To be called a cheapskate often can be derogatory, but it should be a compliment for anyone who is serious in attaining financial freedom. The only way to become rich is to earn more money than you spend or spend way less than you earn. You may be wondering how becoming a cheapskate can push you towards financial freedom. Here’s why:
You Can Enjoy a Raise
By simply watching your finances and ensuring proper control of your money, you can free up more money for yourself. By creating a budget and sticking with it, you can see where you can save, freeing up more money for you.
More to Spend on What You Value
When you live below your means in some areas, you can spend more on things you really value. Shaving off £10 off your food expenses everyday will amount to up to £300 in savings over the course of the month. In six months, that will amount to £1,800 which is money that can go towards a holiday for the family or your retirement pot. Do the maths for other areas of your expenditure and you could be sitting on a tidy sum at the end of the year.
General Peace of Mind
One of the main features of true financial freedom, is general peace of mind. You will no longer have to live pay check to pay check. One financial difficulty will no longer be enough to drastically alter your mood and spending for the rest of the month. You will be safe in the knowledge that you have money stashed away in your emergency fund for when you need it. Proper use of planned borrowing facilities will also ensure you only use your emergency fund as a very last resort.
You Can Retire Early
It is common rule of the thumb to save 10-15% of your income if you want to retire early. However, by living a frugal lifestyle and only spending when necessary, you can afford to save up to 50% of your income. This means you can retire 50% earlier than other people in your age bracket and have time to do the things you love.
Improved Flexibility with Employment
Being a cheapskate means you don’t have to sweat over car loan or mortgage payments you cannot afford. Freedom from such overwhelming debt means you are not under compulsion to stay on in roles you are not happy with. You don’t have to move across the country to resume a new role either. You can afford to pick and choose and at a point, you can launch your own business.