How to Save Millions of Dollars by Rejecting Mainstream Culture
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Do you think that frugality is only for people who are struggling to make ends meet? If so, you’re wrong.
The truth is that almost every family in almost every income bracket spends dramatically more than they should — without really thinking about the true cost.
Wasteful lifestyles aren’t some rare and mysterious phenomenon — they’re shockingly common.
Social and Cultural Pressure to Waste Wealth
Common and culturally expected expenses are often just elaborate ways to waste tens of thousands of dollars — leading to countless millions in wasted wealth over one’s life.
The country is filled with people who could have become millionaires — if they had made slightly less destructive choices in college, malls, airports, and bars.
Social media is filled with images of our friends and family constantly spending major sums of money on all sorts of short-sighted consumerism. The number of friends I have who are spending shocking sums of money on overpriced drinks, expensive clothes, perpetual traveling, and useless college degrees would be jarring if it wasn’t so common.
The Alternative to Waste Might Seem Extreme
Bad financial decisions are so common, you’re often seen as a little “different” if you don’t indulge in the same way. A few examples:
- Wasteful college expenses. Far too many people see college as a time for experimentation rather than a cohesive part of a lifetime strategy. The amount of money wasted — either by the students or their parents — is difficult to comprehend. College can be a great choice if it helps you achieve your career goals. But most people aren’t making good choices. The extent of waste is hidden by the fact that a handful of students are making college look like a good investment by boosting the averages.
- New cars. New cars are seen as a sign that one has made it to the middle class. If anything, almost no one should buy new cars — it’s extremely wasteful, with thousands and thousands of dollars disappearing as the car rolls off the lot. The average new car costs over $36,000 — and that doesn’t count loan interest or lost opportunity cost.
- Social events. Social events are a great thing — until you find yourself going into debt to keep up with your friends. New clothes, travel, overpriced liquor — almost everyone expects this kind of spending to occur. Fear out missing out, (FOMO), is driving spending ever-higher among millennials. It’s gotten so bad that economists are tracking FOMO debt as a social phenomenon– and it’s getting worse. Millennials literally admit to going into debt in order to go to expensive social events. Insanity. If your friends are ruining your life with debt, you need new friends.
- Wasted time. Time is money. Every hour playing video games is an hour someone didn’t read a book about their career. Most people spend more time binge-watching TV every year than it takes to start a new business. Just shifting time from wasteful activities to productive activities can change someone’s life almost immediately. I have no idea how to calculate how much time is wasted by the average American — but I’d bet that most people waste almost all of their free time. People spend literally hours just on their phones. Per day.
- No family planning. Having children is often seen as a non-financial event by young people. They plan their finances around having children rather than the other way around. Instead, family planning should be encouraged. Having lots of kids is good! Just make sure you’re ready to provide for your family before starting one. A family is a responsibility — make sure you can follow through.
Keep in mind, this is coming from someone who never bought a new car until I was already a self-made millionaire, and lived several years longer than I needed to in a small apartment.
Meanwhile, I spent my 20’s watching my broke friends living it up with relatively shallow, unfulfilling and mindless consumerism.
Myth: “I Can Afford This So It Isn’t Wasteful”
Most people live in the nicest house they can “afford,” drive the nicest cars they can “afford,” eat the nicest foods they can “afford,” and take the best vacations they can “afford.”
The entire assumption here is that if you can keep up with the payments, then it’s not wasteful — it’s what you can “afford.”
This is especially true for houses, cars, and college. Most people believe that “qualifying” for a loan means it’s an affordable decision. It’s not. It just means a financial institution thinks it’s a profitable decision for them to lend you the money.
The truth is that “afford” and “waste” aren’t opposite concepts. If anything, most waste happens because it is affordable — that’s why it’s so common. Bad financial decisions are as easy as credit is cheap.
Just because you have enough credit to “afford” to buy unnecessary stuff on credit doesn’t mean it isn’t wasteful. If anything, when you start worrying about whether you can afford something, it’s simpler to assume the answer is “no” and to look for a better approach.
This isn’t just because nickels and dimes are at stake. Even “ordinary” wasteful spending costs drastically more than most people realize.
The True Cost of Wasted Money? Entire Fortunes.
Poor decisions have a massive impact on one’s chances of becoming financially independent, financially free, and wealthy. Ironically, the more one consumes now, the less — exponentially — one can consume later.
This is especially true for younger adults. If you spend your 20s making horrible financial decisions, the impact is even worse because it will be felt for another 50-to-70 years.
It’s the power of compounding returns — and losses.
If you waste 5k per year for 50 years instead of keeping it productive at 10%, the final cost is difficult to comprehend: $6,100,000.00 in wasted wealth.
The 5k assumption isn’t a large sum of money. Eating out, drinks on the weekend, a couple of car trips, a moderate credit card balance — these things alone will get you there.
That’s before accounting for housing decisions, car decisions, college decisions, career decisions, or wasted time decisions.
This level of waste requires so little to go wrong, cutting it out would barely have an effect on your lifestyle. Most people probably wouldn’t even notice a difference if they didn’t waste the money.
You can play with the numbers to see how much worse it gets if you waste double or triple the amount. $15,000 in wasted money per year is over $18,000,000 over a lifetime.
This isn’t as large of a sum of money as it might seem. A couple of bad decisions easily gets most people to this point — college debt, new cars, and expensive social lives alone is probably dramatically more expensive and wasteful.
On the flip side, if you divert that cash flow to a balanced portfolio, you’ll be able to retire years earlier than almost anyone you know.
Just the other day, a 90+ year-old woman passed away, leaving millions of dollars behind for a charity. Her job? Secretary. Financial decisions add up.
How People Waste More Than They Realize
What’s crazy is that almost everyone will agree in theory about the above information. But in application, they begin to rationalize their over-consumption, wasteful habits, and horrible life choices.
This is the “other people” delusion: when people believe that they are the exception to the rule while everyone else is the problem.
There aren’t strong enough words to describe how destructive this delusion is. It’s impossible to correct our course if we don’t see the flaws in our own lives.
Extreme Frugality or Strategic Frugality?
Strategic frugality is a core principle of the Safe Haven Strategy. If you approach frugality strategically, you can make a handful of small changes that are barely noticeable in your daily life — and those changes will literally make you millions of dollars over time.
Strategic frugality isn’t about obsessing over the price of coffee. It’s about figuring out how to structurally change your habits to shift as much of your time and money toward productive results as possible.
The world is filled with frugal people who never get ahead. That’s because practicing frugality and avoiding bad decisions are just the first steps. Being productive and making the right decisions is step two. That’s how you build wealth.
That’s why Conservative Finance was launched: to help people understand that financial strategy requires connecting the dots, mixing defense with offense, and unleashing powerful principles that work in the real world.