This is a question I’ve been asking myself lately. I’ve been frugal all my life. My mother was frugal when I was growing up. She grew up poor and then she had to support me and my sister on minimum wage while rarely receiving child support. She was frugal by necessity then but she stayed that way even when her financial situation improved. Frugality is a trait that I acquired from her.
I’ve come up with three reasons why I am poor even though I am frugal. The first reason is that I haven’t made much money in my life. I’ve probably had over 100 jobs in my adult life and the large majority of them were low paying. Even when I had a good paying job it didn’t matter because I never stayed at the job very long. My pattern was to work for a while,save up money,then quit and live off my savings. When my savings ran out then I would just start the pattern all over again. This has allowed me to travel and do some things I wouldn’t have been able to do if I just had a two week vacation every year. Although if I had been a little more patient I probably could have traveled without depleting my savings.
I’ve never liked working much though. My mom is a hard worker but somehow I didn’t acquire that trait. That is nobody’s fault but my own of course. Since I’m turning 40 this year I don’t have much time to fix this problem. To fix this problem I’m going to have to find a good paying job and stick with it. I’m making it a goal this year. That would fix the first reason why I’m still poor. I’ll detail the other two reasons in later posts.
Yeah, I too think that its a myth that frugal living will make you rich. To me, frugal living is a choice to prevent myself from giving in to the constant pressure to keep up with the joneses.
BTW, I was looking through your challenge reports so far, and its impressive! Good luck with the reamining days of the challange period, and with continueing the habits you hope to retain!
sorry but living frugally is only part of the equation. You need to be making money to begin with. you then save it, invest it and watch it grow instead of spending it.
after a while, its annual growth rate is more than you can spend, and thats how you get really wealthy and can afford to retire.
if you had started working at age 18 and saved $200/mo and invested it at 11% (thats whats a conservative return of what the stock market returned during the 90s) you’d have over $100,000 today. Had you continued it until age 65, you’d have retired with over $3 million.
Nothing makes up for lost time. Considering the 22 yrs of “missed” savings, if you started today and saved twice as much, or $400/mo for the next 25, you’d make nowhere close to $3million.
But the question you need to ask yourself, is do you want to be 65 and broke or do you want to have some savings when you’re old and may no longer be able to find work?