You may be desperately searching for frugality tips and frugal living advice – but is there a smarter way? In your quest to save money and build wealth, you no doubt have come across people telling you to skip coffees and deprive yourself of everything.
For some, that is exactly what they need to do. If you don’t have $100 or $1000 or you’re in debt – you gotta do what you gotta do.
However – many people focus WAYYYYYY too hard on this side of things (cutting costs), and completely neglect making more money – which would get them to their goals way faster.
Don’t be fooled into just trying to ruthlessly cut costs, ultimately that is finite. There is no limit to how much money you can make, so once your costs are under control, go hard on making as much money as possible.
Whether it’s doing more hours, going for a promotion, moving to a company that pays better, starting a business, side hustle, flipping products online etc.
In this video, I talk about why frugal living is fine – but most people approach it one dimensionally.
One pay rise could pay for 3,000 coffees. Focus on the bigs wins when it comes to personal finance and saving money. Refinancing a home loan could be worth thousands of dollars every year, and only takes you a few hours of your time. Getting a pay rise could be worth tens of thousands per year. Negotiating hard when buying a property could be worth tens of thousands.
Think about what big expenses you could cut, and put more effort into negotiating/cutting the biggest purchases/costs of your life (house, car, wedding, schooling).
While this video was a little tongue-in-cheek, hope you find it useful and maybe it will change your perspective on focussing too much on living a frugal lifestyle and shrinking your dreams just because you don’t earn enough currently (even though making much more money is very possible if you work at it).
As always, any questions or comments let me know – what do you think?
Related topics: How to save money, money saving tips, frugal living tips, frugal living ideas, extreme frugality, financial minimalism, frugality minimalism.
Good day there. Ray Corcoran here. In today’s video, we’re going to be talking about extreme frugality. I don’t know why this has become such a massive craze but I’m going to give you my thoughts on it, what I think you should do instead, and with that said, let’s get into the video. And one last thing, if you’re interested in learning more about how to save money, make money and invest your money smarter, then consider subscribing. We do two videos every single week and it’s all no BS straight to the point and based on actual experience, not just made up stuff that I’ve Googled. So let’s get into the video.
So the title is a little bit clickbaity and this is a bit tongue in cheek, this video, but I see so many personal finance people like gurus in the personal finance space bragging about how frugal they are. Now, I would consider myself a frugal person so I’m not necessarily hating on saving money. Quite the opposite, I love saving money. However, some of these people wear frugality like it’s a badge of honour, like there’s some sort of award, let’s see how much punishment you can give yourself and how much you can reduce your quality of life in the name of frugality and maybe getting likes and validation online. And there’s all these little sub-communities online of people that are living really lean and living off $20,000 a year or 10,000 or whatever it is in your currency, a low amount of money every single year.
Now there’s a niche of people that are okay doing that, they genuinely want to do it. However, I think there’s a large portion of those people that actually just don’t know how to make more money and are pretending like they’re just going to live that frugal life and they’ve basically given up on learning how to make more money and they’ve decided we’re just going to try and live very lean on a low amount of money. So if you really, really genuinely want to do it, no problem with that. However, I think a lot of these people are actually deluding themselves and almost bragging about how they can live off so little. It’s a good thing to live off a low amount of money and get used to it, but the big problem is this strategy is so defensive, it is ridiculous. And if you really want to build serious wealth and if you’re on this channel, you’ll soon find out if you follow this channel that my philosophy is really trying to make more money than you’ll ever need and making a large amount of money rather than just trying to make enough to get by and be comfortable. Because realistically, you can do that yourself. Anybody with a little bit of effort can do that themselves. What’s much more challenging is to make a lot of money, multiple millions of dollars.
So that’s what we’re going to focus on on this channel and in this video is really the big shift that you need to make. You see these people, they do my head in these people. They brag about how they live in these tiny homes. I saw a post on Instagram the other day, this lady was posting a picture of this microwave soup from a supermarket chain in Australia. It looked horrendous, it looked terrible, and she was bragging it only cost her 50 cents or 60 cents or whatever it was. Now, if you don’t have $100 or you don’t have $1,000 or you’re in debt, that may be a valid thing for you to do. In some situations, you’ve got to do what you’ve got to do. However, there are some people that are kind of beyond that point now. They’re not rich, they’re not in debt and they’ve saved a little bit of money and they’re continuing to live this, in my opinion, unnecessarily frugal life.
If you’re still doing that, and if you want to do it, that’s fine. However, the thing that you really need to focus on and the thing that most people just… Because this is harder is increasing your income. If you’re not focusing on increasing your income and all you’re doing is playing defence all the time and trying to buy the cheapest clothes and cheapest food, literally foregoing nutrition just so you can save a dollar here, a dollar there, you’re looking at it in a totally wrong way. You need to be focusing on the big wins rather than the small micro wins. If you’re constantly trying to save a dollar here, dollar there, one pay rise could cover 3000 coffees for you. And one pay rise might take you a few months, it could take you a few weeks. It depends what kind of role, what size of a pay rise, what step up in responsibility? But the point is that you should be focusing on big wins. Sure, make sure you’re not throwing too much money out the door every month. Of course, it goes without saying. However, you need to move on to offence at some point.
The problem with a lot of financial advice channels and personal finance channels is they focus, there’s kind of two main streams and you need to understand which one of these that you are. So the first stream is mainstream, mainstream financial advice. This is for people that have regular jobs, regular salaries, their ambitions are to have a little bit more than they have now. Nothing wrong with that but realistically, that is not too hard. And the reason I say that is because it’s only a small jump up in the quality of life and the amount of money that they need. So realistically, you don’t need to do too many drastic things to get a slight improvement in quality of life. And if that’s you, fantastic, go you.
The other stream is people that have decided, without getting all YOLO on you, you only live once and you figure, well, I’m working anyway, might as well make a lot of money and do literally whatever I want. If you’re only going to be here once, then might as well make a lot of money, might as well have a really fulfilling career where it’s challenging, it’s hard, it’s stressful, however, you are rewarded significantly more for it. Maybe you own a business, whatever it is, but you really, really go for it. And you’re left with significant financial resources and you can give more to charity, you can give more to your friends, you can give more to family. You can be a support network for everybody around you because you’ve created more resources than just what you need.
Now, if that’s the kind of thing that you’re interested in, this is how I personally think and this is what I’m working towards. For me, I made my first million dollars relatively young and obviously I’m working on making many, many more, and the reason I think that I still have way more to go and I’m a small fry compared to a lot of people, but compared to a lot of people, I was focused on making more than average money from a very young age. And my focus has always been on making more than a traditional salary. For most jobs, whether it was making in Australia $100,000 a year was a big milestone, maybe $80,000 a year in the US, I’m not sure, but there’s certain salaries where it’s like, ah, you’re on a pretty good salary, you’re on a good wicket, as they say, and you just really need to think about what do you want to go for?
I always think about some of my earliest jobs where I worked so so hard and it was super, super difficult and stressful, at least relative at that time, for peanuts. And it’s like, well, if you’re going to get stressed for making low money, you might as well get stressed to make a lot of money and focus on growing your income, whether it’s pay rises, upskilling yourself, starting a business, moving companies if you’re in a job and there’s limited opportunities there. That is where, in my opinion, 80 to 90% of your time should be, is getting big wins, not looking at skipping a coffee here or there.
What a miserable existence when you’re trying to skip a $3 coffee. Realistically, the problem isn’t the coffee costs $3 or $4 in Australia, the problem is that you don’t have enough income coming in. Of course, if you don’t care about coffee, then feel free to cut it out but if you like coffee, it’s just one of those little things where it’s just ridiculous to deprive yourself of something that for a lot of people gives them… I love my morning cup of coffee. It gives people a lot of enjoyment. That’s a trade-off in quality of life that in my opinion, I don’t think is worth it.
So what’s the whole point of this video? It’s really, one, have a bit of a laugh at these extreme frugal people, which I am a little bit frugal, as I said, but they just take it to the whole next level and it’s just completely ridiculous. And I guess what I’m trying to say is don’t let these frugal people lure you into living a miserable life when, to be honest, you should be focusing more of your effort and attention on making more money. You should be going much harder on that rather than trying to skip a coffee or live in one of those stupid tiny homes or doing all these things where the quality of life sucks. Maybe the very early days, yeah, sure, you’ve got to do it, but as you start to get some progress and you’re like, you know what? I’m starting to get a little bit of savings behind me, enjoy those things. Reward yourselves with those things when the time’s right but spend 90% plus of your time… Ask yourself, how much money did I bring in this month?
Was it five grand? Was it 10 grand? Was it 20 grand? Was it two grand? Whatever it was, that is one of the biggest metrics that you should be focusing on. Because cutting costs, you can cut a lot of costs within days, so even if you’re bad at spending, get good at earning and it’ll usually smooth it out. But you can always fix your spending problems a lot faster than your earning problems, so sometimes earning a lot more for most people, if you’re good at making money, it’s easy to make money quickly, but if you’re not good yet, and you want to get good, that can take time to learn the skills, change the job, get the promotion or whatever it is, so focus on that.
You can always get good at cutting the costs later if you need to, so have you think about that. Look at what you’re doing with your finances. Are you too defensive orientated and too focused on trying to cut costs at every little juncture or are you doing quite a good job of that and you’re actually allocating a good amount of your time to increasing your income? That’s how, if I look at like my net worth at the moment, the majority of that was the result of earnings increases and revenue increases in the business. Obviously the saving helped me keep more of that, but the main reason that money is there was because of sharp increases in income, and I think that’s what you should focus on rather than some of this frugality stuff that just gets pretty ridiculous, to be honest.
So what do you think? Let me know what you think in the comments below. Do you agree with what I say? Do you disagree? Do you think I’ve got it all backwards? Let me know what you think. Let me know what you think of these super frugal people. Or do you think they’re on the right track or do you think that they focus too much on defence rather than actually the important stuff which is offence? Let me know in the comments, give the video a like, and if you enjoyed this video, please subscribe. We’d love to have you on board and part of our family and I’ll see you in the next video. Cheers.