The dictionary defines “Frugal” as someone “prudently saving or sparing; not wasteful.” This word means different things to different people. Some think of Ebeneezer Scrooge hoarding all of his money, while others may think of Warren Buffet, who is careful with spending but ultimately successful. It makes sense considering synonyms vary widely from “miserly” and “penny-pinching” to “provident” and “careful.”
Any way you spin it, frugality involves saving more than spending, and making thoughtful, well-informed decisions when you decide to spend. This post from Chief Mom Officer explains two different types of frugality: active and passive.
According to the post, “active frugality” is the notion of spending money to save money. Some examples include using coupons, adding an additional item to your shopping cart to get free shipping, buying a more expensive version of a product because it will last longer, and so on.
The danger of active frugality is when people who get caught up in clipping coupons and chasing deals spend more than they ordinarily would. How? A coupon only really saves you money if it is something you needed to buy in the first place. The same thing applies to deals and discounts. Say you get a discount at a hotel fancier than the one at which you were planning to stay. It’s only a frugal move to switch if the discount is equal to or less than what you had planned to pay.
Another way to think of active frugality is the with the aphorism “spend now, save later.” There are some bills, such as car insurance, that will offer you a quote for a one-time annual payment that is usually cheaper than paying per month. This post mentions saving money on groceries, especially meat, by bulk buying and deep freezing products. Of course, the ability to make a large one-time payment depends on whether or not you have the immediate resources for such a payment.
Perhaps another way to think of active frugality is to save money by doing a little extra work. For example, this post from The Simple Dollar explains the pros and cons of making laundry detergent at home rather than buying it. The author calculates the cost of his time (remember: your time has value) taken to make detergent versus the money saved. The author’s baseline is $10/hour — if it saves more, then he’ll probably do it.
Passively saving money is the”old school” version of frugality. Rather than actively searching for ways to cut costs or find a deal, passive savers simply spend what they need to spend, and try to keep their needs minimal.
While the approaches to frugal living may vary slightly, we can all agree that frugality focuses on living within your means and saving more than you spend.