Entrepreneurs live a frugal life

 

entrepreneur frugal

The secret to financial independence is low overheads. Low overheads are about being frugal.

 

In order to be frugal in business you must be frugal in life. Its just not possible to live in two worlds, ie: drive a Ferrari and drink Ricoffy at the office.

 

Being frugal doesn’t have to mean being a tight-arse. It doesn’t have to mean drinking Ricoffy. It doesn’t have to mean living in a shitty neighbourhood. It doesn’t have to mean tackiness or mediocrity.

 

You can be frugal and live the good life. Live a champagne life on beer prices.

 

How can you live a frugal life?

 

First, choose your environment. You can’t willpower your way to frugality. You must rather create an environment that promotes frugality.

 

Your environment includes your friends, your community and your geography.

 

Stay away from people that are doing their best to keep up with the Jones’s. Their behaviour will rub off on you and soon you’ll be buying fancy clothes and comparing fancy holidays. Who wants to be a Jones anyway?

 

Stay away from communities that place a lot of importance on conspicuous consumption, ie; Dubai. Places like Dubai have a lot of positive aspects, but the materialism is pervasive and living there will make you feel insecure about your car, your shoes, and your handbag.

 

Stay away from places where its easy to spend money. If you live in a flat at the Waterfront or the Michelangelo, you will spend lots of money every day. Its just too easy to walk across the road into a fancy shop. Rather stay in an unpretentious town/suburb without the tourist prices, Louis Vuitton shops and temptation.

 

Rent the house you live in.

 

In a country like South Africa where the spread between interest rates and rental yields can be as much as 8%, it makes no financial sense for you to own the property you live in. Your bond repayment on a R3mil house is R20,000pm, but you can live in a R10mil house for the same monthly rent.

 

Drive a Honda Jazz (or something similarly affordable, reliable, safe and non-flashy). It won’t cost much cash, it has low insurance, and you can park anywhere.

 

Every time you buy an asset, you buy an overhead. Mental overhead, your life insurance quote overhead, and maintenance overhead. Don’t buy “stuff”.

 

Living in a small house is a great way to stop buying “stuff”. If you have no space it’s a lot simpler to resist the urge to whip out your credit card and buy that awesome couch at Weylandts that you didn’t know you needed.

 

Other than increasing your odds of entrepreneurial success, the biggest benefit of a frugal life is that you don’t attract the wrong kind of people.

 

Money is like a flame to moths. Rather spend energy (and save money) attracting the better sort.

 

Life is too short to hang with the wrong crowd.

 


Also published on Medium.

  • Raimondo De Chaud

    Nice reasoning. Funny how simple the truth is!