A Rich Life

Sanjib Saha

I’M FRUGAL AND FEEL fortunate to be so. Indeed, among all the financial skills I’ve learned, frugality stands out as the most powerful. But at the same time, I also feel affluent. This might seem like a contradiction, but the mindset of frugality and the feeling of affluence strike me as two sides of the same coin.

Frugality is often associated with being cheap. Frequently, “affluent” is used interchangeably with “wealthy.” I beg to differ. Frugality is about avoiding spending on things that have little value, while affluence is about having things that truly matter. I believe it’s possible to strike a balance, so you’re frugal and affluent at the same time.

My family’s frugality is evident in our spending. When I compare our average household expenses to those in the same income decile, our numbers are much lower. In fact, our annual expenses are closest to the income group that’s two deciles below ours.

Meanwhile, we rank in the top quartile for household income in our city, and yet the value of our single-family home is below the city median. All but one of the cars we’ve ever owned, including the two we bought in the past year, were purchased preowned. We use them for as long as they’re safe and comfortable to drive. We are frugal.

But we are affluent, too, in the sense that money has never constrained us from having and doing the things we care about. We vacation a lot, often abroad and never on a shoestring. Each of us freely pursues our interests, despite some being somewhat expensive. My lovely wife has a fascination with luxury German-built sport sedans and SUVs, while I’m a minivan person. We own one of each.

We have both been able to take long, unpaid time off from work to care for our ailing parents, without worrying about the financial impact. We strive to be generous with those we care about. Most important, we earned our financial independence a few years ago, so my wife and I now have the freedom to retire early or scale back our work. This is what our frugality has bought us.

While frugality is a struggle for many, it came naturally to me. Growing up in a middle class, single-earner family, the good habits of budgeting and responsible spending were ingrained in me. After I finished my education and started living on my own, I religiously followed the “save first” mantra and fought every urge to be extravagant. While my self-discipline was great for my financial future, it also led to occasional feelings of being deprived. I was frugal, but I didn’t yet feel affluent.

To prepare for new management responsibilities at work, I was compelled to learn new skills and get broader exposure to business problems. Three key insights from this training came in handy for my personal life. First, the 80/20 rule helped me to relax my self-imposed tight spending rules. I discovered that by increasing my spending just a little, I was able to boost my satisfaction with life significantly. The feeling of deprivation was gone.

Second, the “do more with less” paradigm helped me to focus on my family’s top priorities. I identified our most important financial goals and channeled most of our money there. Third, the KISS—keep it simple, stupid—philosophy helped me unclutter our finances and put our money management on autopilot. All these lessons transformed me from being overly cautious about spending to a more balanced lifestyle. Today, we are affluent because we are frugal.

Like that idea? Try benchmarking your income and expenses using survey data. If your annual expenses are the same or higher than your income group, the chances are you can reduce your spending without any perceptible impact on your lifestyle. Track your expenses, ruthlessly reducing or eliminating spending that has little meaningful value. This will help you spend more on things you find truly rewarding. It doesn’t take a supersized income, financial windfalls, unsustainable self-deprivation, extraordinary luck or investment genius to become affluent. Even if you have none of these, but you have frugality, financial success is all but inevitable.

A software engineer by profession, Sanjib Saha is transitioning to early retirement. His previous article was Cost of Living. Self-taught in investment and financial planning, Sanjib is passionate about raising financial literacy and enjoys helping others with their finances. Earlier this year, he passed the Series 65 licensing exam as a non-industry candidate. 

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