Learning to live modestly

Frugality is all the rage. And a good thing too. With the economic situation as it is, we had better learn to take pleasure from the simple things if we want to keep our sense of balance and be able to sleep at night.

The Rise of Materialism

Before the advent of retirement savings plans, government pensions and a social safety net, most people had to save without incentive by living modestly. Frivolous, uncontrolled spending was virtually unheard of because the risks were so huge. If you go into homes that are 60 years old, the cupboards are tiny. That's because nobody had much stuff. Kids slept two or more to a room, sometimes two to a bed! And people made do with just one or two of anything.

How many different pots do you have in your kitchen? How many pairs of shoes do you own? What about sweaters, t-shirts, pants, skirts, bottles of perfume, ties, scarves, purses, face creams? How about CDs and DVDs? What about sound devices like radios, stereos, iPods? How many telephones are there in your house? How many televisions? How many tools, hair clips, sets of dishes?

How much of your life's energy have you converted into Stuff?

Learning to Live Modestly

Never mind beating yourself up for past waste. That's a waste of energy too. But think about what you've been spending, and what you might need that money for in the future — like food or medical care. Think about how much you already have, and whether you actually have to spend any more money for while. Maybe it's time for a Spending Holiday.

Figure out what it takes to live modestly for a month. You'll need to cover your regular bills, such as:

  • Mortgage or rent
  • Utilities
  • Car payment and gas for work
  • Food, etc.

Once you think you've got the bare bones covered — the bare bones — then look at how much cash you think you'll have to spend (since many bills come right out of your account.) Planning to spend $600 this month on everything from groceries to gas to your sister birthday present? Cut that in half and challenge yourself to live on less.

The Power of Saving

Before you throw your hands up and say, “Ridiculous”, just try it. There's no failure here. It's an experiment. It's to see if it can be done. After all, even if you miss by $150, you've still spent much less than you thought was possible. Hit the mark and you've experienced living modestly and saving money at the same time. Double Whammy!

How much could you save every year if you decided to live modestly? How much less Stuff would you have? How much happier could you be?

Save just $200 a month by living modestly, put it in an RRSP (or Roth IRA) earning an average of 5%, reinvest your tax refund, and in 25 years you'll have $90,000. Save $300 a month and you'd have $134,000. Save $500 a month and you'd have $224,000. Amazing!

Living modestly usually means battling the motivations to spend: advertising, friends and their new acquisitions, the mall. It often means taking a little more time to find what you need, and really really really wanting it before you buy it. And it means being willing to accept that what you already have is good enough.

I have so much Stuff that's not only good enough, but great, that I shouldn't have to spend a cent for quite some time. I wonder how long I'll last?

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HowToMakeMyBlog.com
HowToMakeMyBlog.com
11 years ago

Nice article! In the current economic situation many people need to re-think their spending. I went frugal some 6 months ago and started living more modestly, cutting back on travel expenses, on going out, and on buying unnecessary clothing and gadgets.

I am now able to save enough monthly to slowly pay off my debt, and hopefully in some 6 months I will be all out of debt and will have resources to focus on other goals.

Fabulously Broke
Fabulously Broke
11 years ago

Great post. I adore Gail Vaz-Oxlade. She’s one of my favourite PF’ers 🙂 I watch her show religiously too.. online of course because I don’t own a TV. People should really rethink their spending, because less is really more. BF and I are heading towards minimalism. I’ve even set a goal for myself next year to NOT buy unnecessary clothing/items. That means, unless I REALLY need a coat and cannot make do with what I’ve got, I’ll buy one. But I’m going to try and stop stockpiling what are essentially multiples. Copies of the same thing in the same colour… Read more »

Kim
Kim
11 years ago

“How much of your life’s energy have you converted into Stuff?”

THAT’S the key question right there!

Once we mutiny against the notion of what we “need” versus what we want, lives change.

Good article!

Jennifer
Jennifer
11 years ago

Besides being good for the wallet frugality can be good for the mind too; it’s amazing how calming it can be to live with less stuff.

Cath Lawson
Cath Lawson
11 years ago

Hi Gail – This is brilliant advice. I don’t even like shopping but my family still seems to have accumulated far too much “stuff” over the years.

I’m hoping to immigrate this year – possibly to the USA. So we’ll be getting rid of a lot of stuff. And I’ll bear your advice in mind and really challenge myself to live on less.

Bill M
Bill M
11 years ago

Good advice, plus less things to worry about on the end if something happens. I started cutting down big time in the past 3-4 months and hope to stay this way.

Jacco
Jacco
11 years ago

You can call me naive because I’m not an American, but I would like people to try and find alternative ways of transport instead of using a car. In general people do have legs, they can ride a bike (yes, I am Dutch), or they can use public transport (buses, trains, subsways etc.) to get somewhere. I know that the US is an entirely different country when it comes to the distances people have to travel to get to the mall or to get to work and maybe the entire system of public transport does not meet the needs when… Read more »

Claire at Choyster Cash
Claire at Choyster Cash
11 years ago

This is such an important article to be posting at this time of year, and I’m so pleased that Get Rich Slowly has been getting on the bandwagon of writing about paring down lifestyles this holiday season.

Thanks!

Financial Fellow
Financial Fellow
11 years ago

I heard on the radio the other day that the average American savings rate is starting to creep up a bit. Thank God! Too bad it takes a recession to get people to stop stretching themselves and start putting away some cash for the future. I hate to say it but I feel like the worse things get economically the more you will see the national savings rate increase.

Slackerjo
Slackerjo
11 years ago

JD thank you soooo much for having Gail as a guest on GRS. I love Gail because of her no nonsense approach to finances and debt. AND she is not afraid to yell at people and even curse them out a bit. Sometimes financial advice can be learned by showing spreadsheets and graphs and sometimes it requires yelling.

Gail I hope a ‘follow up’ show is in the works.

erica
erica
11 years ago

Perfectly timed article! My husband and I have been intensely discussing this for the past day. I was laid off from my job and am going back to school to get an advanced degree this fall. He’s worrying about how we’re going to pay for my tuition because the price tag is so high. I’m not worrying at all because I know how little we actually need and can live comfortably on about 2/3 of his post-tax salary and pay for my school pretty much out of pocket.

Aolis
Aolis
11 years ago

I love your show and am very excited to see your guest post here today.

Rainy
Rainy
11 years ago

I think the thing I like best about your blog is the emphasis on small, sustainable, and consistent changes in our life choices. It is always good to examine where we are at and see if we can’t do things differently or better or if, in fact, we’re happy where we are. For me, my first response to this was “Well I’ve already cut out a lot.” and then “I could cut more.” and finally “Do I want to?” I honestly don’t know the answer to that, but I suspect it lies somewhere between cutting more and being pretty much… Read more »

John C
John C
11 years ago

If you read elizabeth warren’s book, the Two income trap, she goes a long way towards destroying the idea that frivolous spending is to blame for the rise in materialism (there is a fantastic chapter about how silly it is to pine for the “good old days of responsibility”, as people have been doing that since they came to this country). Anyone who writes about personal finance and HOW people spend money should read the book. It turns out, frivolous spending on shoes and TVs has very little to do with our current economic situation. It is the rise in… Read more »

Johnny
Johnny
11 years ago

Buying and owning a bunch of stuff lightens our wallets while not adding significantly to our overall contentment. It’s a shame that it took a recession to get people to re-evaluate their spending and savings habits. One thing I started doing a few years ago was putting purchases on a minimum 2 week hold (usually a month or more). I would do research on my desired purchase and have time to mull it over. The extraneous stuff that isn’t useful or doesn’t significantly contribute to time savings, happiness, etc. normally doesn’t make it past this delayed purchase period. It’s not… Read more »

xepe71
xepe71
11 years ago

You re right in the background of the article, but forgot to mention that your savings worth in 25 years will be divided by more than two. This means, if you have saved 90000USD, you’ll be able to purchase for an equivalent value of less than actual 45000USD. this is considering an optimistic depreciation rate of 3% every year (1.03^25=2.09).
Still, it is an excellent article, and of course it makes sense to save (some more) money.

Aman
Aman
11 years ago

These are great points. Many people that hear about living modestly incorrectly connect this to “living cheap” or “living poor”, your points show that neither is true.

Modestly living can not only help you remain a lot in hard economic times, but can have so many further benefits in terms of being lest waste producing, healthy (less stress from being constantly in debt), etc.

dave
dave
11 years ago

great article, my wife and i started living more frugally about 6 months ago. Shopped less and when we did just hit the sale racks. Stopped eating out, stopped getting pizza delivered. Stopped buying steak and got more chicken. Holding off on most large purchases for a month and shopping around often to find in a month we didn’t even want it anymore.
With the money saved we have payed off my car(18k’s worth) in just 6 months. Frugal living is very addicting

Corey
Corey
11 years ago

Social programs and safety nets are GOOD THINGS, that save everyone money in the long term. The reason Americans began to live more comfortably was that our economy grew and the fortunes of the average person grew along with it (although the gains were not shared equally), not because of “government programs”.

Rich
Rich
11 years ago

Great post! Keeping the proper blend of savings and spending is a key to saving money

kelle
kelle
11 years ago

I do hope the current economic meltdown results in the masses questioning the authorities, the stereotypes and the definition of rich. If your nothing without money are you really something more special with it. I think only to those who want it. The rich people I’ve known and admired didn’t have fancy houses, cars, parties. They had well kept modest homes, friendly attitudes and were responsible people. We don’t live to impress and we probably “look” poor. We have two beater cars, but can afford two new(with cash). We have two houses(no mortgage). We have been happy with less and… Read more »

Jason
Jason
11 years ago

What a great topic to see a discussion about! I have followed an overall philosophy of frugality for quite some time, so much so that it is just like second nature. There are so many benefits that can be gained from Ms. Vaz-Oxlade’s suggestions, and she hits the nail right on the head with the figures she sets forth about how much you can accumulate in interest-bearing accounts, just by setting aside the money that would be otherwise spent on luxury items. A point I would like to add is the astounding environmental benefits that can be gained if more… Read more »

andy
andy
11 years ago

Thank you, Thank you! A great article which provides the conviction and justification for the frgual lifestlye I prefer. As I posted recently, being frugal is not being cheap, and the numbers add up as shown in this post!

kick_push
kick_push
11 years ago

i’ve been hanging out a lot w/ a couple of friends who are in between jobs.. and i’ve become accustomed to their lifestyle.. sometimes you just have to make sacrifices in order to survive.. you’d be surprised how easy it is! they have helped me put things in perspective.. it doesn’t take much for one to be happy.. all the “stuff” and “things” are just excess and clutter.. i think we tend to forget that sometimes

oh yeah.. happy holidays everyone!

tom
tom
11 years ago

Your post is definitely informative but I have one question.

I have listened to and read Robert Kiyosaki’s books and seen the current economy and just wonder.

Yes saving is great but if the stock market is so unreliable nowadays and people bet their retirements on it? Don’t they wonder that they can go broke?

Although I am assuming here that you are referring to RRSP and savings in terms of their own savings and putting it into mutual funds. Am I accurate?

LK
LK
11 years ago

Jacco, my husband (who is Dutch) and I went to the Netherlands this year on vacation. We were sooo impressed with the transit system there, and became such fans of the rail/train system. While some major cities in the US have city-wide rail systems, most cities are not set up for it, being set up for road travel and trying to retrofit a rail system is costly and most people actually argue against them! It’s crazy to us that many people don’t see the benefits. I know that many people *do* share one car, or live close enough to their… Read more »

Jean
Jean
11 years ago

Nice article Gail. I have been a fan of yours since discovering your show on-line last year. So much so that I set up a Money Makeover for 2008 on-line on a frugal board as if it were one of your shows…complete with Relationship Rescues. It was a great success from my viewpoint. Showed my DH and I all kinds of errors in our thinking. There is a lot of truth to paring down what you have. If nothing else it adds to the peace in our home. We still have too much stuff, but at least it’s stuff we… Read more »

Ajana
Ajana
11 years ago

I’m a Gail disciple and am (successfully) using her methods to get out of debt. It’s great to see her wisdom and common sense posted here!

It’s a relief to live frugally and not need to buy beyond the basics; even all these crazy sales on at the moment are not a temptation. IMO, frugality = stress-free living.

Fisher
Fisher
11 years ago

Hi Gail!

Great Post. I would like to add something more. There’s a direct linkage between savings and long term sustainability of the planet earth. This is another ‘inconvenient truth’. Everybody needs to realize that if we want long term sustainability of the planet earth, frugality or conscious spending is the way to go.Check out the details at http://www.themoneyquest.com/2008/12/savings-step-towards-sustainable-living.html

mwarden
mwarden
11 years ago

“Before the advent of retirement savings plans, government pensions and a social safety net, most people had to save without incentive by living modestly.”

So, reading between the lines here… your assertion is that the increase in wealth we’ve experienced since 1935 is due to Social Security, pensions, and IRAs.

Battra92
Battra92
11 years ago

For some reason the line “Before you throw your hands up and say, “Ridiculous”, just try it.” seems a bit condescending in nature.

Perhaps I’m just not your target audience.

Theodore Van Rooy
Theodore Van Rooy
11 years ago

“Frugality is all the rage. And a good thing too.”

-agreed…. but it’s not the whole picture… the great depression happened in them midst of the Golden Frugal Age

“If you go into homes that are 60 years old, the cupboards are tiny. That’s because nobody had much stuff”

-That’s because “stuff” was really expensive back then. Thanks to fossil fuels, globalization and increases in manufacturing technology “stuff” is really cheap now.

Frugality is not a virtue unless it’s a means to a worthwhile end.

Nick
Nick
11 years ago

I’ll argue that the reason people today have more ‘stuff’ than generations before, is that the standard of living is higher, rather than materialism. People do what makes them happy, and if spending their money on ‘stuff’ does that, then so be it. Anyone can save if they want to, but the real question is ‘Will I be happier spending or saving this money?’ And that answer isn’t the same for everyone.

Bill in NC
Bill in NC
11 years ago

Houses are considerably larger today than in previous generations – does “The Two Income Trap” control for that?

It was not the least bit unusual for a family of 6 to live in a 3 bedroom, 1 bath, 1,000 sq.ft. house 40 years ago.

Who’d be willing to live so small today?

steve
steve
11 years ago

It is true, at least for me, I have little need for more stuff. Instead of shopping on the day after Xmas, I was cleaning my house–in spite of the jjaw-dropping sales. I ended up going through boxes and boxes of clothes that I had in storage, taking out each item and stacking them according to whether they were pants, shirts, summer, winter–you get it–and when I was done I had a pile of clothes about 3 feet high in each category. I realized in that moment that, barring perhaps some socks and underwear in a couple of years, I… Read more »

John C
John C
11 years ago

The two income trap absolutely covers that. It destroys that myth as well, and discusses the actual numbers of home purchasing in terms of size and cost. If you don’t have time to read the book, here is a video
http://www.youtube.com/watch?v=akVL7QY0S8A

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