Early Retirement Choices - Frugal or Value?
It seems that blogging is helping to educate me - I've used a dictionary twice in the last week, so I must have learnt something. The words that I wanted help with were:
Value - which my dictionary defines as the worth, utility or importance of something, and
Frugal - which it says means sparing, thrifty, economical or perhaps meagre.
Why did I look up the meaning of these words? Before my own early retirement decision, I searched online trying to understand how much money I needed, what would I do etc, and Google often listed blogs about frugal living. At the time, I skipped past these because my retire early plan was to enjoy life and I didn't think "frugal" sounded like a fun early retirement.
I should say however, that since retiring early I have looked at some frugal living blogs and, although low cost, they don't particularly seem to be less fun. They're definitely worth having a look at.
But despite frugality not necessarily having the negative connotation that I envisaged, I'm still not convinced that it's for me. What I prefer to focus on is value.
Whether you're still planning for an early retirement in the future, or you have already retired, the choice of whether to live frugally or otherwise is an important one. It's a lifestyle choice. The plus side of frugal living is that you should be able to retire earlier as reduced costs let you save more for your early retirement pot. You will also need a smaller pot as you will spend less post retirement. The downside is that frugal living may mean you choose not to do some things because you feel they are too expensive/"not frugal" so you could miss out on some things. There isn't a right or a wrong answer, it's a personal choice.
My choice is to focus on value rather than on being frugal. I have a budget which I try to live within, but I'm not cutting it to the bone. If I want to do something then I'm happy to pay for it, even if it is not the cheapest, but what I do want to get is good value. I want a decent bang for my buck. And one thing that I've noticed is that since retiring early, my appreciation of value has changed compared to when I was working.
I suppose in some ways this is to be expected. When I was working, I had a good salary and we could afford to buy many things. Although we didn't go crazy, there were certainly times when we bought things because we could, and not because we should. Looking back, we made a number of purchases that we didn't really appreciate, because we didn't really want or need them enough.
Compare that to now. It's a fact that our budget in early retirement is less than when I was working. Although we have our investments that provide an income (particularly our rental properties), nobody pays a salary into my bank account at the end of each month, so we now simply have a smaller budget to live on. But strangely, I'm finding this to be a positive thing. I now think about what I spend, decide whether it's something that I really want, is it something I'm going to use, something that I'm going to enjoy? In other words, I make a conscious decision about whether I'm going to get value from the item that I am thinking of purchasing. I enjoy both the pre purchase thought process and also know that when I make a purchase I will value whatever it is that I have bought.
In some ways, doesn't this sound like being frugal? Perhaps, but I don't really think so. Looking back at the definition, frugal is about being sparing, thrifty or economical and it therefore seems to focus on cost. Value looks to the other side of the equation, what I'm gaining, value focused rather than cost focused. Perhaps they are opposite sides of the same coin, but I feel that emotionally they are different.
Looking at some of my own examples. We spend a lot in coffee shops and other casual eateries - so far this year, an average of £241 ($297) per month. That shocked me when I first saw it. But I enjoy relaxing in coffee shops, sneaking a piece of cake if I think nobody's looking. If I'm by myself I might take my book, my laptop, read the newspaper or just spend time people watching (don't say that you don't do that sometimes!). Or I might meet a friend, catch up on the gossip, or enjoy time with Sally. This is a cost that we could surely reduce significantly, but I enjoy it, I value it, and I'm therefore happy to spend the money.
Air travel is the opposite. Here I watch the costs, because I don't feel I get good value by spending more. Maybe I would have paid extra for direct flights in the past, but I'm now happy to take a connecting flight to save some money. Hey, I retired early, I have the time, and I figure that I can entertain myself in an airport for three, four or five hours to reduce the air fare. I can then take the money saved and spend it on something else that I will enjoy and get value from.
But my best value item is running. Other than getting some new running shoes from time to time (and you don't need them as often as the manufacturers say), running is free. No equipment needed, I can head out from my front door, it does me good, keeps me trim and healthy at the same time. But what I like best is running with friends, with a group or a club, which makes it a great social activity. OK, it was tough when I first started - running, breathing and talking didn't seem to be things that I could do at the same time, and although practice doesn't always make perfect, it does make for improvement. I now run, chat, joke and then go for coffee after to chat and joke some more. There are still days when it feels like the hardest thing, but the I feel great when I've finished, and the next run will always be better. So, running, almost free, and my best value deal for sure.
So, for me, value is the magic word, and I'm appreciating that more now that I have retired early. I will continue to read some of the frugal lifestyle blogs as well, they seem to be more fun than I thought, and maybe I'll pick up a few tips to save a bit of money along the way.
By the way, back to the dictionary that I used, which is an actual book, one with proper pages. I bet this type of dictionary isn't used too much these days, it's mostly Google searches instead. I've had the dictionary a long time, I think since getting it as a Christmas gift in 1993. I remember Sally saying it was a bizarre thing to want for Christmas, but I have used it many times over the years and still remember who gave it to me. Thank you Mandy, that was a good value gift.