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How to build your wealth without living frugally

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by Paul Kindzia in Happiness, Personal Finance
August 19, 2022

Many people have a belief that you have to be frugal to become wealthy.  Perhaps we need to pause and clarify so that you could process your own thoughts and challenge your own beliefs on this topic.

We each have individual personalities and natural behaviors.  Let’s call it “default software” that we run daily that allows us to live the life path that we are on.  There really are people that are naturally frugal and are quite comfortable and happy living a frugal life.  There could be a number of reasons for their frugality.  Below are just a few;

  • They had prior experiences that required living on next to nothing or living in harsh unpredictable conditions.People that lived through the Great Depression were forced to live frugal.  It was their only chance of survival.  So even as economic conditions improved, their habits and behaviors never did because they always thought that the next drought was just around the corner.  They lived their remaining days never wasting a single resource.
  • They don’t make much money and don’t want to put in the effort to make additional household revenue.They feel that the trade-off isn’t personally worth it.  They would rather cut expenses and do without rather than put in more effort into generating additional revenue.  Examples of this could be kids that go out west to be ski-bums or semi-pro athletes in fringe sports such as triathlon.  The chances of making big bucks is slim but that isn’t what drive them.  They would rather accomplish athletic goals that are meaningful at that phase of life than go and chase revenue.
  • They were raised to be frugal by their parents and they don’t know any other way.Through repetition, they were hardwired by their culture and circle of influence to act and behave a certain way.  There could be religious influences related to their beliefs.

The important financial principle that I like to stress is, “LIVE BELOW YOUR MEANS.”  That now provides us with much greater leeway on our way to wealth.  The fact is, many of us (me included) don’t want to live frugally.  I use the word “frugal” with an exaggerated emphasis on;

  • Painful cutbacks
  • Scrimping
  • Miserable
  • Perpetual self-sacrifice

Please note the difference between living frugally and living below your means.  If you live frugally, you probably are living below your means.

However, you can live below your means without living frugally if you have adequate earnings!

Wealth building and preservation requires living below our means.  It does not have to mean living frugally by way of perpetual pain and self-sacrifice.

I can assure you that many people do not want to set their thermostats at 60 degrees during a cold winter’s day or the air conditioner at 80 in the blazing heat of summer.  Many would rather enjoy the fruits of their labor on luxuries of life such as a constant 72 degrees in their personal residence.

The alternative to living frugally is to increase your earnings to a point where you have the extra financial resources to build wealth AND enjoy some luxuries of life.  That requires more work and effort on earnings.  But we know that many people may or may not be willing to make that trade-off.  That is a personal decision.  If you don’t want to live frugally and you want to build wealth it is possible.  The obstacle then is to learn, acquire and implement additional life skills that allow you to generate additional and increased earnings.

I would rather work harder and increase earnings to at least a minimum level and enjoy the basics of a good life.

What many wealth builders have to figure out on their own is what their minimum level of comfort is in life to be content and relatively happy as a baseline.  Then many of the financial resources above and beyond that minimum level can be allocated towards additional wealth building and preservation.

I have worked with people that became wealthy on very little income and I have worked with people that became wealthy with much more significant income.  Often the extra income required additional work and investment (education, learning, hours, and frustration).  That leads to personal decisions on how fast and how high we want to personally achieve in the area of personal wealth.  But it is highly personable because some naturally are content with a slow and steady process while others are more motivated to speed the process up or move the potential wealth bar higher than others which requires more earnings.

If your earnings are too low, then your minimum level of living will require more sacrifice, skimping and doing-without some basic luxuries for most of your lifetime (or throughout your entire lifetime).  I actually find those examples equally impressive when somebody still achieves significant wealth with reduced earnings because I know the sacrifices that were made over long periods of time to achieve the goal.

When you boil it down, it often does come down to some form of sacrifice.  It just depends on what your preferred method of sacrifice is.  Is it working less, earning less and doing with less?  Or is it working more, earning more but having more along the way?  You get to choose.  Hopefully, this will be a light bulb moment for you and your wealth building plan.

Good habits lead to good behaviors.  Good behaviors lead to good decisions.  Good decisions lead to a good life.  Live by principles and choose wisely.

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