Personal Finance

5 Frugality Myths Americans Believe That Would Make Ben Franklin Cry

Expertise: Personal Finance, Personal Development, Real Estate Investing Basics, Landlording & Rental Properties
59 Articles Written
Closeup of Ben Franklin on a one hundred dollar bill

Now, more than ever, being frugal and wise with money is vital.

In fact, I am going to make a bold statement. Ready? Here it is!

Frugality is the single most important characteristic in an individual who seeks to attain financial independence. 

Take a look at the financial independence expression:

Passive Income > Expenses

By being frugal, you work BOTH sides of this equation. Your expenses are reduced, while your savings rate increases, allowing you to invest in assets that provide passive income.

Have people succeeded without being frugal? Absolutely! Look at Grant Cardone and Donald Trump. They focus solely on increasing their income as opposed to reducing their expenses—yet they are still financially independent and live very lavish lifestyles.

Politics is my least favorite topic of discussion, so we will not talk about it here, but look at their reputations. Their followers are split amongst those who worship them and those who detest them.

Famous ‘Frugalists’

Instead, let’s take a look at some of the most famous figures who value frugality. There have been many, but I am going to focus on two: Ben Franklin and Warren Buffett.

Ben Franklin was essentially the founder of the financial independence movement. He created the first franchise known to the world: a printing business. He sold half of it and amassed enough passive income through the other half that he was able to retire at 38 years old. At the time, he was very wealthy—yet still spent as if he were poor. This freedom allowed him to pursue his passions and discover a few small things you may have heard of: the lightning rod, bi-focal glasses, and electricity.

Related: A Case Against Frugality: Why Pinching Pennies is NOT the Best Path to Wealth

Warren Buffett, one of the world's richest men, has amassed a net worth of over $85 billion (2018) by being the stock market's best investor for the past 50+ years. How has he amassed so much wealth? The Snowball is a great book that illustrates this, and you can probably get the idea from the title. He kept his spending significantly lower than his expenses and invested the difference. With compound interest and above-market returns, his investments created the massive amount of wealth he has today.

Let me ask you this: Who would you rather be associated with? Grant Cardone or Ben Franklin? Donald Trump or Warren Buffett?

In this article, my goal is to help create more Ben Franklins and Warren Buffetts in the world. The first step is through frugality.

Frugality might seem like a bad word to some. This is largely due to the five myths described below. I am going to debunk them.

Let’s go!

frugality

Myth #1: Frugality makes you “cheap.”

I wrote an article called “The 4 Stark Differences Between Being Frugal and Cheap.” It debunks this myth in and of itself. Rather than repeat myself, I’ll leave a summary of the four differences here:

  1. Someone who is frugal saves money. Someone who is cheap saves money at the expense of others.
  2. A frugal person happily spends on things of value. A cheap person saves in any possible scenario, at all costs.
  3. A frugal person values time. A cheap person values money.
  4. A frugal person looks for value. A cheap person looks for the least expensive.

In other words, a frugal person does not value material items. They do not try to keep up with Joneses. They are perfectly OK driving their used Toyota Camry, finding deals at Goodwill, and packing a lunch. However, they do spend money on the parts of life that matter most to them.

Myth #2: Frugality doesn’t allow you to truly live.

This is the funniest one. I get it all the time. “Craig, you need to live a little.” These people clearly don’t know much about me.

As the song “Live Like You’re Dying” goes, I have been sky diving (in the Swiss Alps), Rocky Mountain climbing (in Colorado), and even rode a bull (maybe he was named Fu Manchu?). I’ve climbed volcanoes in Guatemala, scuba dived in the Galapagos, and have been all over the United States.

That’s what “living” is for me. Those adventures and the people I meet doing those things are what I live for. You know what I don’t live for? Crappy restaurant food. “Nice” cars. Superficial clothing. Going to the same bar with the same friends every weekend. You get the idea.

It’s not just me. Talk to anyone who values frugality. Compare them to those who spend more lavishly, and I can almost guarantee the frugal person, the one who needs less to appreciate life, is infinitely happier than the lavish spender. They are more fulfilled, have more things that matter, and acquire less clutter.

“The richest man is not who has the most, but who needs the least.” I don’t know who said it, but I love it!

Myth #3: Frugality is too hard.

Congratulations! You are no different than 95 percent of the country. The “too hard, I can’t, it’s too much work” statements that spew out of Americans’ mouths baffles me.

Rather than think of ways to save 50 percent or more of your income—which, if done correctly, will likely allow you to “retire” in five to 10 years—you would rather come up with the “it’s too much work” excuse and work 40 to 50 years.

I’m no mathematician. But it seems awfully clear that you are going to be putting in a LOT more work if these excuses persist.

Related: Living Frugally vs. Spending on What Matters: How I Achieve a Happy Medium

Myth #4: Increasing your income is better than being frugal.

This is a half-fair statement. You can absolutely make more money by increasing your income. However, the trap that most Americans fall into is that immediately as they increase their income, they increase their lifestyles. They reward themselves with a new car or live in a more expensive apartment, etc.

Increasing your income is a great way to go about achieving financial freedom. While there is unlimited scalability, however, it is far less efficient.

Back to the financial independence expression:

Passive Income > Expenses

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Increasing your income only allows you to work one side of the equation. Frugality works both! By decreasing your expenses (right side), you are able to invest in more passive assets (left side).

Not only that, but when you cut expenses, you are saving after-tax dollars. Ben Franklin’s quote of a “penny saved is a penny earned” is actually outdated with our current tax system. A penny saved is now 1.33 pennies earned (depending on your tax bracket).

Myth #5: If you have a family, frugality is impossible.

Having a family definitely makes it harder than if you were single. However, frugality is still possible. I am still the last node on my family’s tree (no kids), so I can’t relate. However, let me talk about a few people who can.

Meet Mr. & Mrs. 1500, Mr. Money Mustache, and Mr. & Mrs. Frugalwoods. I could go on, and I promise you do not have to have a “Mr. and Mrs.” in front of your name to be frugal. Let me give you a brief rundown of the 1500s and Mr. Money Mustache.

Mr. and Mrs. 1500 started their journey of financial independence with two kids! Once discovering the concept, they set themselves a goal that after 1,500 days they would be financially free, mainly through frugality. The 1500s live in a wonderful town outside of Boulder, Colo., travel regularly, and Mrs. 1500 just purchased the car of her dreams. It all started with frugality.

Mr. Money Mustache (MMM) is the original frugality badass. MMM worked as an engineer for a few years and quickly realized he was amongst the few that were saving large portions of their income. After “retiring” at 31, he realized he was on to something. This freedom has allowed him to start one of the most successful personal finance blogs in the space, spend unlimited time with his son, and do things he loves to do.

Conclusion

There you have it—five common frugality myths, busted! Now, quit your whining, and take action! Here’s a challenge/action item for you.

Look at your finances, whether you use Mint or Personal Capital, or you just look over your most recent bank statement. Then, determine ONE THING you can cut from your life. This is preferably something with a meaningful impact. Perhaps you can cut your restaurant spending in half? Or maybe you can ditch that silly cable bill.

Whatever you decide, go at least 60 days without it. After the 60th day, if your life is just incomplete without this item, then bring it back in and cut something else out in its place. Run this experiment every single month.

Over the course of the next 12 to 24 months, these effects will have compounded, and you will have changed 12 to 24 things that you were wasting your money on. Your life will be optimized. If you’re a median income earner, your savings rate will likely be at or above 50 percent. You will be on the fast track toward financial independence!

Do you find that frugality is a necessary step towards achieving your financial goals? Is it something you struggle with or embrace?

Share your experience and strategies below!

Craig Curelop, aka thefiguy, is the author of The House Hacking Strategy and a driven pursuer of financial independence. Starting with a net worth of negative $30K in 2016, he has aggressively saved and invested to become financially independent in 2019. From sleeping on the couch and renting out his car, he was able to invest in three house hacks in Denver, a flip in Jacksonville, and traditional rental properties in North Carolina. He plans to continue to invest in both Denver and Jacksonville for years to come. Craig's story has caught the attention of several media outlets, including The Denver Post, BBC, Money Magazine, and many other real estate/personal finance podcasts. He hopes to inspire the masses to grab hold of their finances and achieve financial independence. Follow his story on Instagram @thefiguy!
    B Rockwell
    Replied almost 3 years ago
    What happened to the Frugalwoods???
    Terry Heilman
    Replied almost 3 years ago
    I think it is a good article. I have been called cheap by my family and frugal by my banker. It is a myth that you will stop being frugal once you have more than enough money. it is a habit that made you wealthy why would you change it? If you save 50% of your income when you make 100k you are spending 50k. When you make 200k and spend 75k your savings rate is actually higher and your lifestyle is increased. You still live a great life and your burn rate is less compared to your income. Your lifestyle can increase as your assets increase and it will affect you less. Yes you can spend $5 for a beer even though you could buy it or brew it cheaper. You will typically see wealthy people in bars during charity, social, food or political events and not as a daily habit unless they own the bar.
    Terry Heilman
    Replied almost 3 years ago
    I think it is a good article. I have been called cheap by my family and frugal by my banker. It is a myth that you will stop being frugal once you have more than enough money. it is a habit that made you wealthy why would you change it? If you save 50% of your income when you make 100k you are spending 50k. When you make 200k and spend 75k your savings rate is actually higher and your lifestyle is increased. You still live a great life and your burn rate is less compared to your income. Your lifestyle can increase as your assets increase and it will affect you less. Yes you can spend $5 for a beer even though you could buy it or brew it cheaper. You will typically see wealthy people in bars during charity, social, food or political events and not as a daily habit unless they own the bar.
    Bryan Watson from Buffalo, NY
    Replied over 2 years ago
    “Those adventures and the people I meet doing those things are what I live for. You know what I don’t live for? Crappy restaurant food. “Nice” cars. Superficial clothing. Going to the same bar with the same friends every weekend.” Super well put , I feel like I rationalize my spending along the same lines.
    Joseph Walsh from Brookfield, Wisconsin
    Replied almost 2 years ago
    I just wish I would of stumbled onto the concept of FIRE when I was younger! My College age daughter will likely beat me to FI! Which is good, at least I have passed it on. One of her younger Brothers has asked about opening a Roth, he’s 16.
    Joanna Lilly Accountant from South Lake Tahoe, CA
    Replied about 1 year ago
    Thank you Craig!! I'm definitely a frugal person. I always have a current passport and a travel budget, attend concerts regularly, buy a ski pass every year, and own a home in an outdoor playground. My young kids are following suit. Experiences matter to me wwaaaaayyy more than things. I've never owned a brand new car, bike, skis, and rarely....clothes. I haven't had cable since I don't remember when, and hardly ever see a movie in the theater. I invite friends over for home-cooked meals, and borrow books from the library. Through a flexible self employment schedule, I'm starting to build the left side of the equation - passive income. Currently, I have about $150 per month coming in. Hahaha. I just hope that when I do become financially independent, my frugal habits will continue....
    Jeffrey Russo Investor from Thomaston, Connecticut
    Replied about 1 year ago
    This is by far one of my favorite BP posts. I don't care if something costs a dollar or a hundred, if it's a poor value I don't buy it. I also hate spending money on low quality restaurant food (which is most restaurants) not only is it a poor value it's bad for your health! Everyone should remember, "There is no greater wealth than health"
    Robert Almonte
    Replied about 1 year ago
    Just want to say thank you for the article. Certainly one of the best articles I have read.
    Luz Ocasio Rental Property Investor from Coral Springs, FL
    Replied about 1 year ago
    Love this article. I recently received a nice inheritance yet I still drive my 2008 163000 miles car. Only go to movies on a matinee price. Cook at home don't shop at malls in fact I only buy something when I need it not want it. I'm a professional shopper and love what I do(for now). I've gotten comments from friends saying I'm cheap. Cause they expected me to buy a car etc. But I'm investing in myself. I'm learning as much as possible in real estate investing and the stock before I jump in... like the article says I spend money on what values to me. I love to travel and promised myself to go every yr to a different place.
    Steve Hiltabiddle Lender from Eastern Pennysylvania
    Replied about 1 year ago
    An old topic but a good topic. As someone who had a father born in the Great Depression, this is second nature to me. I know frugality isn't dead but I hope those who may be struggling with having enough money to make it to their next paycheck read this and take it to heart. I too have traveled several times to South America for week long treks, as well as Europe, Asia among other adventures. My current adventure is my family. Yes, harder to be frugal but i can tell you that after years of not spending on insignificant items, I have the luxury of being able to do many things I know are not available to those at similar stages of life. Also, having been someone who saved and invested well, I have many options available to me which I'm not only quite aware of, but thankful for. I recently had a conversation with a friend who made a lot more money than I ever did but today, worries about retirement. Why, he spent loads of money constantly to have the 'nicest things' (not to mention 3 divorces) and now is concerned for his retirement. Spending below your means is a habit, a healthy habit that reaps rewards in ways those who don't practice frugality may never know. There are plenty of books out there that provide guidance and the value of being prudent with the money you make. All good sources of information but for me, I’d recommend saving 10% of GROSS income and don’t touch it until you can find a way to invest it to make it grow.
    Paul Day from Fort Erie Ontario, Canada
    Replied about 1 year ago
    Great Article Craig!
    Marcus Little
    Replied 10 months ago
    This is fantastic and absolutely critical to financial freedom. I've taken strides to become more frugal. My 2012 Hyundai, with 105k miles runs like a champ (knock on wood) and I've got no need for a new car. I also just cut my housing expenses by over 50%...in short order, those savings will be going directly to REI!!!
    Glenn F. Rental Property Investor from Virginia Beach, VA
    Replied 10 months ago
    From the article: "Increasing your income only allows you to work one side of the equation. Frugality works both! " Yes but the negative is that this cheapens your lifestyle. Not fun. Another option is to increase your income and just keep your expenses the same. This way you don't have to cheapen your lifestyle by cutting expenses yet you are increasing passive income.
    Tim McDaniel
    Replied 10 months ago
    Great article Craig! I really enjoyed how you explained myth #2: Frugality doesn't allow you to truly live. I completely agree. I'm enlisted in the military and have been able to save and invest quite a lot with my modest salary. These are my freedom fighters as I look to expand my investments in the future. However, aside from my goal for financial freedom someday, I think back on my experiences in the military so far and I can't help but smile. I've been to 15 European countries on personal travel (because it was cheap from where I was stationed) and even lived in Crete, Greece for 2 years (not on base). I'm not suggesting anyone join, as a lot of where you go is out of your hands, and you have to chose your job (rate, MOS) wisely. I've just been lucky so far. Thanks for the article!
    Stephen Torti Investor from Providence, RI
    Replied 10 months ago
    Very well written, thanks for sharing. Really like the comparison between cardone / trump and franklin & buffet.
    Timothy Dutil
    Replied 10 months ago
    A very good, very wealthy and very successful friend told me years ago.... "Its not how much you make, its how much sticks to the walls!" I have never forgotten that and it is invaluable to understand.
    Jim K. Handyman from Pittsburgh, PA
    Replied 10 months ago
    Brilliant, Craig! Would you rather spend time with THIS group of people, or THAT group of people?
    Anne Nguyen Investor
    Replied 10 months ago
    I agree with many of your comments. Thanks for your insights.
    George Choy Investor from United Kingdom
    Replied 10 months ago
    Absolutely. My wife and I tackled both sides of the equation. We revisited our personal expenses and saved £12,000 within a few hours, and built our property portfolio at the same time. That enabled us to become Financially Free by the time she was 39 years old.
    Tan Frendley
    Replied 6 months ago
    Great article. I have a lot in common. I am an Engineer but I have practiced frugality all of my life and therefore, in next few years (upper 40s) I will be financially independent. I won't be super rich but I will have enough to live and enjoy a stress-free life. :)