One of the things that eventually becomes pretty evident to frugal people is that, as you discover more and more frugal strategies, you start to see some diminishing returns on that frugality.
For example, the realization that if you move from just buying straight name brand items to buying store brands is a huge money saver, but methodically comparing every product throughout the store to make sure you’re buying the cheapest possible item every time is a big case of diminishing returns, as you’re rarely returning enough for your time to make the effort worthwhile.
Switching from eating out for most meals to making healthy and tasty meals at home for most meals is a huge money saver, but making an already inexpensive meal even cheaper often isn’t going to save you a lot of money. You’re not going to shave a lot out of a basic pasta meal with a simple sauce made at home.
Identifying the cheapest grocery store in town and switching your shopping to there is going to save you a ton on groceries, but doing a ton of grocery store hopping to save $4 at each store isn’t going to save you a lot of cash for your research and time investment.
Here’s the point: the first fifty or so frugal changes you make to your life have a nice financial return. You make a change, like reducing or eliminating a bill, and it has a really nice impact on your life moving forward. Those first fifty or so changes often result in thousands saved per month, and it feels transformative and empowering.
However, what you discover is that each narrow expense in your life has one or maybe two tweaks you can make that result in a significant change in the expense. After that, the changes make a smaller and smaller and smaller financial difference.
Making a meal plan instead of buying food for meals on the fly is going to make a major financial improvement. Refining that meal plan? It’s not nearly as impactful.
Air-sealing all of your windows will make a pretty nice impact on your energy bill. Patching up that sealing every year won’t make much of an impact.
It’s the 80/20 effect, all over again. 20% of the frugal steps you take will result in 80% of the savings, and it’s usually the first big change you make in a particular spending area. After that, you can make lots of changes, but they often won’t add up to as much as that first initial change.
What do you do when you reach that point, when you’ve already optimized almost every element of your spending?
You start optimizing for other resources, often starting with time. A lot of the biggest frugal improvements that people skip over are the ones that require some time investment. Things like cooking food at home take time, time that people with busy lives sometimes don’t have.
Thus, finding more time starts to become a bigger and bigger frugal priority. If you can find more time-efficient ways of doing the things you need to do in your life, then you free up more time for things that you really want to do but are a bit more time consuming. Making your daily routine a bit more efficient in terms of time gives you time to make a far less expensive dinner or time to air seal your windows or time to air up your tires to the maximum recommended pressure, things that you might have skipped over because of a lack of time.
At this point, I view maximizing all of my personal resources as a frugal priority. Maximizing my money is vital, but maximizing my time and energy and focus and mindset often makes other activities much more do-able. I look at my daily routines with care, not just to maximize expense, but to maximize time efficiency. If I can make a normal task a few minutes faster, that’s a few minutes I can give to myself to relax or to take on something I wasn’t previously handling well.
It doesn’t even have to be time management or energy management. Simply taking on a new area of self-improvement for a while, once you have a lot of your frugal and personal finance initiatives on autopilot, can pay powerful dividends in your life.
Perhaps in the coming year you can take on goals that center around improving your health (which can help strongly with long term medical costs) or getting in better physical shape. Maybe you can adopt goals that center around building a new skill (which can potentially help with your career) or learning something new, like a new language. Maybe you can simply work on building better and more relationships with people in your personal life and in your professional life, as building more and better relationships is a powerful way to improve your life and even help your finances.
Adopting a new goal doesn’t mean you have to abandon frugality or personal finance. The reality is that as you start to reach your limits on what really works for frugality and you’ve moved a lot of your finances to autopilot, it doesn’t require as much attention and thought as it once did. You have space for trying new things without letting the old things down.
At the same time, taking steps to improve your income becomes more and more important as you start to hit maximum limits for your frugality.
In the end, successful personal finance is about maximizing the gap between your spending and your income. You can make that gap wider by spending less, but you can also make it wider by earning more.
This doesn’t mean you have to run out right now and get a second job. What it does mean is that you should be taking steps to increase your income, whether it’s by improving your situation at work or by looking for new avenues for income.
For many people, time is the big constraint. Many people feel as if they don’t have enough time to start new initiatives for making money. The truth is that there are a lot of ways to put yourself in position to increase income without increasing your time commitment.
At the same time, if you begin to explore being more efficient with your time, you’ll begin to find more time for things like taking an evening class or working toward a new certification or even taking on a part-time job. You can directly turn that extra time into extra income if you so choose.
Finding the limits of frugality doesn’t mean that that your financial journey is over. There are many other tools and strategies that can help you keep accelerating your progress toward your big goals in life. Frugality is just one very useful tool for getting there; it’s not the only tool, and when you start to see the limits of that tool, it’s time to start adding more tools to your tool belt.