Frugality is a bit of a dogma in the personal finance community. And with good reason. You will never achieve financial independence if you are not able to implement some systematic frugality in your life. But there is a part of the equation that I think the community glosses over.

Frugality is allowed to come and go in phases

Let me explain, because I can already feel you shifting in your seat 🙂

You hear things like “Save 50% of every dollar earned.” And this is fantastic advice, but it can be more.

A lot of personal finance advice is based around this notion of a fixed income and fixed budget.

“I know I receive $2,000 per month, and I know what my expenses are every month.”

This advice works for most wage-slaves who have a standard salary or hourly rate, and work the same number of hours every week.

And to be fair, this is probably the vast majority of America. But the whole goal of FI is to be a little different. A little daring. We don’t want to be the majority.

Thinking Differently

The biggest mindset shift that has helped me get to a $1M net worth by age 30 was to realize a very simple concept.

[thrive_text_block color=”note” headline=”A Simple Truth”]The amount of money you can save is limited. The amount of money you can earn is unlimited. [/thrive_text_block]

If you make $50,000 per year, could you live on $40,000 and save $10,000? Sure

Could you live on $25,000 and save $25,000? Maybe…

Could you live on $10,000 and save $40,000? Not sure about that one.

Especially as a dad of 3, I have come to grips that there are some costs that just start creeping up with the little ones. We tried the reusable diapers… never again. I accept the cost of new diapers and wipes. I’ve accepted that higher cost of living (and it is so worth it for me!).

But what about the other side of the equation?

Let’s go back to our example, and assume that we want to reach financial independence as quickly as possible.

If we make $50,000 per year and find that saving 50% of that is the best we can do without enduring too much pain, what are our options to save more money?

Drum roll please?


If you lived on the same $25,000, but found a way to make an extra $1,000 per month doing a passion project or side hustle, you would be able to save a whopping 44% more per year without reducing your living standard!

Yes, you will need to invest some time into that side hustle, so you need to be intentional when selecting it.

Let’s revisit frugality

It’s time to challenge the idea of eternal frugality.

This is an area that my family has made some strong changes that challenged me at first, but has paid off incredible dividends very quickly.

In this busy chapter of life (3 kids, a full time job, and a blooming side hustle), we have selectively rejected frugality in certain areas of our lives.

What is your time worth?

What is an hour of quality time with your kid worth to you? Or insert your person/place/thing of choice if you’re not a parent.

Yes, you have an hourly wage or a salary, so you could use that to calculate your own personal hourly rate.

Let’s say you make $50 an hour (for easy math) at your day job.

If it takes you 2 hours to mow your lawn on Saturday morning, you are accepting a $100 opportunity cost. That means that you (in simple theory) COULD be earning $100 instead by working those hours. Don’t worry, I know I’m painting with a broad brush, but amuse me for a moment.

It costs about $30 to get my lawn mowed. And not to mention he can do a much better job in less than half the time with his equipment and expertise.

So the choice to outsource my lawn works out to $100 of opportunity – $30 of cost to outsource = $70 of profit if I outsource.

But but but I can’t work Saturdays

This is where the beauty of the side project comes in. If you are able to build up a passion project on the side that is capable of using your true talents, you can create an amazing opportunity for yourself.

At first, you will be sinking time (and money) into the project, and see little returns on the other side. But with steady, consistent effort you will start to see $1 per hour, $10 per hour, $100 per hour begin to come out the other end.

And when you consider the beauty of compound interest on your time, the equation begins to make even more sense.

If you find a side hustle that has the ability to scale efficiently (like online business), every incremental hour you put into the business becomes more valuable, because it stands on top of the hours you have already sunk in.

Compare that to mowing the lawn. Every hour you spend is worth the same as the hour you spent last week. And the week before that.

Aside from a small amount of efficiency gains by perfecting the art of lawn work, there’s not much benefit in working outside your zone of genius.

Keeping the faith

One challenge you will probably have along this path is incredible uphill climb you will face in the beginning.

You will watch the lawn guy (to beat the example to death) working outside, while you are working on something inside, and you will face a frugality faceoff…

You’ll know that what you are working on could create a more long term impact, but in the here and now, it’s costing you money and increasing your cost of living! How do you reconcile this?

Invest in yourself

You have to start thinking of your life as a business. Instead of simply sticking to a budget, you will need to start thinking in terms of cash flow and income statements.

You have to begin to think about outsource opportunities as business investments. And money goes where it’s treated best.

As you are aggressively saving for financial independence, you will do well to invest in yourself along the way.

Even though my family has essentially doubled our monthly expenses, we have at the same time increased our income by a factor of 10. Not over night of course, but over the course of a few years and many fun evenings working together after the kiddos finally go to bed. It’s possible, but you need to keep the faith along the way.

Post FI

So that’s all well and good but what does this mean for you once you’ve reached FI? Do you need to keep those expenses high to continue to grow and scale your side hustle? Of course not!

Once you’re FI, you’re FI. Period, end of story. The expenses you choose to keep are totally up to you.

Think about the normal commuter lifestyle. You may no longer have need for that commuter car, so your car insurance and maintenance are totally optional expenses for you going forward.

Same way with your side hustle. If you were paying to outsource time-consuming tasks while you were building your thing, you get to choose what to do next.

Do you keep the lawn guy, the house cleaners so that you can continue to grow it once you’ve left corporate? Or do you simply scale everything back, reducing your expenses and your income together?

The beautiful thing is that Financial Independence gives you the ability to choose.

I am not at financial independence yet, but we are creeping up on it at a pretty quick pace. And the main driver is that we have been LESS focused on our expenses and MORE focused on building a side business that I cannot WAIT to “retire” to.

Embrace the phase you are in

If you are rocking the commuter lifestyle and your time is more valuable than a few extra dollars – feel free to pay to create some margin in your life. Find something to do with that new time that is a creative outlet for you, and that might also have the potential to be a life-long pursuit once you have reached FI.

So what do you think about this? Are there certain non-negotiables for you that you will never pay to outsource? Do you agree that we all have an hourly worth and we should respect that time?

I’d love to hear your thoughts in the comments below!