What Is Frugalism?

A big part of our philosophy for saving big money revolves around this idea of shifting your mindset from consumerism to frugalism.

But what exactly does that mean? What is frugalism?

Most people have a basic idea of consumerism, but just in case you’re not sure here’s our definition.

Consumerism is an economic ideology that encourages the insatiable acquisition of goods and services.

We live in a consumerist world, where people are encouraged to buy goods and services on a regular basis. Obviously, we must buy some things regularly, but our society has gone overboard to the point where people are not only encouraged to regularly buy needs, but also to regularly buy wants.

Thus, consumerism in this day and age might be better termed an economic ideology that encourages the insatiable acquisition of unneeded goods and services.

Here is where frugalism comes in.

What Frugalism Isn’t 

Before we get into what frugalism actually is, let’s first establish what it isn’t.

Frugal people often get a bad rap, and there are a host of uncomplimentary ideas attached to being frugal.

However, the one that comes most to mind is cheap.

If you tell someone you’re frugal, they almost always automatically assume you’re cheap.

Sure, cheap does mean costing less, but it also means of decreased value.

That is the key difference between frugalism and being cheap. Instead, frugalism is all about the value!

Aside from the unflattering synonym of cheap, here are some other things people think about frugalism:

  • Being frugal means you always spend as little money as possible
  • Being frugal means you can never have nice things
  • Being frugal means you can never do anything fun
  • Being frugal means you must deny yourself of all pleasures

The above list is not part of frugalism, AT ALL.

Frugalism does not mean you can never have nice things or do anything fun, nor is it so rigid that you can never break the mold and spend a little extra once in a while. We all buy things we don’t need, or spend money unnecessarily, ALL OF US.

Frugalism also does not mean that you should short-change yourself in every aspect of your life. You SHOULD be spending money on your health and wellness, investing in yourself, and experiences.

To recap, frugalism does not mean you always spend as little as possible on everything in your life. It’s not that rigid.

If it was, we wouldn’t believe in it.

What Frugalism Really Is

So, what is frugalism?

Frugalism is a general outlook on life, as well as a way of thinking and acting.

The dictionary definition of frugalism is the act of being frugal.

On the other hand, the definition of frugal is economical in use or expenditure; prudently saving or sparing; not wasteful.

That’s not a bad definition, but we want to take things further.

You see, for us frugalism isn’t just an adjective, it’s a philosophy.

For us, frugalism involves three key ideas:

1) Understanding how money-related systems work

2) Using that knowledge to save money

3) Getting maximum value and usage out of the purchases you do make

Aside from the 3 keys mentioned above, there’s a special bonus key that we’ll get to a bit later. But first, let’s run down each of the 3 main keys to our philosophy of frugalism.

Understanding How Money-Related Systems Work 

Here’s the deal.

There’s a lot that influences the decisions we make, and money is no different.

However, most people have a very rudimentary understanding of how financial systems work, and are taken by these systems because of it.

Credit cards, student loans, payday loans, and other debt-causing systems feed off consumerism. These institutions make money when you have debt, which is why they encourage it.

People are continually taken by creditors who “make it work” for them, all the while not realizing that they’re walking into a trap. All they know is what they want, never mind what financial binds they put themselves in to get it.

Out of sight, out of mind is NOT the way to go when it comes to finances, and it’s your responsibility to arm yourself with as much finance-related knowledge as possible.

Remember, learn to WORK the system, rather than BE WORKED by the system.

The problem is, finance knowledge doesn’t end with finances.

There is more to money than money.

MUCH more.

You see, there are many systems at work that influence you and how you spend your money that don’t necessarily appear to be related to finance, but they are.

Marketing, media, social media, social status, social norms, socioeconomic status, culture, social psychology, family systems, habit formation, religion, and education are all related ideas that greatly impact our finances every day.

Furthermore, it is the intersection of these factors that determines how we choose to spend our money.

Explaining the impact of these systems is far outside the scope of this article, but understanding how these various factors impact the decisions we make with money is a huge part of our philosophy of frugalism.

Using That Knowledge To Save Money

Knowledge is power, but power is useless unless you do something with it.

Once you have the knowledge, you need to put that knowledge to good use and begin working the system to save money.


There are endless ways you could use your knowledge of money-related systems to save, but we’ll share some of our favorite examples.

Credit Cards

  • Earn a large sign-up bonus and then redeem it for cheap travel
  • Continue to earn and burn points and cash back rewards without paying interest (by paying the balance in full every month)
  • Utilize 0% for [insert number] months financing to stretch the blow of a large purchase (but pay the balance before the 0% term is up to avoid all interest)


  • Make extra payments on loans and mortgages to save thousands in interest
  • Utilize a high credit score to get the best rates on loans, which saves interest

Social Status

  • Buy used cars to save thousands
  • Look for value in purchases versus brand names

The above examples are just a few of the big ones, but there are literally endless ways to put your knowledge of money-related systems to use.

Getting Maximum Value and Usage Out of the Purchases You Do Make

Once you have an understanding of how money-related systems work, it becomes easier to save money through buying items that get you maximum value and usage, rather than making decisions based on social status or other factors.

Too often, people make purchases because of the value they think the item provides to their status within society. The number one priority is image, and how they are perceived by others.

This is more than evident in the explosion of social media over the past decade, where people seek to portray themselves in the optimal light to a score of people they’ve never even met.

Narcissus would be proud.

Don’t get us wrong. It’s okay to take a selfie once in a while.

The problem lies in people making financial decisions where the primary motivator is to increase their social status.

For instance, people buy new cars because their friends and family will be jealous. They only buy brand name clothes so that people will think they are well-off. They must buy and show-off all the latest technology.

Buying new things is fine, but what is the reason behind the purchase?

If the main motivator has something to do with wanting to impress, or wanting to avoid looking poor (for lack of a better word), then you are practicing consumerism.

Frugalism, on the other hand, is a practice in which you look to get maximum value and usage out of the items you buy. It is not being cheap, but rather finding the best value for your money.

For instance, does your iPhone 5 still work just fine? No need to upgrade if it does, no matter how you “look” to others for using it.

Does your car still safely drive you where you need to go? No need to spend thousands on a new one, or even a used one.

What about clothes? Do these clothes from Ross do the job and still look good? Who cares where you bought them, what matters is if they serve their purpose and provide a good value.

One of our biggest value pet peeves is restaurants. Have you ever noticed that the more expensive the restaurant, the less food you get?

There have been multiple instances where we’ve been to fancy restaurants and left hungry.

This is yet another example of consumerism at work, because it is the social status providing the value rather than what you go out to eat for, the food!

As with anything, you choose what to spend your money on. However, you should also be thinking about why you are choosing to spend your money on a particular item or experience.

If you’re doing it for the value and trying to get maximum usage, you’re practicing frugalism. If for some other reason, you’re practicing consumerism.

The Bonus Key: Letting Go of Social Status and Image

The above statement brings us to our bonus 4th key.

This key is the secret to opening Pandora’s Box of frugalism. It’s like a cheat that unlocks secret levels to the game of frugalism.

You see, you will likely be able to understand and even utilize key 1 above, and maybe even key’s 2 and 3 to some extent. However, you won’t be able to fully unlock the frugalist mindset if you don’t buy into the 4th bonus key.

Wanna know what it is?

If you want to truly be able to utilize frugalism and have big Money Earned through Money Saved, you must be able to do this one extremely hard thing.

You must let go of the need to maintain social status and image.

That’s it.

Simple right?

It sounds simple, but in practice it’s really hard.

We are social beings, and we all care about what people think of us. Unfortunately, what we’ve been conditioned to care about most is social status and image, so it’s almost impossible to completely forget about.

However, you can begin to shift your mindset it many ways, and it may be best to start with one or two small changes at a time.

If you’re a shopper, maybe give it up for a month or two and put to use the clothes you already have.

If you’re into technology, keep that iPhone or other device for a few months after the new one comes out. Maybe you’ll see you don’t really need to upgrade.

If you think your car is losing its luster, push yourself to drive it a few more months. We promise, if your friends are really your friends, they’ll still love you no matter the car you drive.

In fact, engaging friends and family in your shift may even help you successfully make the shift quicker.

Tell them you’re trying to save money in a certain area and ask for their help. Not only will they help to keep you accountable, but they’ll prove to you that their love goes far deeper than your material possessions or where you choose to eat.

Moral of the Story

Shifting your mindset from consumerism to frugalism is extremely difficult. We are brought up with the consumerist ideology, and frugalism flies in the face of everything we’ve been taught to value.

However, frugalism is not the martyrdom that people make it out to be, it’s simply another way of placing value.

There are 3 main keys to frugalism, along with an extra bonus key that is critical for successfully implementing frugalism.

You must understand how money-related systems work, use that knowledge to save money, and begin looking to get maximum value and usage out of the purchases you do make.

The bonus key to all of it is being able to let go of social status and image and begin to place value in other areas.

Letting go of social status and image is a long road, but it’s worth the journey to financial freedom that frugalism can provide.