Does Frugal Have A New Normal?
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]
Good stuff. To answer the question yes I consider myself far more frugal than most (probably not you 🙂 and that’s how I became financially independent at such a young age. Although I agree in what you’re saying about many adopting some of our frugal habits, here’s where I disagree. The main reason I got to FI was by saving HUGE on the first two of the “big three” – namely housing and transportation. Yes, many more people are now cooking at home and not eating out and thus saving on the third of the big three which is food. But they’ve already locked themselves into the big house they don’t need and the money-burning wasteful vehicles they don’t need. Unless they are selling their huge houses and trading in the super-sized clownish SUVs during this pandemic, their better food habits aren’t really gonna make up for the first two.
Don’t get me wrong, I see silver linings in this pandemic. Mostly that so many Americans are getting out and getting some exercise and realizing how unhealthy they are and that exercise is missing from their lives. And less eating out is of course great for their budgets and waistlines too. But now they need to go a step further and reconsider the 3000 square foot house with empty rooms and the $40,000 SUV that sits still most of the time and gets groceries at the most.
I don’t think we disagree Dave — Controlling the big three expenses makes a huge difference. That hasn’t changed in recent months.
Always good to be frugal. Thanks for more ideas on how to be frugal.
No problem Dividend Power!
Most people will revert back to normal once this is over. No doubt about it. I like your point on eating vegetarian. I have lowered my meat consumption dramatically and can already see a major impact on my budget. I’ll probably end May with around $150 spent on food just by switching to a more vegetarian style diet. That’s a $100-$200 a month decrease on what I’m spending now!
Thanks Backpack Finance!
Several months ago I checked out 3 Indian cookbooks from the library. So many easy vegetarian dishes. Alter some of the spices to your liking. Cut the recipe to a one serving batch and try it with your spouse. Tweak it and move on to the next. I went to an Indian store in March and picked up lentils, rice, spices, beans for a third of the price of the grocery store. It was crazy cheap.
Credit card debt is on the rise since people are off work. Try not to charge if at all possible. Once you start work, make an effort to pay off the cards.
For every $100.00 you spend, $ 20.00 is interest. Or, $1.00 out of every $ 5.00.
Like any tool, credit cards can be used dangerously or safely. It goes without saying that I’m NOT a proponent of credit card debt.
Yes, go vegetarian or vegan for your $, health, animal welfare and the planet!
Our family has been eating WFPB (whole food plant based) 90% of the time, mainly for health reasons since Nov. 2019. My husband’s cholesterol has gone down 50 points, I have lost 20 lbs and our allergies are milder this year. We do spend money on the best produce but I have no doubt we will save a ton of money and avoid all the negative stuff that come with ill health. My teenagers are getting used to it since they are a captive audience during this time…(hee hee.)
Is this what wealthy people consider frugal? Many of us have always done these things just to survive.
If I ever meet one, I’ll ask for you.
Being frugal means smart management of your resources and thinking through the consequences of decisions. It never went out of style for those who chose to be responsible, but for those who are frivolous, it is a lesson that they never learned. I have a friend that retired from her state job when she was first eligible for a pension, she thought she was smart, but found that her retirement pay didn’t cover her expenses. So she got another job paying less than half, with more physical labor required as well as less benefits than her government job. If she had stayed where she was, she would get higher pay, generous vacation time, pay less for health insurance as well as building up her years and getting a higher retirement pension. She regrets that no one ever did retirement planning with her and discussed finances.
Ironically, temporary frugality’s been thrust upon us here in Panama for the most part. Since we haven’t been able to really leave our property together, we’re spending so much less on entertainment and eating out. We’re still ordering food to be delivered periodically but it’s just been much less money spent regardless.
You bring up a good point on the cell phone service. I think if we were still living in the US, I’d consider that option but we don’t have as many options for WiFi around here. I’m a Google Voice user too and it’s pretty awesome!
I hope you guys are doing well Jim. The Panamanian version of the COVID lockdown seems so much more extreme. At least we can still go out for a walk here in the States.
I think I’d lose it if I had to stare at four square walls for months!
We’re still holding out on Netflix. Ha!
We also have just one car insurance policy. Even better, we only have one car! 😉
Yeah, most people will go back to normal once the economy opens back up.
Hopefully, some will see the light and save more for the next crisis.
You guys are way more frugal than the average family Joe. There’s a reason why you’re killing it!
Hi,
Being frugal ensures one to have bigger buffer which gives one more peace of mind.
WTK
I thought I was frugal but I found 500 a month in fat to trim
Being frugal is about striving for efficiency. Paying for multiple streaming services just so you can watch more shows doesn’t strike me as being very efficient.
Over the past couple of years we’ve been slowly eating less and less meat. Not full vegetarians but there have been weeks when we’d eat only veggies for the entire week. Meats are expensive.
Good insights. We don’t go vegetarian, since we’re meat eaters and hubs at least won’t compromise. But we don’t eat too much meat either and, since we’re doing all the cooking at home, we save a lot. Ordering food from outside is not a cool idea, as the quality is usually sub-par compared to what I cook (or the rest of the family). We did use instacart a while for groceries, so that we don’t expose ourselves. Husband goes to Lidl, which is an excellent grocery store, even if not too close to home (about 20 miles to and 20 back).
We keep our phone plans, as he’s still working, but staying more indoors has saved us quite some money. We’ll try to stick to a more frugal way of living after the lockdown is over, as I think these months have been an eye-opener for most of us.
I would say that going all vegetarian if you are not comfortable with it is not necessary. What we have done is use different meats, like chicken, beef and pork like we usually have, but to add black beans, onions, mushrooms, peppers and other vegetables and serve them over brown rice for example. Simply reduce the amount of meat in the meal, not eliminate it completely. I think it is both healthy and satisfying, especially when you add the different spices.
Funny, some of my friends are asking me where to invest now that they have this extra money. But they’re actually more confused as to the purpose of saving anything. This is a country which has no social security, no medicare, nothing, and they’re confused why they would need any savings??? When I mention that one day they can choose to work in a different job that they don’t hate, they say that they like working and won’t stop.
It’s difficult to comprehend the purpose of FI if you only think of negative reasons (illness, job loss etc), versus those that see they can work on things they want to.
I feel like longterm the benefit may be that people look back at their finances in the “COVID” months and see a few things missing, money they didn’t spend. Maybe they won’t miss those things as much as they thought and will continue to skip them (you gave some great examples where that could come in).
Atop that, people may find that they enjoy new things/activities inserted into their life necessitated by the pandemic. For example, maybe there will be a rise in board game playing, crafting, or other inexpensive hobbies that offset expensive external activities. Maybe folks will get used to their home gym/outdoor fitness routines instead of the expensive gym memberships.
Then again, maybe we’ll all go right back to the old things that’ll make us feel more “normal” again.
We insured 4 vehicles, my daughter took over her insurance the first of this month, we parked 2 vehicles we own(one we are in the process of selling). By doing this we dropped our auto insurance $400/month. We only drive the electric(our Leaf) so we have not purchased gas since the beginning of March.
Sadly hubs took 40% pay so savings rate is not what I would like.
Normally we mostly eat from home. We tend to only go out to eat when my son has a basketball tournament out of town. Even then, we cook in the hotel room. We did order food from Instacart once when we really did not want to go out. I looked at pricing and it looked like it was 10-15% higher than going myself. We did try pick up at Wal-mart, which was great, pricing was good but it was really hard to get an a pick up time scheduled, they were so busy. One thing that has saved us lots of money is only going to the store every 2 weeks. We went to the store much more often than that, wasting a bunch of money. We already eat vegetarian/vegan, as long as you cook from scratch and don’t buy all the expensive vegan processed food, it is much cheaper.
We had to keep our phones, both hubs and I need our service for our jobs. We get Netflix for a very low price through Tmobile, our cell-phone provider.
We dropped a gym membership($140/month) and I convinced my husband to skip buying renewing our Amazon Prime.
Concerning car insurance, the easiest way to drop premiums is to (1) combine policies and (2) declare a “best guess” of annual miles driven for each car. My wife and I use 4000 and 2000 miles respectively. Don’t be surprised if your bill falls by more than 50%!