Meet Pete. This former engineer, retired at age 30, now lives with his wife and son in small town Colorado on a budget of around US$24,000 (approx. $31,500 AUD) a year. Yet they all still indulge in hobbies (including snowboarding), holidays, organic food, fine cheese and chocolate, and more.ͥ
Certainly more than is enjoyed by Illona, dubbed ‘Britain’s Most Frugal Pensioner’, who lives on just £2,400 ($4,100 AUD) a year by keeping the cost of all her meals under £1 ($1.80 AUD) each, wearing extra clothes instead of turning on the heating, and cutting her own hair.ͥ ͥ
Closer to home, there’s Jasmine and Aaron Boothey, who live on around $30,000 AUD. The Bootheys save two thirds ($60,000 AUD) of their household income simply by never replacing anything that isn’t broken, waiting for big sales and never borrowing (apart from their mortgage).ͥ ͥ ͥ
It’s not just quirky characters who are known for their frugal habits. Some of the world’s richest and most successful people live far below their means. IKEA founder Ingvar Kamprad still drives the same old Volvo he’s had for decades, and sometimes even catches the bus. Warren Buffett has just the one house – the same Nebraska abode he bought in the late ‘50s.
What does this mean?
The fact that these people – both the ordinary Joes and the billionaires – are deriving publicity and popularity from their frugality really says something about the way our society has changed.
Between the Wars, frugality was a simple fact of life for most people. Incomes were low, and luxuries were in very short supply. Anyone with a parent or grandparent who lived through the Great Depression knows the stories. Then after World War 2, economic recovery saw spending escalate and luxury become less of a dirty word. Think Dior’s New Look, the first supercars in the ‘50s, and the development of luxury shopping precincts. As recently as ten or fifteen years ago, thriftiness was something to be kept hidden – certainly not something to brag about to your friends.
Since the global financial crisis, we’ve once again been forced to examine our relationship with saving and spending. Those who didn’t suffer a pay cut, lose investment wealth (or their jobs), had friends, family and community members who did. But many Aussies didn’t want to give up on things like owning a family home or going on holidays. So they found ways to pinch pennies in one area and spend in others. And thanks to the rise of social media and blogging – see Jasmine and Pete above – they spread their discoveries far and wide.
Getting back to basics with budgeting
Not ready to compete for cheapskate of the year? You don’t have to go to extremes to increase your savings. It’s also important to remember that in the end, scrimping and saving is always more satisfying when it’s in pursuit of a goal.
Here are a few basics to get you started on trimming back your budget: