Financial Success is More than Being Cheap or Frugal

11 Jan Financial Success is More than Being Cheap or Frugal

Buying on saleDoes Being Frugal Mean You’re Winning?

I meet a lot of people on the streets, at parties, and in networking events and the conversation always turns to “what do you do?” I’ve gotten pretty good at dodging the stereotypes of a financial adviser, insurance agent, or investment broker. I explain how as a coach I’m none of the aforementioned professions and I simply help people get better with their money through proven budgeting and debt elimination techniques.

Frugal Folks are Defensive

Once I get through all that, a funny thing happens. I hear, “Oh, I have a friend who should see you. They’re really bad with their money.” Or, “Oh, there are a lot of people out there that need people like you, Matt.” But when I ask questions about how well they are doing with their money, the comments get really weird. “Oh, I always buy stuff on sale. You should see me. I’m the queen of coupons!” Or, “I’m really good at finding deals.” Or, “I’m good with money. I watch every penny and pay my credit card off every month.”

These statements are usually uttered with a sense of defensive pride. And rightfully so. Everyone thinks they are good with money. Everyone thinks other people are worse with money than they are. But just because you’re cheap and watch for sales doesn’t mean you’re doing well financially. Just because you clip coupons doesn’t mean you’re good with money. It doesn’t even mean you spend less money than others. And even if you do spend less money than anyone else, that doesn’t necessarily mean your overall financial picture is in balance. I’ve met lots of “frugal” people that still have lots of debt. It takes more to win with money than simply declaring yourself frugal.

Be intentional with money

Success in personal finance is about being intentional. You’ve got to have a plan relative to your income. You’ve got to write out your plan and you’ve got to stick to that plan. A healthy plan includes a written budget, proper insurance coverage, a will or estate plan, a debt reduction plan, a retirement plan, a college savings plan, and more. You can’t just be a tightwad and call yourself king of frugality.

If you really want to succeed financially, open your eyes to the world around you. Continue being frugal, but start being intentional. Do a written budget every month. Write out your plan for eliminating debt. Cut up the credit cards to force yourself to stop using them. Start paying for things on a cash basis. Shop for the best deal, not just what you have a coupon for. Make savings a priority in your life. Make sure you have proper insurance coverage. Create a basic estate plan for your beneficiaries. Develop a plan to teach your kids about money. When your debt is gone and you have an emergency fund in place & you’re contributing for retirement, add a little fun into your life. It’s ok to live a little, just not too much at the wrong times. And most importantly, make sure giving is a part of your overall financial plan, and inherent to your spirit & personality.

When you start doing these things in a formal way, you’re ensuring your financial success. Notice that none of the above mention hanging on to your money with a tight fist. Making frugal choices is just one piece of the bigger picture. When you keep that bigger picture in mind, the other pieces come into balance and you can really start winning with money. So go ahead: be proud to be frugal. Just remember to be big picture frugal.

  • Jeremy
    Posted at 14:17h, 13 January

    That was an amazing post my friend.

    • Matt Wegner
      Posted at 15:48h, 13 January

      Thanks Jeremy!

  • Kathy
    Posted at 11:49h, 14 January

    great post! I thought I was frugal many years back; however, I realized I was justifying buying more cheap items. What I actually was doing was spending all our income on sale items and a bunch of junk. When I go laid off in 1999 in my mid-40s (and found another job immediately), that is when we got REAL serious about our money. We had a plan, in fact we had a lot of plans — 1 year, 5 years, 10 years, etc. up to having the house paid. off by age 62 when SS would kick in (or not). I am proud to say that we are right on track, even though I was laid off permanently 18 months ago!
    Those who used to say we were cheap, etc. now look at us with envy and ask for advice. Unfortunately for them, they’re not willing to make the necessary sacrifices to get fiscally fit. They say they’ve earned the right to splurge. I say they want to use all their tomorrows today.

    • Anonymous
      Posted at 14:34h, 14 January

      Way to go Kathy – setting goals and developing a plan to reach the goals is definitely a big part of financial success. And you’re right – too many people don’t want to sacrifice to be successful. They are the broke people who make fun of the folks who get out of debt and build wealth. I’m ok with broke people making fun of me!