If you want to buy a house, it’s good to be frugal. It’s even better to be a frugal saver than a frugal spender.
Frugal Spenders vs Frugal Savers
What’s the difference?
A frugal spender is always looking for a good deal. She uses the department store coupons that come in the mail from department stores. She’s regularly checking Groupon for deals. She even spends hours researching the best plane fares before taking a vacation.
Well, if you’re not saving for a down payment, closing costs, and future maintenance costs, it’s fine. But it’s not going to save you lots of money.
A frugal saver, on the other hand, doesn’t ask herself “How can I save money on all the stuff I want to buy?” Instead, she asks, “Do I need to spend this money at all?”
Questions a Frugal Saver Asks
A frugal spender asks two questions: “Do I want it?” and “How can I get it the cheapest?”
But a frugal savers asks lots of questions:
- Can I wait to buy it to see if I need it at all?
- Can I make it myself?
- Can I get it from somewhere else for free (e.g. Craigslist, Freecycle)?
- Can I make do with something I already have?
- Can I make what I already have last longer so I don’t need to replace it?
A little questioning mindfulness goes a long way. And can save you lots of money. How much? Let’s look at an example.
The Frugal Spender and Frugal Saver Order Carry Out
A frugal spender orders carry out Chinese food for two using the coupon she got in the mail to get a free egg roll and bottle of soda. She spends $25 and saved about $4 using the coupon. Good deal.
The frugal saver took advantage of the buy one pizza get one free deal from her local grocery store (if she were really frugal, she’d make the pizza from scratch). She spends $7.99 for two pizzas, has the delicious smell of melting cheese in her house, and is eating dinner long before the hour delivery time if she ordered in.
If the frugal spender orders a comparable “deal” every week (and we all know that getting carry-out only once a week is rare for most folks), she’ll spend $1300 by the end of the year.
The frugal saver getting a comparable bargain at the grocery store that’s easy to prepare quickly when she’s tired and temptation is high, spends about $415 by the end of the year.
One small change in thinking in one area, on a weekly basis, nets the frugal saver almost $900.
Now apply the same discipline to vacations, buying clothes, eating out more frequently, and household items. A frugal saver would be looking at thousands of dollars in savings compared to the frugal spender.
Frugal Spending vs Frugal Saving in Home Buying
If you’re saving tens of thousands of dollars for a down payment, you need every bit of help you can get.
So don’t listen to your frugal spending friends. You’ll buy a home much sooner if you become a frugal saver.