By Eric Rosenberg, WCI Contributor
If you’re into personal finance, you’ve likely come across the concepts of minimalism and frugality. Both can play a role in how you think about your money and spending habits. Whether you’re aiming for financial independence or simply want to improve your budgeting, here’s a look at minimalism vs. frugality and what you should keep in mind when applying them to your financial situation.
What Is Minimalism?
In personal finance, minimalism focuses on the idea that less is more. I like to think of it as putting quality ahead of quantity. With minimalism, every possession should have a purpose, and nothing should waste space.
When focusing on minimalism, items you own should provide value, but price isn’t the most important consideration. If you’re a wealthy physician with a high income and plentiful savings, you may want to have less in your wardrobe but only own comfortable, high-quality items.
What Is Frugality?
Frugality is the idea that you should spend as little as possible while still achieving your financial goals. With a focus on frugality, you’re more interested in getting the job done at the lowest cost. When you’re spending money, it’s all about getting the most value with the least spending.
When focusing on frugality, you’re likely less concerned with quality and more interested in stretching your dollars further. For example, someone with a frugal mindset is more likely to clip coupons and buy items on sale rather than stick with brand loyalty.
More information here:
Frugal vs. Cheap – What’s the Difference? (Plus 11 Tips to Avoid Being Cheap)
When Is It Time to Stop Being Cheap?
Minimalism vs. Frugality
On the surface, minimalism and frugality are opposite concepts. Minimalism says that less is more and focuses on quality over price. With frugality, price is everything.
White Coat Investor contributor Dr. Leif Dahleen, founder of Physician on FIRE, shared that “minimalism employs an abundance mentality.” On the flip side, “frugality employs a scarcity mentality.”
But that doesn’t mean some people don't find a way to follow both principles. Perhaps in some areas of your life, you’re a minimalist. In others, you’re a frugalist. To continue the examples above, maybe you’re a minimalist when it comes to your clothing choices but focus on frugality at the grocery store.
Outside of the extreme outliers, most people likely follow a combination of minimalism and frugality. You may even find yourself ebbing and flowing between them over time. I was into frugality in my 20s while paying off my student loans and saving up a down payment for my first home. Over the years, I became more of a minimalist as I built wealth and found a stronger financial footing.
Avoid the Extremes of Minimalism and Frugality
Discussing frugality makes me think of some frugal tips I learned early in my time as a personal finance writer. I once read about making your own shampoo and deodorant as a way to save money. I’d say that’s taking things too far. I’d rather be clean and enjoy the convenience of buying shampoo and deodorant than get by using alternatives I make myself.
The show Extreme Cheapskates offers examples of how being too frugal can impact relationships and even one's health. In this clip, the woman on the show doesn’t use toilet paper, washes her clothes in the shower while she’s showering, and follows other habits most of us would find unbecoming.
However, extreme minimalism may not be much better in some ways. Visiting a friend or relative with an extremely sparse home can be uncomfortable. Extreme minimalism is fun in an art museum exhibit but not great for creating a cozy place to live.
More information here:
Real Life Examples of Physician Budgets — From the Frugal to the Extravagant
Minimalism and Financial Independence
Ultimately, adopting minimalism is more straightforward when you're financially secure. If you find that you need something you've previously let go of, you're in a position to replace it without much financial stress. Plus, you can invest in higher-quality items that offer greater functionality or durability.
It's much easier to embrace an abundance mentality when you have the resources to buy what you need without worry. This allows for a more relaxed approach to acquiring and maintaining only what truly adds value to your life, aligning perfectly with minimalism.
More information here:
10 Frugal Hacks to Automatically Save Money for Busy Professionals
Minimalism vs. Frugality: Bottom Line
Both minimalism and frugality offer valuable perspectives that can enhance your financial IQ. By understanding and applying these strategies in moderation, you can work toward a more mindful relationship with your finances, finding a balance between saving and investing in quality. This awareness can help you make more informed financial decisions, ensuring they align with your long-term goals.
Rather than approaching minimalism and frugality as mutually exclusive, consider integrating them in a way that complements your personal finance journey. If you can balance them well, you can use them to help you reach financial success.
The White Coat Investor is filled with posts like this, whether it’s increasing your financial literacy, showing you the best strategies on your path to financial success, or discussing the topic of mental wellness. To discover just how much The White Coat Investor can help you in your financial journey, start here to read some of our most popular posts and to see everything else WCI has to offer. And if you're inspired to build a sturdy financial foundation, make sure to sign up for our WCI 101 email series.
I just consider these two terms exactly that – terms. Like everything today people want to put others in categories (tribes) and compare/contrast/argue etc.
To me the line between these is super blurry and I might lean more to one or another depending on the hour. I consider myself pretty frugal, and kinda minimalist, but with both it depends on day and on what items you’re talking about.
Bottom line, if someone asked me which I am I’d say “neither, I just spend less than most people and have less than most people” (in America of course)
Nothing to add just wanted to say while this isn’t a “traditional” WCI/PoF article it was very thoughtful and well written. I imagine these types of articles are probably harder to write than more traditional “how-to” articles (which are incredibly helpful) but I for one would enjoy more of them!
I know where you can find more!
I wrote a thought piece in a similar voice not long ago. Totally different topic, though: https://www.physicianonfire.com/life-without-chains/
Cheers!
-PoF
My wife is a confirmed minimalist and I am a confirmed frugalist. I am trying to change. Recently sold two of my cars. Felt great after I did it. Wife is pleased. I am thinking the solution is for me to simply stop buying things. But I just spent an hour looking for a back up slow pitch softball bat online. Here is a frugal rule I use that a friend keyed me in on. You only need one back up item for each item you already own. I already have a back up bat for my Mako (a Juggernaught). So I shall cease and desist looking for another bat. But I sure want to…
That’s like a back-up hockey stick. I finally got around to buying a back up made in this century recently, but honestly, if I break a stick I use a teammate’s until the end of the game and then go buy a new one. I guess it would be a problem if NONE of us had a back-up, but that doesn’t seem like an issue in softball. I mean, how many people need a bat at the same time? 2?
You are correct, even the opposing team would loan me a bat. But…the chances anyone would bring the exact same bat that I broke with the same weight and end load are small. Especially since the bat I use is not made anymore. And practicing with a new to me bat during a game is impossible which means performance issues. So it comes down to possibly losing a softball game vs. the new minimalist me. Minimalist winning so far.
You are clearly much more hardcore about softball than I had supposed! I just get up there and swing away!
https://www.youtube.com/watch?v=Zi5V26yHG9g
I feel like I aim for both, but over 50 years on minimalism is mostly only by accident: I also have multiple choppers and shredders, not to mention battery operated tools. Why? Because so far none of them are the do all be all promised when bought, and none of the rechargeable batteries have convinced me they’ll really last . It’s also why my poshest kitchen tools are gifts- I buy the cheapest likely good ones since I expect they’ll have a lifespan of <5 years, the other reason why I hoard 2nd versions and keep the not perfect old versions I no longer use.
During my longest stint at one place, 4 years, I realised the plastic milk jugs I saved outside for the garden were broken down by the sun when I wanted to use them. This epiphany changed the things and ways and quantities of things I save "just in case". I still find that items are often needed within 6 months of discarding one- this gets less and less as I hoard/ store more stuff and sort out which ones I may really need again and will be reliable when I do.
Right now we speak of downsizing. Spouse says "we can't because of all your outdoor stuff". Aside from the actual land and garden, IMHO it is actually the closets full of his cool stuff. Ask him to make the first move on consolidating stuff. And he maybe is frugal? he'll spend hours hunting down great buys of a gadget or watch and then add on more stuff to get free shipping- luckily the kids appreciate the presents from his favorite stores.
Also they quit making the good stuff by the time you can tell it’s good! I refrain from buying a second one as soon as I realise an expensive item is a good one, and I’m much more careful with clothing after getting a pair in every color of shoes then going up a shoe size after the baby! Leads me to try making my own clothes- too bad I’m no hand at shoes boots or home remodeling. Or appliance repair!
I also find that one helicopter doesn’t do everything I need it to so I picked up a few. 🙂
😆 don’t tell spouse I have multiple choppers, he’ll complain about not being allowed to have even ONE fixed wing.
I’m currently an accidental minimalist. I painfully downsized and got rid of almost everything I own, and retired to Mexico with five suitcases. Everything I currently own (mostly clothes) fits into a closet in the furnished house I’m renting. I expect to buy a house here in the next year, and will have to buy everything to furnish it. So it’ll be interesting to see whether I become a permanent minimalist. I certainly can’t imagine accumulating again the amount of stuff it took me 60 years of living to acquire.
Be careful buying a house in Mexico. Sometimes they sell the same piece of land to more than one gringo. My uncle Lou discovered this the (very) hard way.
I agree it’s easier to be a minimalist if you’re financially independent or close, but you could probably say that about any lifestyle. Things are generally easier when you have a seven figure cushion.
I’m definitely a minimalist now and wish I were more so when I was a student and resident. I had way more belongings back then, and looking back with clear hindsight, I didn’t need most of it. Would have made moving much easier and could have spent much less money on rent and extraneous stuff. I think the benefits of minimalism are even more pronounced for lower income people, provided they’re actually trying to minimize their material possessions instead of having a convenient excuse to spend money on a bunch of new stuff to replace the old stuff.
I’m curious, what is the significance of the Nike shoe on the bookshelf in the picture?
As folks forced into retirement, we employ a combo of minimalism and frugality. Husband is good at getting by on little in general; I am not as good at it but am kicka@@ at frugality–black belt level because I grew up poor.
I agree with the conclusion that, once you reach FI, minimalism is the better practice. You can live in a smaller space, for one thing, and anytime you can reduce a fixed cost, that represents significant savings in the future. Reducing fixed costs will gain you more in the long run than reducing the non-fixed ones, unless you are a total spendthrift.
Good article written from a POV I had not considered. Thank you.