When I was growing up, I thought starting out with limited means made you an ideal candidate for becoming frugal.
It turns out the exact opposite is true, at least for me.
Rich people know more about being frugal than you think. In fact, a very wealthy person gave me the foundation for frugality when he said: “Nobody ever got rich spending money.”
It was news to me, but it made perfect sense. I had always dreamed that one day I was going to get rich. What would I do with this imaginary wealth? Spend it, of course, which would keep my means limited.
That line of thinking changed during my freshman year in college, thanks to Gregory Joseph “GJ” Nooney III.
GJ came from a family of considerable means. None of us in the dormitory knew that for the first six weeks of our freshman year. He was like the rest of us: A teenager stumbling through his first experiences away from home.
When someone passed the hat to pay for a keg party, GJ put in $1 like everybody else, even though he could have dropped a $20 bill without a problem. When we all went out for dinner, GJ stood in line for the 50-cent hamburgers and 25-cent fries, although he could easily afford the priciest restaurant in town.
One Saturday night, a group of friends from his hometown showed up at a party and one of them told me GJ was the heir apparent to a family fortune valued at $85 million. This was 1973. I don’t know the financial equivalent in today’s terms, but it felt like his family was worth about $500 million in 2013 money.
That changed things between GJ and me. I was considerably over-served at the party, but even I understood that I now had direct access to someone with “considerable means.” That put my dream of moving from “limited means” to “comfortable means” on fast-forward.
Surely, GJ would show me the way.
GJ also was thirsty that night and, after bringing him a couple of 12-ounce “persuaders,” I asked about his wealth and if it was really possible for someone like me to get rich. He chugged his drink, took a look around so it didn’t look like he was showing off, and said: “I’ll tell you what my dad told me: Nobody ever got rich spending money.”
Think about the simplicity in that six-word line of advice: Nobody ever got rich spending money.
No matter where you stand on the scale of wealth — limited, comfortable or considerable — you could improve your standing by not spending money, especially on things you don’t really need.
Groceries for the week? Spend. Lunch for the family at a fast-food joint? Don’t spend.
New clothes for school? Spend. New clothes for Joey’s 10th birthday party or (worse) Emily’s Sweet Sixteen party? Don’t spend. Just as an aside: Why anyone would spend $300 on a dress for a Sweet Sixteen party, or any other teenage event, is beyond reasonable. It’s insane.
But people do it and in a lot of other places, too. I bet that if you looked at your credit card purchases for the past month, there are 15 to 20 charges where you made a conscious decision to spend money you didn’t have.
How much could you have saved if you chose not to spend money on only half of those purchases? I’ll bet it’s somewhere between $100 and $500, depending on your level of spending.
Try this out: Take the money you don’t spend and put it in a separate bank account. Give it six months. The results will impress you.
In fact, I bet you’ll be so impressed with the outcome that you’ll double the amount you contribute. At the end of the year, withdraw that money and invest it in a retirement account for you or a college account for your kids.
You won’t get rich, but you will be richer.
Send thoughts, tips or actual experiences regarding frugal behavior to Bill Fay at email@example.com.