saving vs investing - minimalism vs frugality

[franky1]

in many economic topics of this forum i see many people have misconceptions..

saving vs investing
many quote how savings should be avoided and people should throw every penny into investing due to inflation.. where investing earns more
let me clarify

saving is not a long term thing. not a wealth creation thing.
saving is a temporary play to only save a small amount to literally SAVE people from incidents of rainy day, emergencies where they need quick access to money. to literally SAVE you from having to resort to selling investments at a loss or using debt in an emergency.
you are not suppose to put all wealth into savings,

the gameplay is simple.
if you income is say 2000units of any currency(denomination is not important its just a demo)
and say
housing was 800 (40%)
groceries was 400 (20%)
bills was 300(15%)
leaves you with 500(25%) of excess

for 3 months save the 500 to get a rainy day savings pot to cover a month of bills and essentials
then after that put 500 into investing. knowing if your salary doesnt arrive on time or you lose a job and takes you a month to find ANY other job/start getting social security(unemployment). you dont then need to extract investments or use credit cards/debt. because the savings will save you

as for the inflation concern. a 4% inflation devalue of 1500 is only 60. by which any time over the year you can add in 60 to top up savings to equate to next years rate of bills
EG
5 a month of the 500 excess goes to savings to keep savings at a rate adjacent to rising bills cost. so you can still invest 495 until you get a salary pay rise that the counters the depletion
so the fears and misquotes of people suggesting not to save at all and throw everything into investment are not as well guided as they seemed
saving will save you from investing badly and save you from panicking in dire times to not need to sell investments at a loss,
in short savings will save you

minimalism vs frugality
alot of people think to save/invest requires being super frugal, live under a rock like a hermit and never spend. this is not the case
instead develop a minimalist lifestyle.
decide what actually important to your life. what things serve a purpose/function, gives lasting memories.. and spend wisely.
do you need all the clutter of dozens of branded shoes, clothing, household luxuries/decorations.
or can you find the minimalist unbranded options that serve a regular function to only need a couple items

develop it further. do you really need the lavish new luxury car, or just a minimal model that gets you from A to B
do you really need to pay premium transport, carry 5 luggage bags charging extra at airport, containing every item of clothing and gadget your house had. and then sitting in first class on a plane... or can you just put a weeks worth of underwear and shirts/pants into one bag and sit in economy.

frugality of hermit crab living can be a short term aid. but at somepoint going super frugal fails itself because living on "survival" mode too long is a mental break that cant last. the stress of surviving and not living will become its own downfall which usually ends up with people splurging in excess to get that feel good feeling to regain sanity.
so instead be wise about your spending. note wasteful. make purposeful decisions on things that make your life have good long term feelings/memories. and cut out on the wasteful stuff you usually dont care about a week after purchase

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[Darker45]

While I agree that savings is a must, I don't think savings is only designed for the rainy days. Savings could actually be the necessary start for investment. To many people, investment is a luxury they cannot afford. But they can actually regularly save little by little until it gets significant enough to be invested on a small business or whatever.

Also, saving has become a short-term thing because we have a kind of money that is not worth keeping across time. The current monetary system makes long-term saving pointless. However, it could be possible with a different currency. Bitcoin, for example, might make saving even inter-generational.

I'm with you on the minimalist lifestyle.

[franky1]

While I agree that savings is a must, I don't think savings is only designed for the rainy days. Savings could actually be the necessary start for investment. To many people, investment is a luxury they cannot afford. But they can actually regularly save little by little until it gets significant enough to be invested on a small business or whatever.

Also, saving has become a short-term thing because we have a kind of money that is not worth keeping across time. The current monetary system makes long-term saving pointless. However, it could be possible with a different currency. Bitcoin, for example, might make saving even inter-generational.

I'm with you on the minimalist lifestyle.

savings infers the word to save(rescue).. so only think of savings as the rescue fund. not the wealth creation fund. then it allows you to then treat savings as the small pot of money for rescue, and when you have that rescue buffer to save you in dire times. you can then stop funding the rescue fund and start investing the income excess excess

as for starting a business. no one on low income should jump big. always start low, test the waters and grow with prosperity
EG
if you want to cook food and serve it. dont envision needing $200k to buy a restaurant. start small, test recipes, see if the local populous even demands what you have to offer.  offer food delivery from a "ghost kitchen"(your own home that links to uber eats for delivery only)
have a food stand at a country market or street market. gain a loyal customer base then expand using the profits

to many have the luxury maximalist mindset of wanting to open a 5 star restaurant as first foot into the industry

truly plan your money. the minimalist way first. do you really need a fully furnished $200k restaurant lease before you have even let anyone taste your food to test your recipes. or could you start small.. perfect your offering. then expand

[dothebeats]

I like how you cleared out the concept of minimalism and frugality. Many people think that in order to have some money for savings or investing, you have to literally deprive yourself of pleasure and other good things in life. You just have to keep things at the minimum and only spend on what you need to spend. I started doing this a couple of years back and my financial state is in a much better state now, able to afford a lot of things but choosing not to because I'm focused on building up my investments for my early retirement.

It might be different with individuals who are providing for their family, but eventually they will have the capacity to save at least a little of what they're taking home from their salaries and start from there.

[DrBeer]

Good topic, and useful. All of the following is from personal experience It's very simple, here are 3 steps to achieve your goals
1. saving everything and everywhere is a bad way. The good way is balanced, reasonable consumption
2. Analyze your spending, choose those that are really "empty", convert them into investments. To do this, keep a record of income, expenses and cost items.
3. If the income is still "eaten up" and there is no opportunity to save/invest - look for an additional/new channel of income.

And remember - if by old age we do not provide ourselves a quality existence (savings + passive income) - no one will provide it for us!

[Ucy]

In our world, it's expected you multiply whatever seed or gift you got rather than dump it somewhere where it doesn't grow. If you are fond of hiding your seeds than using them for profitable businesses you might end up not getting more and the one you hid would be taken from you and given to a productive person to multiply.

If you must put money in physical piggybank, better to do that with a physical currency that will appreciate in value in the future. If you have done your homework and believe the dollar will appreciated in few months time then sell the currency that will likely depreciate in value  and get yourself some physical US dollar . But the best remains investing whatever money you have in profitable problem solving investments.

I remember discouraging someone from saving with no experience, and I gave this example: if she was saving for 3 to 4 months for a product that was worth #20 (when she started saving) and in the 4th months the price of the product increase by let say 30%, did she gain or lose? her answer was lose. I told her putting money in piggy isn't for the rich... She has alot to learn.

[kingvirtus09]

To be honest, minimalism and savings appear to be nearly identical; they allow us to save for things we want more than we need, although simplicity can provide us with so-called financial freedom. .by conserving money and avoiding unnecessary expenses.
So, what are our financial goals or targets? Short- or long-term investment? So, what do we do with the money? Saver or spender?

But in this discussion We can build a financial strategy that is consistent with our ideals. Let us merely remember that we can modify these concepts to match our own problems.

[franky1]

To be honest, minimalism and savings appear to be nearly identical; they allow us to save for things we want more than we need, although simplicity can provide us with so-called financial freedom. .by conserving money and avoiding unnecessary expenses.
So, what are our financial goals or targets? Short- or long-term investment? So, what do we do with the money? Saver or spender?

no
savings is not about saving for things we want..
savings should be for the things you need.

both saving and minimalism is about purposefully adjusting your views to concentrate on the things you NEED
that is not to say people need to live without a vacation.. its more about concentrating on the fact that for sanity sake when you NEED a vacation to rest and rejuvenate and break the insanity spiral of non-stop work
you make the best judgements. not waste it on things that dont bring you long term happiness, recovery of energy and sanity

if you are just going on vacation because you want to for one week a quarter, try to organise vacation for when you need to 2week each 6month. make the most of time off to help you rejuvenate and have great experiences

or the opposite. if you dont want 1 week per quarter/2week per 6month. but NEED a extended weekend break to recover from stressful work every couple months. then plan what you need

still have your extended breaks/vacation just choose wiser about expense, experience and time utilisation

for instance
out of all vacations/extended weekends you have ever had, which one gave you the best memory and rejuvenated you, freshened your energy levels to make you feel happy to go back to work after the vacation.. vs which vacation was a huge waste (where after going to vagas losing on the slots), you came back to work more stressed, feel guilty about spending and upset about what happened on vacation

most people then work out the most cost effective experience, within budget that does not leave them feeling guilty of spending after and has rejuvenated them

But in this discussion We can build a financial strategy that is consistent with our ideals. Let us merely remember that we can modify these concepts to match our own problems.

people that purposefully budget. stop relying on 6 credit cards and instead start developing a savings pot for emergencies so they can cut up the credit cards.

they also look at the most expensive devices/gadgets/appliances in their homes and look at the warranties/expected life span of appliances. and then budget that too
EG a #400 computer lasts maybe 5 years so they budget an amount of #7 a month (#7*60month=#420) thus getting a computer upgrade when old one fails is not a sudden #400 emergency. but an unnoticeable #7 planned expense that eventually will be needed

thus saves you needing a credit card or 'pay later' retail loan
thus saves you needing to sell investments at a bad time at a loss to pay for the computer

[Fortify]

in many economic topics of this forum i see many people have misconceptions..

minimalism vs frugality
alot of people think to save/invest requires being super frugal, live under a rock like a hermit and never spend. this is not the case
instead develop a minimalist lifestyle.
decide what actually important to your life. what things serve a purpose/function, gives lasting memories.. and spend wisely.
do you need all the clutter of dozens of branded shoes, clothing, household luxuries/decorations.
or can you find the minimalist unbranded options that serve a regular function to only need a couple items

develop it further. do you really need the lavish new luxury car, or just a minimal model that gets you from A to B
do you really need to pay premium transport, carry 5 luggage bags charging extra at airport, containing every item of clothing and gadget your house had. and then sitting in first class on a plane... or can you just put a weeks worth of underwear and shirts/pants into one bag and sit in economy.

frugality of hermit crab living can be a short term aid. but at somepoint going super frugal fails itself because living on "survival" mode too long is a mental break that cant last. the stress of surviving and not living will become its own downfall which usually ends up with people splurging in excess to get that feel good feeling to regain sanity.
so instead be wise about your spending. note wasteful. make purposeful decisions on things that make your life have good long term feelings/memories. and cut out on the wasteful stuff you usually dont care about a week after purchase

There is a very fine line between minimalism and frugality, a line which can sometimes get blurry in fact. Take toilet paper as another example, sometimes it is not wise to go for the cheapest option when it comes to the basics, even if it does the job - if you have the money it can be wise to upgrade to a reasonable standard. I'd say minimalism should be defined as a different topic entirely, because you can be minimalist but still a lavish spender. I think it's definitely important not to be wasteful with your resources and too many people fill their homes with unnecessary junk, buying the latest gadgets (on finance even) which they might use a couple times then sling in the back of a cupboard, but this is the society we live in that constantly bombards us that we need these "essential" things in our life.

[franky1]

in many economic topics of this forum i see many people have misconceptions..

minimalism vs frugality
alot of people think to save/invest requires being super frugal, live under a rock like a hermit and never spend. this is not the case
instead develop a minimalist lifestyle.
decide what actually important to your life. what things serve a purpose/function, gives lasting memories.. and spend wisely.
do you need all the clutter of dozens of branded shoes, clothing, household luxuries/decorations.
or can you find the minimalist unbranded options that serve a regular function to only need a couple items

develop it further. do you really need the lavish new luxury car, or just a minimal model that gets you from A to B
do you really need to pay premium transport, carry 5 luggage bags charging extra at airport, containing every item of clothing and gadget your house had. and then sitting in first class on a plane... or can you just put a weeks worth of underwear and shirts/pants into one bag and sit in economy.

frugality of hermit crab living can be a short term aid. but at somepoint going super frugal fails itself because living on "survival" mode too long is a mental break that cant last. the stress of surviving and not living will become its own downfall which usually ends up with people splurging in excess to get that feel good feeling to regain sanity.
so instead be wise about your spending. note wasteful. make purposeful decisions on things that make your life have good long term feelings/memories. and cut out on the wasteful stuff you usually dont care about a week after purchase

There is a very fine line between minimalism and frugality, a line which can sometimes get blurry in fact. Take toilet paper as another example, sometimes it is not wise to go for the cheapest option when it comes to the basics, even if it does the job - if you have the money it can be wise to upgrade to a reasonable standard. I'd say minimalism should be defined as a different topic entirely, because you can be minimalist but still a lavish spender. I think it's definitely important not to be wasteful with your resources and too many people fill their homes with unnecessary junk, buying the latest gadgets (on finance even) which they might use a couple times then sling in the back of a cupboard, but this is the society we live in that constantly bombards us that we need these "essential" things in our life.

minimalism is not about cheapest.. you are right. minimalism is about conscious spending on meaningful things and avoiding spending on meaningless stuff
frugalism is about cheapest

a good example of the difference is
frugalism would be cheapest one ply paper bought in bulk to save via bulk discount, stocking up rolls in every corner/cabinet of the bathroom..
minimalist would have a toilet with built in bidet.. to not need to clutter or continually buy toilet paper, thus save on toilet paper and also plumber visits of clogged sewers

[milewilda]

Savings could really have that different purpose

1. Rainy days
2. Investment
3. Impulsive Wants
4. Sudden Needs
etc....

The main question is, Would you do able to save up at least 25%? No we wont.. For sure on the time that we've seen
that we do have such excess then pretty sure you would really be spending it out on a night party or having those leisure activities yet
you would really be having in mind that you could earn it on the next month.

Saving thing sounds basic but doing the actual thing is something challenging. It is really just that impossible
that you wont really be wary in making decisions which one is worth and which one is not.

[0t3p0t]

Good topic, and useful. All of the following is from personal experience It's very simple, here are 3 steps to achieve your goals
1. saving everything and everywhere is a bad way. The good way is balanced, reasonable consumption
2. Analyze your spending, choose those that are really "empty", convert them into investments. To do this, keep a record of income, expenses and cost items.
3. If the income is still "eaten up" and there is no opportunity to save/invest - look for an additional/new channel of income.

And remember - if by old age we do not provide ourselves a quality existence (savings + passive income) - no one will provide it for us!

Good point especially the last one. If we are going to follow all this steps we won't be having any stress along the way to success. The reason why poor people remain poor at the end of the day is because they don't care about these things. I also found these following reasons on google helpful so maybe it's worth sharing.

Long-Term Security
Among the many advantages of saving is the long-term security it provides you. The future is unpredictable, and financial emergencies can crop up anytime. Saving money allows you to create a safety net for your future expenses as well as unplanned financial needs. The more you save, the more peace of mind you have, as you are better prepared for anything life throws at you.

Saving money is a step towards financial independence
The importance of saving money cannot be understated when it comes to independence. Financial independence plays a critical role in making you self-sufficient. It helps you live life according to your preferences and comfort. You have the liberty and authority to spend your money on the things you like and live a comfortable and enriched life.

Saving money enables you to take calculated risks
Another reason why saving money is important is because it allows you to take calculated risks. When you have enough money, you can take risks like starting a business, changing professions and exploring your interests without the immediate pressure of generating income.

Savings Reduce Stress
Having adequate savings enables you to live a more fulfilled life. You are more likely to be less stressed about your future goals like retirement or unexpected expenses like healthcare. Savings allow you to be relieved and at ease, knowing you have sufficient funds to navigate different situations in life.

[livingfree]

There is still a lot of people that understands saving will help them make rich. But no, that's not how it goes with saving. It's only good when you are trying to save for emergencies or anticipating things to come unexpectedly. Still, it's one of the good practices that a person can have but saving to invest is the best approach.

As for minimalism and frugality, I also saw that thought from many that if you're trying to live frugally you'll have to sacrifice the quality of life. No, it's not how it goes. Living frugally means like simple living and removing those expenses that you can eliminate because in reality you don't really need them.

The logic there is about buying your needs and not your wants. But if you have a spare, you can spoil yourself sometimes.

[Text]

I agree that savings as a rescue fund serve as a safety net for unexpected expenses and emergencies, allowing for better financial decisions even in challenging times.

I think it embodies the core principles of minimalism, conscious spending, and avoiding wastefulness. It's not just about opting for the cheapest option but making purposeful decisions that contribute to a meaningful and clutter-free life.

The line between minimalism and frugality can be blurry, it often boils down to motivation. Minimalists focus on living with less to simplify their lives and reduce stress, while frugal people aim to save money and minimize waste.

[Apocollapse]

Unfortunately even you save 500, there's a chance if you sick and need to visit a doctor, it's not enough to pay your medical bills. Not to mention your parents might ask you for money because your family need it, your girlfriend asking for a present etc.

Not many people want to live in minimalism because they live in a society where people around them wear a branded cloth, they will bully people who're not wear a branded cloth or something like that.

[franky1]

Unfortunately even you save 500, there's a chance if you sick and need to visit a doctor, it's not enough to pay your medical bills. Not to mention your parents might ask you for money because your family need it, your girlfriend asking for a present etc.

but the point is organising your finances before you spend it. literally give your money a target so you know where your money goes at the start of the month, and not just realising at the end of the month the money is gone and wonder where it went..

by categorising your money. giving each cent/penny a name/reason/target/goal. then helps you stay within your means. before you spend it
if you have no medical insurance or if government doesnt do public healthcare. then you plan for that.
if at start of month you know its your girlfriends birthday or its valentine season. you plan for it.
you then put money aside to rescue you for the unplanned. to avoid needing to take debt/sell assets at a loss.
if you have medical costs. you dont use a credit card or sell a house or sel bitcoin at a loss.. instead you request a medical payment plan and fit it into your budget

Not many people want to live in minimalism because they live in a society where people around them wear a branded cloth, they will bully people who're not wear a branded cloth or something like that.

not many people "want to" but its the choice..
do you want to push the status you are in down the road never improving by doing nothing.. getting into debt spending lavishly on things you dont need. or do you prioritise your needs to make the most of your money.
EG this does mean if branded clothing does bring you long lasting happiness. but it doesnt matter where you go on vacation. then you minimise the vacation expense and prioritise the clothing budget to get the best result

its about organising your finances to give your money a goal/target that achieves actual long term progress of happiness, rather then wasteful regret

[shield132]

I like your advice, it explains everything in detail with its pros and cons about why we should save some part of our money and why should we invest another part. I completely agree with you on that part but in the last part, you touch lifestyle and I want to remind you that it doesn't apply to individuals that struggle.

minimalism vs frugality
alot of people think to save/invest requires being super frugal, live under a rock like a hermit and never spend. this is not the case
instead develop a minimalist lifestyle.
decide what actually important to your life. what things serve a purpose/function, gives lasting memories.. and spend wisely.
do you need all the clutter of dozens of branded shoes, clothing, household luxuries/decorations.
or can you find the minimalist unbranded options that serve a regular function to only need a couple items

develop it further. do you really need the lavish new luxury car, or just a minimal model that gets you from A to B
do you really need to pay premium transport, carry 5 luggage bags charging extra at airport, containing every item of clothing and gadget your house had. and then sitting in first class on a plane... or can you just put a weeks worth of underwear and shirts/pants into one bag and sit in economy.

frugality of hermit crab living can be a short term aid. but at somepoint going super frugal fails itself because living on "survival" mode too long is a mental break that cant last. the stress of surviving and not living will become its own downfall which usually ends up with people splurging in excess to get that feel good feeling to regain sanity.
so instead be wise about your spending. note wasteful. make purposeful decisions on things that make your life have good long term feelings/memories. and cut out on the wasteful stuff you usually dont care about a week after purchase

When you are from a poor country and try to save some money, you simply have to eat cheap food like rice, buckwheat, bread, potato, pasta, use low-quality oil, etc... You simply have to sacrifice your health for a while which you'll have to pay later. When you are poor, not only luxury cars but even cars don't exist and to save some money, you have to use the bus less, go out less, buy second-hand clothes. When you live in a poor country, you already have to buy shoes that will last you for centuries. So, for people from poor countries, to save some money, you have to be super frugal, live under a rock like you described.
If someone is capable of affording what you described, then that person is rich and probably doesn't really need to save something, that is the lifestyle that poor people want to achieve.

[Natsuu]

To be honest, minimalism and savings appear to be nearly identical; they allow us to save for things we want more than we need, although simplicity can provide us with so-called financial freedom. .by conserving money and avoiding unnecessary expenses.
So, what are our financial goals or targets? Short- or long-term investment? So, what do we do with the money? Saver or spender?

But in this discussion We can build a financial strategy that is consistent with our ideals. Let us merely remember that we can modify these concepts to match our own problems.

I agree. You've pointed out how minimalism and savings team up for financial freedom by saving money and skipping the unnecessary splurges. Whether you're into short-term gains or long-term wealth, it's all about what suits your vibe like saving or spending. Making a personal financial strategy that vibes with your ideals is keys and flexibility is the name of the game, letting you tweak things to fit your unique situation

[Helena Yu]

Correct, I also adopt this lifestyle.

The biggest mistake that most people suffer in financial management is they only focus about invest in asset. Investment is actually the last step to protect our wealth, the first step is study hard and the second is get high paid jobs or have a business. if you didn't earn enough, you won't able to save money or even invest it.

Minimalism lifestyle is mostly underestimated by a lot people, they need to have a strong mental to receive mocks.

[franky1]

but in the last part, you touch lifestyle and I want to remind you that it doesn't apply to individuals that struggle.

minimalism vs frugality
alot of people think to save/invest requires being super frugal, live under a rock like a hermit and never spend. this is not the case
instead develop a minimalist lifestyle.
decide what actually important to your life. what things serve a purpose/function, gives lasting memories.. and spend wisely.
do you need all the clutter of dozens of branded shoes, clothing, household luxuries/decorations.
or can you find the minimalist unbranded options that serve a regular function to only need a couple items

develop it further. do you really need the lavish new luxury car, or just a minimal model that gets you from A to B
do you really need to pay premium transport, carry 5 luggage bags charging extra at airport, containing every item of clothing and gadget your house had. and then sitting in first class on a plane... or can you just put a weeks worth of underwear and shirts/pants into one bag and sit in economy.

frugality of hermit crab living can be a short term aid. but at somepoint going super frugal fails itself because living on "survival" mode too long is a mental break that cant last. the stress of surviving and not living will become its own downfall which usually ends up with people splurging in excess to get that feel good feeling to regain sanity.
so instead be wise about your spending. note wasteful. make purposeful decisions on things that make your life have good long term feelings/memories. and cut out on the wasteful stuff you usually dont care about a week after purchase

When you are from a poor country and try to save some money, you simply have to eat cheap food like rice, buckwheat, bread, potato, pasta, use low-quality oil, etc... You simply have to sacrifice your health for a while which you'll have to pay later. When you are poor, not only luxury cars but even cars don't exist and to save some money, you have to use the bus less, go out less, buy second-hand clothes. When you live in a poor country, you already have to buy shoes that will last you for centuries. So, for people from poor countries, to save some money, you have to be super frugal, live under a rock like you described.
If someone is capable of affording what you described, then that person is rich and probably doesn't really need to save something, that is the lifestyle that poor people want to achieve.

i understand those in poverty, unemployed or poorly paid work cant even afford cars or vacations.. so have less choices.. in regards to minimalism
but as a for instance of minimalism. your family has understood and made the choice that having a cellular device and internet has more long term positives of possible income compared to putting a nicer meal on a plate. no judgement i can understand the merits of such decisions

but even on low income of frugalism, people should still pre-plan the month, before spending on essentials... rather then just unplanned spend on essentials with no money left but plenty of the month left, wondering what happened and what to do

i have visited many countries and seen scenes of what you described, and in many ways far worse
people with what appears to be new sandals, but they purposefully wrapped the soles tread in card or tree bark and used rags as straps to protect the actual sandals from ware and tear. making the sandals last a lifetime, or use plastic shopping bags when wet
i have seen how villages getting free aid rations of rice from charity, killed the market of farming rice.
i have seen how villages getting free aid rations of clothes from charity, killed the market of clothing

i have seen families prepare meals where it says use a cup of rice. and seen the family spoon out a couple spoons from a cup to save a few % to make it stretch out longer. so i am fully aware of super frugalism

yes choices are narrower. but by pre-planning, even that can stretch the money, food to last a few days longer than expected
this is where people then have to get creative about increasing income

and yes increasing income is a different debate which is another category.. separate from the minimalist vs frugal planning concept
when you live in an area where there are buses, where there are shops that sell shoes/clothes. there are opportunities.
heck when you speak with friends and family and speak of the things they wish they could have, even that can be an opportunity. but thats for another category of discussion