Can living stingy improve your personal finances?
For some, without a doubt. Living a stingy lifestyle means saving more money, which can improve any financial situation.
For others, focusing on earning more or investing might be a better time use of time, rather than focusing on saving money.
Either way, for everyone, there is at least one thing you can learn from living stingy to apply to your life, even if you aren’t focused on saving right now.
We’ll get into how you can apply stingy principles to better your life further below, but first, here is a definition of what “stingy” actually means.
What Does Living Stingy Mean?
The definition of “stingy” is, “reluctant to give or spend; not generous.”
In other words, stingy means cheap.
Someone who lives a stingy life cuts back on expenses liberally and is always seeking opportunities to save money.
Living Stingy Definition: Living cheaply, cutting unnecessary expenses and waste.
So, is living stingy a bad thing? Or a good thing?
We’ll answer that question in more detail below, but keep in mind, the end goal of cutting unnecessary expenses is to put more money in your pocket. Someone who is living stingy is ultimately pursuing more savings to either invest, pay down debt, or simply stow away.
Pros and Cons of Living Stingy
Living Stingy Pros
1. Build a Better Budget and Save More
A stingy person almost always has a budget. They go hand in hand, as it’s hard to cut costs without having a basic understanding of your personal finances.
A budget is made up of three primary financial metrics:
- Income: Money coming in
- Expenses: Money going out
- Savings: Money leftover
As mentioned earlier, someone who is being stingy is focusing on cutting expenses. Though, their ultimate goal is to maximize savings, and increasing income can also accomplish this goal.
To be stingy, you need a firm understanding of these three budgeting levers, and having that understanding is 100% a good thing, especially when you end up saving more money.
2. Avoiding Lifestyle Inflation
Lifestyle inflation is a personal finance term used to define a scenario when your spending goes up in proportion with income increases.
For example, when you get a raise, promotion, or new job that pays more money, instead of saving the extra money to invest or pay down debt, you spend it.
A little bit of lifestyle inflation can be okay. If you get a $200 per month raise and decide to spend half of the money and save the other half, at a high level, there are no red flags there.
Though, full lifestyle inflation (when you spend your full income increase and don’t save anything) can have negative consequences. The most common is it causes you to stay in a paycheck to paycheck cycle, which is never good.
And yes, even if you make a lot of money, you can still live paycheck to paycheck (it’s called being a HENRY).
When you are stingy, you spend less and end up pocketing most of your of raises which can help set your future self up for financial success.
3. Being Savvy with Your Money
Last, but not least, when you are closely monitoring your daily spending, you will naturally have a better grip on your money.
Money won’t “slip through the cracks”, and you’ll be sure that every dollar is being spent purposefully.
On top of just spending less and saving more, which was mentioned in pro #1, being savvy with your money makes day to day life easier. You won’t have to stress about whether or not you can afford a purchase, because you will have an intuition to know if it’s the right move or not.
Overall, money decisions become easier and less stressful.
Living Stingy Cons
1. Overdoing It
As I mentioned, I think saving more money is almost always a good thing.
For 99% of us, more money at the end of the month is great. Though, some people can take frugality too far and save too much.
There is some simple math you can do to see if you are on track for retirement (or any other financial goal), but it’s also important to take into account your personal life.
Are you skipping social events and nights out with friends?
Passing on a work lunch with your boss to save an extra $10?
While you probably don’t want to (or can’t afford to) go out every night, or eat out for lunch every day, it’s worth checking to see if the occasional meal out, or any other “want”, fits within your budget.
Saving for saving’s sake could leave you in a great financial spot 30 years from now, but wishing you would have had a little more fun along the way.
Make sure your saving has a purpose.
2. Not Enjoying the Little Things
On a similar note, stinginess could have the unintended consequence of cutting out small enjoyment from your life.
Sure, buying a cup of coffee from a coffeehouse is way more expensive than brewing it at home. That’s why it’s one of the most commonly cited ways to save money. But if you enjoy it, don’t be afraid to do it.
Little purchases like this, when they fit your budget, can bring some joy in the short term. Not everything has to be a sacrifice for saving more.
5 Ways to Successfully Live Stingy
To start living stingy, you don’t have to go all in on day one.
Just like there are lessons from the Financial Independence Retire Early (FIRE) movement that everyone can implement to live a better life, the same goes for living stingy.
You don’t have to live stingy every day or count every penny you spend, but there are certain principles and strategies that come with living stingy that could improve your life.
1. Measure and Monitor Your Money
Just how I like to say, “retiring early is not for everyone, but financial independence is.” I also think that budgeting is not for everyone, but understanding your money is.
You don’t have to count every dollar you spend like an accountant, but having a general sense of your money is a great thing.
Here are some ideas to act on that will help you better understand your money and financial situation:
Calculate Your Net Worth: To me, net worth is a vital personal finance metric. You can learn how to calculate your net worth here.
Check on Your 401(k): Your 401(k) is likely your biggest retirement account, but for some reason, most of us don’t check in on it on a regular basis. Blooom is a free financial service that will perform a “check-up” on your 401(k) to make sure everything is running smoothly.
Create a Budget: For some, maybe you do need to start from scratch and build a budget. It’s often the initial step to learning how to save money. To find areas you save, you first need to understand where you are spending money.
2. Spend Money on Items that Bring Value
Someone who is stingy is likely cutting expenses left and right. A better approach would be to cut expenses on things that don’t add value to your life.
To be honest, this is more of a living frugal approach than a stingy approach.
One way to do this is to look at your most recent bank or credit card statement and take a close look at your spending habits over the previous month. If there are purchases that you don’t remember or regret buying, those are obvious areas to cut back on in the future.
3. Set Goals
As mentioned earlier, cutting expenses helps you save and invest more, which is usually a good thing.
Though, an even better approach would be to set financial goals and then ensure you are saving and investing enough to reach those goals. Rather than saving for the sake of saving.
Some goals to consider setting for yourself are:
- Retirement: At what age and and with how much money do you wish to retire?
- Saving to buy a house: When do you want to buy a house and how much are you willing to spend?
- Saving to buy a car: Do you need a car now, or will you in the future?
- Paying for a child’s college education: Do you have or plan to have kids, and do you plan to pay for their college education?
- General wealth-building goals
Creating a basic financial plan is another great way to help answer some of these questions and set goals.
4. Make Your Money Work for You
Living stingy doesn’t stop at just cutting back on expenses and saving more money. From there, you should make your hard-earned savings work for you.
Depending on your goals you set previously, there are two primary actions you can take to make your money work for you:
- Investing: Learn how to invest in index funds.
- Saving: Check out our favorite bank accounts for ideas on where to store your savings and attain the best interest rates.
Just, please, don’t put your money under a mattress.
5. Earn some Extra Cash
Someone who is living stingy is also always looking to make some extra money. At the end of the day, the result of making more money is the same result of cutting expenses: more money in your pocket.
Here are some of my favorite side hustle ideas and ways to make some extra cash:
- Freelance: Make extra money through sites like Upwork and TaskRabbit.
- Take Surveys: Survey Junkie and Swagbucks are two options to make money by taking surveys.
- Use Phone Apps: Mistplay is an app that will pay you to play games!
- Cashback websites: Joining cashback websites like Rakuten to start saving money.
- Find Your Next Side Hustle: Check out a longer list here.
Summary: Is Living Stingy Worth it?
Living a stingy lifestyle is not for everyone.
It’s also not all about pinching pennies.
Understanding the principles of what living stingy means and picking and choosing the right ones for you is 100% worth it.
Whether you are looking to earn more, save more, or invest better, applying stingy principles to your personal finances can have a positive impact and create a better financial future.