It makes sense that we should wish to arrange our spending to maintain our required standard of living at the least cost. That’s simply being efficient with our money. And it’s no different from other spheres of our lives. We are entitled to arrange our affairs to minimise the amount of tax we have to pay, as long as we stay within the law. It is a mainstay of an investment plan that we should seek to minimise the risk taken for the targeted return. This is no different – although I can imagine my wife groaning at my having found a justification for frugality in our day to day living. Frugality in this sense is defined as being organised, knowing what the plan is and sticking to it. It doesn’t mean to suggest a lower standard of living. Choice should remain as to how we spend our dollars. The key issue is to be efficient in how we spend. To get the biggest bang for the buck so to speak.

Be efficient in how you spend

My references points for frugality had been overseas sources to date and so I was interested to Google New Zealand sources. There were various options including more hints for surviving the supermarket. But it was www.guide2.co.nz/frugal-living and a post from Ruth Brown which caught my eye in supporting the proposition that being considered in our expenditure can lead to better, not lesser outcomes.

Are you more like Frugal McDougall or Lavish McTavish?

There were two clans – the McDougalls and the McTavishs. Lavish McTavish never gave much thought to tomorrow. He wanted to give his family whatever they wanted. And if he didn’t have his own money, he’d use someone else’s – often borrowing from his generous neighbour Jack McBank. At night, you could pick Lavish’s house a mile away – it always had the lights blazing in every room. At the other end of town, lived Frugal McDougall – not much to his name, except a modest income and a plan – to take his family to see the world. Frugal knew exactly how much it would cost and how long it would take him to save it.   He also knew how he would achieve it – with his family’s help and just a few dollars at a time.  So when no one was in a room the lights were off, appliances were turned off at the wall.   They knew what was in the pantry and the freezer and they planned their meals around it.  They bought in bulk where they could and waited for specials.  They grew their own vegetables.  They made their own cleaning products from simple household ingredients.  Whenever anyone got a fifty cent piece, they would put it into a special jar.  Whenever they thought they’d like to buy something, they waited 24 hours to see if the urge wore off. Finally, in fact, much sooner than they expected – Frugal McDougall and his clan with a plan, were off to see the world. Unfortunately, at the other end of town, Jack McBank got sick of Lavish McTavish borrowing money and not paying it back and sued his kilt off and took his house. Frugal McDougall had by far the better outcomes.

Stephen McFarlane is a Chartered Accountant and Certified Financial Planner. He is an adviser with the One to One Group and Triplejump both of whom are based in Timaru. A Disclosure Statement is available on request and free of charge at www.one-to-one.co.nz.