge and time on top of spending time bonding with my little daughter. Finding different things valuable at separate stages of your life is normal and even healthy. It proves that you are changing as a person and hopefully a happier one.

Here are a few simple examples of how I have become more frugal over the years...

• I feel like now more than ever people purchase clothes out of boredom or desire for status. I see this as a slippery slope that, instead of leading to happiness, can backfire and bring more of the opposite to your life. Boredom and desire for status cannot be cured with purchasing more material items. The fix is temporary, and one should focus on finding what is triggering them. I no longer find joy in owning more clothes that I actually use. Not only do they take space, but I also noticed that I spend money on addition apparel, which just sits and collects dust in the wardrobe with the price tags still on. One day I grabbed all my clothes and laid on the floor in our bedroom, picked my favorite shirts, trousers, long-sleeved tops, shoes, and jackets, and then sold the rest on Vinted. This brought a few benefits with it. Firstly, I freed a lot of space. Secondly, I recovered some of the money I spent on the clothes. Thirdly, I became more mindful when it came to buying new clothes.I have a rule now: "You buy one new shirt; an old one needs to get retired". Beyond a certain number of shirts, they bring no further value to my life. Now, if you are a shirt collector, then I can understand why you might want to add one more to your current collection. Like I said from the start, what brings value to your life is rather personal.

• Being more Stoic. I am planning to have a dedicated page on stoicism, but for now, let's say it basically means "spending less and ideally no time thinking about events that are outside my control". This is a work in progress for me, and I feel like I will never achieve full mastery of it.

• Idle cash. If I have any amount of cash, I would put it in an interest-bearing savings account so the pennies accumulate while the pounds are waiting to get spent. For example, I get paid on the 27th of each month but don't have to pay off my credit card balance until the 20th next month. So, I put away the money I am going to use the pay of my balance of say £1000 in a savings account at 4.9% interest, which will yield me ~£3.08 in interest for the 23-day period. £3.08 of free money for doing two simple transactions.

In reality, frugality is a state of mind that helps a person bring more long-term happiness into their life. It is not something you are one day and the next you lose.