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Frugalism: achieve financial freedom with minimalism!
Learn How Frugalism Leads to Financial Independence: Saving, Investing, and Living a Frugal Life.
Frugalism: achieve financial freedom with minimalism!
Frugalism, a philosophy of life characterized by the idea of achieving maximum savings with minimal expenditure, is becoming increasingly important. The term comes from the Latin “frugalis”, which means “simple and modest”. This savings movement, which emerged in the USA with the FIRE movement (“Financial Independence, Retire Early”) during the 2008 financial crisis, has now also become established in Germany. Followers of frugalism strive to achieve financial independence early on by drastically reducing their expenses and saving a large portion of their income, often up to 70%, as reported by ZDF.
To achieve this goal, frugalists must fundamentally change their way of life, according to information from MDR. You measure every cent and avoid unnecessary consumption. Investments in stock ETFs, real estate or risky investments such as cryptocurrencies play an important role in allowing savings to grow even more effectively. However, financial experts warn of the risks: higher returns are often associated with more uncertainty when investing. However, in order to secure the desired standard of living in retirement, it is crucial to develop a sophisticated financial strategy at an early stage that also takes into account the amount of future pension payments.
Financial independence vs. reality of life
The idea of frugalism can be challenging for many. While some people are able to save large portions of their income, this is not easily possible for the majority. This is particularly true for households with children, where the drive to save often clashes with the needs of the family. Financial expert Ralf Scherfling from the North Rhine-Westphalia Consumer Center emphasizes that foregoing consumption alone is not enough: “The feasibility also depends on the level of income and the net return that can be achieved.” The path to financial independence through frugalism may seem tempting, but reality shows that not everyone is willing or able to live this austere lifestyle.