Do you consider yourself a frugal person? I used to think Mrs. Tako and I were pretty frugal people. If you remember our backstory, the two of us were good savers in our 20’s and 30’s which allowed us to reach financial independence by age 38.
We saved, but we didn’t suffer. We traveled internationally quite a bit, ate delicious meals, and generally had a very luxurious life — all while saving a good chunk of our income.
That was the past, and this is now. Today I’m not feeling nearly as frugal as I used to. A lot of it has to do with changes happening in the world with response to COVID-19. All the little things we used to do to save money are now being done by A TON of people.
For example, instead of eating out, more people are cooking meals at home. Many of the same people are making coffee at home instead of going out for a daily latte. They’re also cutting their own hair, working-out at home, and DIYing housework instead of hiring it out.
Does any of this sound familiar? It’s because many of those frugal behaviors are things I’ve written about on this blog. The same little tricks that Mrs. Tako and I used to save up to our multi-million status.
Now, everybody’s doing it! It has me wondering: Are we still frugal if everyone else is doing the same thing?
Maybe it’s time to step-up our frugal game!
Stepping-Up Our Frugal Game
As mentioned in my last post, one of the best ways to keep compounding during a recession is to tighten your belt, spend a lot less, and plow money into investments.
It doesn’t matter if you thought of yourself as frugal person in the past. Now is the time to really “get ahead” by saving and investing when the markets are down (or flat) for the year.
What makes this the perfect time to make lifestyle changes, is there is no social pressure right now. With so much of the world social distancing, and many of our societal “norms” being disrupted, absolutely nobody is going to judge you if you start doing things a bit differently. It’s the perfect time to push yourself out of your comfort zone and find ways to save!
These new methods might seem a little strange by “the old rules”, but they will certainly pay off in the long-term, when the economy recovers.
Yes, I have complete faith that the economy will eventually recover, but it is going to take some time. How long? I have no idea… but for now, all we can do is focus on what we can control. Namely, our spending.
The New Frugal
Knowing that we needed to tighten our belts a little, I’ve been brainstorming ideas on how to save cash in this new COVID world.
Some of these ideas might seem a little outlandish, but in order to really save money, altering your behavior is the single fastest way to save.
Here’s a few of the more interesting ideas to save I’ve come up with:
* Go full-on Vegetarian. This idea might seem a little shocking to all the big meat eaters in the audience, but Mrs. Tako and I have long flirted with the idea of eating vegetarian and dropping meat from our diet! We generally eat vegetarian a few meals a week, so it wouldn’t be a giant stretch to go full-on vegetarian. We might save $100/month if we became full-on vegetarians too!
* Stop using overprice food delivery Apps. Food delivery services like Uber Eats, Door Dash, or Grub Hub are quite popular right now. It’s also a pretty expensive way to get food — Not only do you have delivery and service fees that amount to an increase of 25% to 30% over the cost of the meal, but menu items are often more expensive using delivery apps. It’s frequently a lot cheaper to order from the restaurant directly, and avoid the fees and markups associated with delivery apps.
Now, I get the convenience argument, but how hard is it to make a phone-call and pick up the food yourself? Get off your lazy ass and pick up the food yourself! Odds are, you’re not going to exposing yourself to COVID-19 by picking up food at a take-out counter either.
* Limit yourself to one streaming service at a time. With libraries closed, and most forms of entertainment either canceled or shut-down, the siren song of the television is now a powerful draw. Streaming services are getting more popular these days, and I know several family friends that are actually subscribed to more than one streaming service at a time.
“What? Why do they do this?” is the question I’m always wondering. They only have one TV, and none of the programming they watch is live. They can watch the exact same show now, or 6 months from now. Having concurrent subscriptions makes zero sense to me. It makes far more sense to only subscribe to one service at a time, binge-watch all the content, and then cancel the subscription. Rinse and repeat at the next service.
Sure, you might pay slightly higher fees by paying month-to-month instead of for an entire year, but this added cost can easily be countered by not having two concurrent streaming subscriptions.
* Cut-out the snacks. With COVID-19 keeping everyone at home and (probably) watching too much TV; eating and snacking is really easy to do. Almost everyone I know is getting less exercise than they should right now, and snacking is just a bunch of extra calories. Snack foods are also really expensive! (With the exception of one of the most frugal snacks) It’s not hard for a family to consume $50-100 per month (in fancy snacks) without breaking a sweat.
That’s quite a bit of money every month that could be saved — and we’d all be healthier for it! Just stop buying snacks and limit eating to mealtimes only. We really don’t need all those extra calories!
* Turn off your cellphone service. Back in the old days it made sense to have a fancy cell-phone plan with data. People were out and about. Mobile plans made sense in those days! These days, people are sticking close to home where wifi is always available. Do you still need a fancy mobile phone plan if you never leave the house?
Probably not! Regular calls can be made with Google Voice, and home internet wifi provides all the data you can consume. Try turning off your cellphone service, or switching to a lower cost ‘call-only’ plan that matches your current needs. It’s easy enough to upgrade once again if life suddenly changes and we start spending more time away from home.
Mrs. Tako and I have gone for years without a mobile data plan, and we see absolutely no reason to upgrade to one now.
* Cut your car insurance. Another tip I’ve seen put into practice (recently), is to trim that extra car insurance policy. This is for families with multiple cars that used to commute to different workplaces.
With fewer people driving regularly (less commuting and more working from home), why bother insuring two cars! Only keep an active insurance polity on one car — ideally the most fuel efficient car you use for grocery shopping.
How much can this strategy save? It really depends on your car insurance policy, but saving $100/month wouldn’t be impossible.
Saving Is All About Percentages and Consistency!
Ultimately it’s all about your savings rate — the percentage of take-home pay you spend vs. how much you save that return matters. Saving 50% or more of your take-home income is a sure-fire way to reach financial independence… even in a low return world.
Yes, much of the world has experience a higher savings rate under this new “COVID-19 economy”, but odds are it’s not going to last for the long-term. Give it a few months and most people will once again begin frequenting restaurants, hiring workers to perform home maintenance, and getting hair cut at salons.
Individual savings rates will eventually plummet down to normal levels again. The question is, can you maintain that high level of savings? Do you have the willpower to keep making all your meals at home, and cutting your own hair? One hundred dollars a month might not seem like much, but if you can consistently save $100/month over decades, that kind of savings really adds-up.
I personally doubt most people have the will-power to maintain their new-found high savings-rate. It’s just too easy to be lazy and have someone else cook your meals, mow your lawn, or cut your hair. Everyone I talk right now to misses “the easy life” we had before COVID-19.
Everyone wants life to “go back to normal”, but how much of your income were you saving as part of the old “normal” lifestyle? Was it enough to reach financial independence?
Given that so many people have trouble saving, I think now might be the right time to make some serious lifestyle changes.
[Image Credit: Flickr]