Minimalism and Frugality: What's It All About?
Be thrifty , build up reserves, and retire early - the frugalist principle has existed for many years and is enjoying growing popularity today. Adherents of the frugalist lifestyle take care to spend as little as possible in order to be financially secure. But is this doable for everyone?
What does it mean to live frugally?
The term "frugal" is synonymous with "modest" or "simple". Adherents of this philosophy pursue the plan to become financially independent as early as possible. To this end, they set aside a large part of their income. The approach is basically simple: once 25 times one's annual needs have been saved, it is possible to live off the returns for the rest of one's life.
Extreme saving: Origins of frugal living
The concept originated in the American "FIRE" movement. The acronym stands for "Financial Independence, Retire Early" and describes the idea of financially decoupling oneself from the need to work and thus retiring earlier. The idea originated in the USA in 2007. As a result of the financial crisis at the time, people were forced to significantly limit their spending and learn to get by with less.
Living frugally is characterised foremost by the pursuit of financial independence. Generally speaking, this is achieved when monthly expenses can be completely covered by the assets saved. However, it is not only about building up reserves. Living frugally also means fulfilment that does not come from consumption but from other activities, such as social engagement.
The importance of financial reserves
There are numerous books on the subject of frugalism. A well-known example is Florian Wagner and Retirement at 40, in which Wagner details how he saves and cleverly invests as much of his income as possible so that he can retire at the age of 40. Oliver Noelting's Frugalism pursues a similar goal. Regarded as a pioneer of the German frugalist movement, Noelting builds up reserves from a good 60 to 70 % of his income, which he invests in a targeted manner. Frugalism for beginners is not difficult to implement. Already by reducing fixed costs for housing, cell phones or insurance, selling excess items or avoiding unnecessary expenses, for example for restaurants and other leisure activities, it is possible to set aside a large part of one's income. There is also considerable savings potential by not owning a car. Knowledge of the financial market is essential for a frugalist lifestyle. This will help you identify the best options to invest and grow your money. Not only saving, but increasing wealth is the main focus of this philosophy. By investing in the right investment objects such as shares or real estate, frugalists succeed particularly well.
Minamlism versus Frugalism
Frugalism and minimalism have some similarities, but there are also differences in the practical implementation and the basic idea. What both have in common is that followers of the movement renounce unnecessary consumption and limit themselves to the most necessary expenses. The frugalist philosophy, however, is mainly limited to the reserve and increase of financial assets. To achieve this, a large part of the income is invested in real estate, shares and funds. Minimalists generally reduce the use of consumer goods in everyday life. Minimalism focuses on doing without and simplifying one's lifestyle, rather than building up wealth. A minimalist flat is usually small and sparsely furnished. Minimalism in everyday life is often expressed through a secluded, nature-oriented lifestyle.
Implementing frugal living
In general, it should be noted that a frugalist lifestyle can be adhered to if one has a higher income, a fixed part of which can be set aside. Frugalism is also possible for those who have children and families to care for. It is important to gain a comprehensive knowledge of investment opportunities and to look closely at one's own income and expenditure. If these prerequisites are met, the approach is an interesting option for becoming financially independent.