Stay On Top Of Your Financial Resolutions
It’s a new year and one of your resolutions is probably financial in nature. One way to stay motivated is to read books that encourage you to stay on the path you want to follow.
Frugal Isn’t Cheap by Clare Levison is the book you want for money matters. We all know there is no magic bullet that will turn $5 into $500 or $5000. But what this book does offer is lots of practical advice.
The big idea that kicks off Frugal Isn’t Cheap is making the mental shift to a frugal state of mind. Clare says, “If I had to come up with one synonym for frugal it wouldn’t be ‘cheap’; it would be ‘smart.’ Being frugal isn’t about buying the cheapest thing; it’s about buying the things that are truly a good value. . . You have to start spending less, so you can have more. Many things like cars, clothes, and furniture depreciate greatly the minute you take them home. You need to think hard before spending a lot on those kinds of purchases.”
Later she says, “Frugal people don’t spend their time wishing they had more stuff. They avoid excess. . .You aren’t what you own. Being secure with who you are is one of the most important factors in financial success.”
My first “aha” moment came when reading about the “I’d rather” idea. Instead of thinking, “I want…” think, “I’d rather… .” In my case, I’d rather save $60 towards Amy Porterfield’s List Builder's Lab rather than buying clearance t-shrits from Old Navy. Purchasing that class is an investment in myself and I'll get a return on the money spent. Buying five $10 shirts doesn’t really get me anything but shirts I don't need. Reframing my purchases in this way has been a huge game-changer for me; though book buying does remain my kryptonite.
In addition to writing about the mental shifts necessary, Clare has chapters about budgeting, paying off debt, savings, making large purchases like homes and vehichles, long-term investing, and talking to your children about money.
My second big takeaway came from the chapter on savings. Clare touched on a new-to-me idea. The idea was that savings takes practice like any other skill. I’d never really thought about it that way before. I’d always thought of building savings as something you either did or didn't do and that some people find it easier than others because they don’t mind the delayed gratification. But Clare says that the more you practice saving, the easier it gets, just like lifting weights gets easier over time. Plus, the more money you save, the more motivated you are to watch the dollar amounts continue to grow.
Another idea that I loved was using your current net worth to calculate your future net worth. Know your future net worth can help “you solidify your financial goals and find the motivation to achieve the. . . Creating a five-year net-worth plan is a great way to get a big-picture look at your finances. Hopefully, this exercise will convince you to put your extra dollars into lowering liabilities rather than making more purchases. In addition, it should be a reality check on what you should put your money into and what you shouldn’t when making purchases. Most ’stuff’ depreciates. Put your money into things that are going to increase your net worth.” Uh, yeah. This is all common sense stuff but sometimes you just need a kick in the pants, which Frugal Isn’t Cheap provides.
The one area of the book I disagree with very strongly is the idea that Hard Work + Responsible Spending = Financial Success. I think we all know that it’s not always that simple. Especially as healthcare and housing costs continue to rise and wages remain stagnant. If you are in dire financial circumstances, I recommend More Than Making It by Erin Odom. Frugal Isn’t Cheap is a great book but it’s definitely geared towards those in a stable financial situation.
At the end of the book, she closes with the following advice,
Make the mental shift.
Make the change a daily habit.
Be realistic and honest but stay positive.
None of which is ground-breaking but this book’s beauty is in it’s simplicity and no-nonsense advice. It’s common wisdom in a sensible, easy-to-understand framework. Surrounding yourself with this type of content will keep you on top of your financial goals.