Several times a day, I find myself having a conversation with someone about personal finance. Whether it’s face to face, via email, through social media, or something else, it is a surprisingly common thing for people to open up about their financial state to me and ask really thoughtful and insightful questions.
While those questions and answers – which often turn into mailbag posts – are often the most fulfilling part of my day, they’re also the most challenging part of my day for a number of reasons.
One big reason for this is that some of the stories are really hard to hear. The stories of people who are really struggling, particularly when it is due to horrific unexpected events, are tough to read. They’ve usually got a ton on their plate and are hoping that I can provide some kind of miraculous solution, which I usually can’t.
Other stories are a challenge because of missing details. It’s really hard to give adequate thoughts on a person’s situation when those thoughts rely on assumptions and guesses about their life. Not knowing a person’s age or employment situation makes it very hard to suggest anything meaningful.
There are many, many types of messages that I get, but I wanted to focus in on one particular type: the message from the unfulfilled person who believes they have found a new life direction thanks to personal finance.
I’ll hear from someone who has seen some very nice short term financial success from being a bit more frugal in their buying choices and suddenly now thinks that frugality is going to solve all of the challenges in their life. They’ve focused in on frugal tactics like a laser beam and view it as the “magic key” to opening all of the doors that they want to open in their life.
I understand that passion because, to a large extent, I was once there myself.
For a period of my life that lasted for eighteen months or so, I truly believed that frugality was the key to building the exact life that I wanted to have. Frugality was how I was going to buy a home. Frugality was how I was going to improve my fitness (yep). Frugality was how I was going to make everything in my life better. It was in this period that I wrote my short book , which was exactly what it described but also included a few bits that were very excited about the power of frugality to change lives.
Here’s the catch, though: near the end of that period, I began to realize that, although frugality had really helped in some aspects of my life, it wasn’t this magic wand that could fix everything. A lot more was required of me to live the life that I wanted.
I needed discipline. I needed the ability to choose the difficult option in the moment and do it on a regular basis under the knowledge that it would build a better life in the long run. Discipline is why you make your bed in the morning rather than just trudging out the door as quickly as possible. It’s why you go to the gym when you’d rather curl up and watch Netflix.
I needed organization. I needed to be able to find things when I needed them. I needed to have a home that was presentable at any moment.
I needed time management. I needed to know what things I needed to get done at any given moment. I needed a smart way to keep those things accessible, too, and out of the way when I needed to focus on a task at hand.
I needed values and principles. I needed core rules to live by to balance my life and help me navigate tough decisions and be at least relatively certain that I was always making good choices.
I needed good friends. I needed good relationships. I needed emotional control. I needed a healthy body. The list keeps going and going.
Here’s the thing: frugality is a wonderfully powerful tool for building a great life, but it is only one tool in a toolbox. Being obsessive about frugality alone will help in some areas but not in others.
I like to think of these things as being like tent stakes. If you have just one, you don’t really have a functional tent. If you have three or four, you can at least make passable shelter. If you have a lot, you can make a wonderful place to sleep that will give you plenty of space and keep the rain out.
Each tent stake is one of those tools, and the canvas tent itself is your life. One tool won’t really prop it up into anything amazing – it takes a lot of tools to make the kind of life that you want.
So, what exactly should you do if you see yourself in these words? What should you do if you find yourself pinning all of your hopes on using frugality – or some other individual tactic – to fix a myriad of problems in your life?
Moving From “Frugality as Solution” to “Frugality as Tool”
The absolute first thing you should do when you decide that you want to make changes in your life is to really think about what those changes should specifically be. A vague idea of a “better life” won’t really help you achieve much of anything, and, besides, almost everyone has a somewhat different definition of what a “better life” actually is.
What do you want out of your life? It seems like such a vague question, and it’s because of that vagueness that people often ignore it or get lost in it.
My preferred tactic to use here is to visualize a specific future, a few years down the road. It’s simple – I just ask myself one very straightforward question. “Assuming that things go reasonably well in the next five years and I’m able to execute on the things under my control, what do I want my life to look like?” So, you assume that if you bite off some reasonable challenges for yourself and execute on the things you can control, what will your life look like?
Things to include in this picture are things like personal health, intellectual growth, some degree of financial success, skill development, and personal achievements. You can also include things like positive growth in existing relationships and development of new relationships, but do not pin your hopes on a specific person or specific relationships outside of your immediate family because those things are somewhat outside of your control.
Try to focus in on just a few things that you want and make them specific. Maybe you want to establish some financial control in your life, but what does that look like? Are you eliminating debt? Saving for retirement? Or, maybe, you just want to have a really strong marriage, but what does that look like? Better communication? Better intimacy? What about your career? If you’re focusing on that, what does that mean in terms of things you can control? More education? Living up to a performance review?
Figure out a handful of key things that you really care about, and then make those things specific. Where do you want to be in five years? Debt free? Better body? Lower weight? Better career options? Better relationships?
Once you’ve really identified some of the things you want to have in your life in five years, start translating those things into changes. What’s the difference between your life now and that picture you visualize? Maybe you’re debt free. Maybe you’ve lost weight. Maybe you have some retirement savings. It really could be any number of things.
This might appear similar to suggestions I’ve made in the past on Money360, and for good reason, but here’s where things start to change a little bit.
That list of changes is now your list of goals. Frugality is a tool that will help you achieve some of those goals, but it is far from the only tool. What tools will you need?
Well, the next step in this journey is research. You need to look into the specifics of each of those goals and find out what kinds of things actually work in terms of achieving those goals.
If your goal is debt repayment, for example, frugality is definitely one tool, but it’s not the only tool that helps. Improving your income through improving your career or starting a side hustle is also a tool you can use to pay off debt – it won’t start clicking right away, but if you have a lot of debt and a large timeframe, you’ll find that some career focus will really pay off for you in a few years when you can really hammer through that debt.
Other goals you may have will only use frugality in a secondary way at best. If you want to lose weight, you might discover that the most effective way is to count calories. This may seem really obvious, but you’d be surprised how often people begin to pin all of their hopes and dreams almost irrationally on a single tool.
In fact, if I were to suggest one tool that’s actually fundamental to anything you want to achieve, it’s discipline. Discipline, in this context, simply means having the self-control necessary to consistently put forth the effort needed to achieve a goal over the long term, even if – or especially if – the results aren’t immediate.
Without discipline, it’s pretty hard to keep pushing yourself through the long slog between the exciting start of a goal and the exciting finish where you achieve the results you want. Self-discipline is the willingness to get up each and every morning and do something that offers a bit of resistance.
Putting Tools in their Place
Let’s step back here for a moment.
We’ve established that frugality, like many other things, is not a solution in and of itself, but a tool one can use to work toward a life-changing goal.
We’ve also established that the best approach for changing your life is to define a life-changing goal, then research that goal to figure out how to approach that goal in the most effective way that you can.
Finally, we’ve established that the most effective all-around tool is probably self-discipline, but no tool is perfect for everything.
Let’s focus in a little bit on that second part – research. You know where you are. You know where you want to be. However, the path between here and there seems both difficult and unclear. Lots of people are telling you lots of different ways to go and suggesting lots of different tools to use.
What do you do? How do you figure out the right strategy to follow?
My approach is very straightforward. I read a lot of different approaches and stick with the things that they have in common.
For example, the most consistent elements of weight loss strategies that I’ve seen revolve around eating fewer total calories and eating a diet that’s mostly plants – fruits, vegetables, and whole grains. There are many, many, many different weight control strategies out there, but all of them tend to fall back on those things.
If you want to get more fit, move around more, pick up some heavy things, and occasionally push yourself hard enough that you’re out of breath a few times in a row. The exact thing that you do varies all over the place, but the advice seems to consistently agree on those elements.
This move is akin to digging through a toolbox for the right tools for the job. You might know how to use a hammer, for example, but a hammer isn’t particularly useful if you’re trying to install a shelf. You need a level, a few brackets, some screws, and a drill. As the old adage goes, if you have a hammer, everything begins to look like a nail, but if you try to use a hammer here, you end up with a big hole in your drywall and a bunch of wasted time.
Let’s sum all of this up.
A Tool Won’t Save You. A Plan Will.
If you believe that a particular strategy will solve all of life’s problems, you’re going to be sorely disappointed. There is no magic tool that will solve every challenge in your life. Just because something handles one or two of those challenges really well doesn’t mean that it will handle all challenges with ease. Don’t become obsessed with just that one strategy – instead, add it to your quiver of strategies that you can use to solve problems.
Instead, start by identifying where you want to go. Where do you want to be in the future? What changes need to happen in your life?
Then consider those changes as problems to solve. How do you move your life from where it is now to where you want it to be? Then, how exactly do you make that change happen?
Those steps give you a vision, a goal, and a plan. Tools like frugality are how you make those plans a reality. Knowing how to get the most from a dollar is a very useful thing to know, but it’s really only useful for approaching financial goals, and financial goals alone won’t bring you the life that you want. It won’t magically solve fitness goals or marital goals or achievement goals or other goals.
Frugality is not your solution. Frugality is a powerful tool, one that works well in terms of helping you achieve some big goals you might have, but it doesn’t solve those problems by itself.
Frugality works best when you consider a financial goal to be very important for the future that you want and when it’s paired with other useful tools, like self-discipline and budgeting and money management and bill negotiation skills. Taken together, those tactics can go a long way toward stretching your income and helping you stop accumulating debt and pay off debt.
If you want to hang a beautiful picture, you need more than just a hammer. You likely also need the right kind of nail and a level if you want to get the job done well and get it done efficiently.
If you want to achieve financial success, you need more than just frugality. You likely also need self-discipline, money management skills, and negotiation skills if you want to get the job done well and get it done efficiently.
Frugality is a tool. It’s a great tool, don’t get me wrong, but it’s not a solution on its own. It just helps you on the path to where you want to go. You’ll need more to get you to where you want to go with any reasonable efficiency.