Frugality
The practice of being economical with money and resources, prioritizing value over spending and living below one's means to build long-term financial security.
What is Frugality?
Frugality is the discipline of spending money carefully and avoiding waste, choosing to live below one's income level in order to save, invest, and build financial security. It is not the same as being cheap or denying oneself all enjoyment; rather, frugality involves distinguishing between purchases that deliver genuine value and those driven by impulse or social pressure. Frugal individuals prioritize high-impact spending on things that truly matter while cutting ruthlessly on things that do not. The practice is foundational to many personal finance strategies, including the FIRE (Financial Independence, Retire Early) movement, where high savings rates enabled by frugality accelerate the path to financial independence.
Example
A household earning $90,000 per year applies frugality principles: they buy a reliable used car instead of a new one (saving $15,000), meal prep most lunches ($3,000 annual savings), and avoid premium cable subscriptions ($1,200 savings). These decisions free up nearly $20,000 annually for investments without requiring a higher income.
Source: Consumer Financial Protection Bureau — Managing Spending