Updated on 07.04.11

Does Frugality Beat Inflation?

Trent Hamm

A few weeks ago, I put out a call on Twitter and on Facebook for detailed posts that people would like to see. I got enough great responses that I’m going to fill the entire month of July – one post per day – addressing these ideas.

On Facebook, Rebecca requested a post on “ways to live more frugally, and ‘beat’ inflation. ie: garden, raise own animals? (is it cost effective?) buying used/bartering/trading, public transportation vs driving pros/cons, saving in an economic nightmare (is it possible?)”

Here’s the real truth of the matter: frugality does beat inflation. Some methods of frugality, however, are much more effective at fighting inflation than others. Let’s look at what I mean.

Removing yourself from the cash economy (in bits)
Any move you can make to remove yourself from directly using money to buy things is a strong blow against inflation. Gardening, for example, is a great inflation fighter, particularly when it’s self-sustaining year over year using non-hybridized seeds. Bartering with your neighbors for tools and services is another great inflation fighter.

In each of these cases, your means of exchange are not related to money. When you’re gardening, your primary exchange is your time for your food. When you’re bartering with your neighbors, you’re offering the tools you already have and the services you can provide for the tools and services they can provide.

These exchanges do not involve cash in any direct way, so they’re not affected by inflation in any direct way. The more you can do things like this instead of spending money, the less impact that inflation will have on you, no matter what comes down the pike.

How can you increase your value set here without spending money? Build your skill set. Learn skills like plumbing and carpentry and home repair, the types of things that people always find useful.

Reducing the impact
Most frugality, however, falls under the realm of simply reducing the quantity of items that you need to buy regularly. The less you have to buy, the less impact inflation has on you directly.

For example, if you spend a weekend air sealing your home, you’re going to directly reduce the amount of energy that you have to buy from the electrical grid each month. If you install a wind turbine, you’re going to drastically reduce that amount. If you install a geothermal heating and cooling system, you’re also going to drastically reduce that amount.

If you are able to use mass transit regularly and buy a long-term pass on it, you’re again shielding yourself from the inflation of gas prices and, possibly, from other auto-related costs (if you’re able to sell your car). This does not shield you from future inflation of mass transit passes, but if this cost is much lower than the cost of upkeep on a car, then it’s a major victory.

Some of the things Rebecca alludes to in her article are what I would call “lifestyle” choices. An example of this is raising livestock for food production. Certainly, such moves can be a way to reduce (or even eliminate) your reliance on outside sources of food (thus drastically reducing inflation’s impact on your life), but they often require a severe lifestyle change and commitment that few people are willing to do.

For example, raising livestock is a severe time commitment on a daily basis. Animals need to be fed and watered and checked for health concerns constantly.

They also need room in which to roam safely, which largely restricts you to living rurally if you have any significant amount of livestock. I’ve known people who have raised a goat in a suburban environment, but a single goat makes only a small dent in your food needs (via milk).

This amounts to a lifestyle choice, not just a frugal tactic. For some, it may be a great lifestyle choice that’s very life-affirming with the added bonus of drastically reducing or eliminating the connection between their food costs and inflation. However, they pay for that with their time and their energy. It is not a choice that everyone will want to make. In fact, few will make it.

I have some interest in raising chickens and perhaps a cow or two if we were to live in the country, but the big reason for me wouldn’t be to reduce the impact that inflation has in my life. It’s more of an issue that such a relationship with one’s food and with the animals that supply it is a valuable one to me.

Simply put, major lifestyle changes – the kind that shift how you spend a large portion of your time and where you live – shouldn’t be taken on solely for frugality purposes. There needs to be more of a reason than just saving money or reducing your connection to inflationary pressures if you’re going to radically alter your day-to-day life.

Being self-sustaining
Another point worth noting is that the more self-sustaining you are – meaning the more free you are from inflationary pressures – the more you’re free from many other types of modern pressures. You have less need to have a high-paying and stressful job. You have less drive to own material possessions that mostly serve to impress others, as others have less of an impact on your economic future.

Being more self-sustaining is quite rewarding beyond merely protecting you from inflation. It protects you from countless other concerns as well.

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  1. Sonja says:

    Two particularly great piecse of frugal advice came to me from Amy Dacycyn’s “Tightwad Gazette”. She talks of avoiding being an early adopter with technology. Just wait patiently and someone will probably give you their “old” one or sell you one very inexpensively. We were slow to switch from VHS to DVD and got a lot of great VHS movies from friends who switched right away. We still had children at that time who were delighted with the free Disney movies we were given. I am using an iPhone 3G right now that was given to me by a friend who had to have the iPhone 4.

    Second, if you are looking for an item “put the word out” that you are in need of whatever it is and ask your friends and family to keep you in mind if they hear of anyone needing to get rid of or sell their whatever-it-is. We got a lawn mower this way, a 52″ rear projection TV (not LCD or HD, hence the need for another friend to upgrade, an air compressor and a welder. My sister-in-law got a free piano this way, she just had to move it herself.

  2. kristine says:

    If you have already sealed your windows, if you have already changed or lifestyle to live lean and mean, then an increase in any consumable you need will have a direct impact on your budget.

    Adopting new frugalities to ameliorate new specific inflationary increases will lessen their impact. No one is perfect, and there is always room for improvement, but you can reach a kind of critical mass, where the lifestyle is finely tuned, and you become subject to the law of diminishing return.

    Long term readers of TSD may fall into this category; new readers likely will not, and resonate more with this post. I am looking for new ways to address the former scenario, much like a dieter who has plateaued with 5 pounds left to go.

  3. deRuiter says:

    Buying pre owned is a great way to beat inflation. All wool sweaters, all cotton clothing, great quality handbags and belts of leather, beautiful coats and suits are all available at yard sales for pennies on the dollar. Shop better neighborhoods where people with larger incomes grow tired of new things before the “new” is even off the item. It’s interesting to see how many items of clothing are available at garage sales with the original tags still attached. Take advantage by buying gently preowned things, antique furinture, beautiful older accessories at flea markets and yard sales. Stop sending your money to China, beat inflation, save wads of cash and help the environment. Buy pre owned! We bought a slightly used TV at a sale, the owner had just won an even bigger TV at a raffle, and we paid $75 for this big TV. The TV functioned perfectly for more than ten years, and it was from a yard sale so there wasn’t any sales tax to pay. Worked out to less than $7.50 per year to own and use the TV. Now that beats inflation!

  4. Sara says:

    I have noticed that frugality is definitely protection against inflation. I recently was in a position of needing to outfit a new home because of divorce. By shopping yard sales, I acquired everything I needed at extremely low prices. These items may last the rest of my life because I tended to looked for older pieces of kitchenware and sturdy vintage wood furniture. This will tremendously reduce future replacement costs. I am starting to buy high quality clothes for work so they won’t have to be replaced so often either. I spend little on material items at this point. Hopefully I will be able to buy myself an inexpensive home soon which I will pay off quickly and therefore reduce my home expenses to very little. So over several years of procuring what I need, my need for income actually gets reduced. Working to establish gardens, fruit trees and bushes and decent food storage will help to lessen food expenditures over the next few years. So yes, I think frugality can not only reduce the impacts of inflation but beat it…

  5. Debbie M says:

    I’m with kristine–becoming more and more frugal can beat inflation, but staying the same doesn’t. Even if you’re very frugal, spending only 20% as much as average people, inflation attacks that spending.

    For example, I bought a small house and paid it off. Yea! Property taxes and insurance still rise each year. Cutting my own hair means I spend no money at all on hair cuts. But if the price of something else goes up, I have no wiggle-room in the cutting-my-hair part of the budget because it’s already at rock bottom.

    That said, you can keep getting better at being frugal. Every time you find a new way you like, you can profit from that forever, and it can be a springboard to new ideas. But how long can this go on before you have to become a cave-dwelling freegan to keep your costs from going up?

  6. carol mason says:

    Live in Kansas and raise a few head of cattle, my
    thoughts to share Big Bales of hay 45.00, last wk.
    corn 9.00 for 50 pounds, in the winter they can’t
    live on just hay. Takes between 500 and 600 dollars to process a beef after you feed for 2 years

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