Today I will write about concept of frugality. You can be always more frugal and always less. Actually it is a key decision to make, once you decide you would like to be financially independent. For one person it can feel frugal as he did not buy that Maserati and got only Porsche. For another buying a $5 coffee is big NO NO. Any of us has to decide what is good enough for us. Most of the purchases can be substituted by purchases in different price categories.

You can get a new watch for $10 and also for $100,000. It usually depends on your income, debt relationship and saving decisions. I will mention here our various spending decision to paint a picture of our level of frugality we had on our way to financial independence. You have to decide what is important to you and how do you value your time, which you are selling to your employer to pay for your purchases.

Usually largest spending decision is purchase of the house. Most of the people I know bought most expensive property they could afford. Which saddled them with maximum debt, the banks would give them. I don’t like debt so we tried to minimise it and borrow as less as possible. Also house did not have to be new in the best location. Though we spent a lot on our house (Australian property market is extremely expensive), usually it was nowhere near to what we could afford. This house buying decision kept our mortgages at comfortable levels even when our top interest payable reached 9% at one point.

Cars

Here we would be considered bit of spenders by FIRE community. We have never owned brand new car, but most of the time we have 2 vehicles. Normally we would buy small car size of Mazda 3 or Toyota Corolla 3-4 years old worth about $15k used. These Japanese made vehicles are quite economical, practical hatchbacks, reliable and due to reliability and popularity they keep their values well on resale. Our last purchase was in the range of $25k for Mazda CX9 SUV. It is great car, safe, 7 seater (great for visitors as we have inside 2 baby seats), drives well for its size. Cons are only as it is so big (over 2 tonnes) consumption exceeds 13 litres/100km and as a luxury vehicle it depreciates bit faster than our Corollas. So that doesn’t make us too frugal but these SUVs do cost close to $60k new and are nice vehicles. We usually keep our cars 4-6 years.

Holidays

Holidays were always important expense for us. Both of our families live overseas (Czech Republic and South Korea). Also one of not many cons of Australia is that it is bit remote and you usually fly long distances for your holidays. That is reflected in prices of tickets. We usually fly to Europe every 2 years and we used to fly to Bali annually (for my surfing holiday) plus another short trips usually somewhere in Australia. That doesn’t seem too frugal but again compared to other people I know we have always flown well purchased economy class. We usually stay in hotels or AirBnB reasonable distance to our preferred location. Never luxury category. Wining and dining also on budget. Main goals of our holidays used to be to see as much as possible, meet all family, make holidays as long as possible, walk a lot. Luxury was never on the list.

Furniture

Furniture is not on my list of important things so I am quite bad here. Most of the stuff we own is second hand unless wife protested. Luckily she is on board with our financial independence decisions. I would always prefer to buy $10,000 worth of ETFs than luxury sofa.

Electronics

I love gadgets but luckily I don’t buy many. We usually buy quite expensive new mobile phones and laptops about every couple of years. That is because we use them a lot for personal and business purposes and also because I usually manage to get reasonable price. We rarely spend money on other electronics. Our TV is now about 8 years old (46” Sony LED works still fine) and my nice home theatre (which I bought second hand anyway) I have sold as I could not use it much due to having small children. Expensive stuff and kids do not mix well. For example favourite past time for our twin toddler boys is to use TV as a target for throwing various toys. If I have paid for it $3k lately I would be concerned. But what can you do. Many things have short life once exposed to kids. Luckily I know things are not important and we buy stuff only which we consider necessary.

Groceries

Australia has quite expensive groceries compared to USA or Germany. We are buying lots of fruit and vegetables which is pricey. That’s why usually we buy only what is in the season. That is great for saving, quality is better and also good for variety. Mango is nice but I don’t want to eat it every day (especially not when they are $6 each). We never spend much on meat, don’t drink soft drinks or eat much sweets (with exemption of simple biscuits for our boys). We do drink bit of milk including soya milk. There is no budget but I reckon we must be over $500 per week for 4 people.

Eating out

We rarely eat in restaurants (except when travelling) and I think I could count on one hand instances when we have spent more than $50 for two eating out. Usually some Japanese or Thai will do. Maybe we are too fussy but I cannot see it as a good value for money to pay $30 per meal. We rarely order alcohol with our meals.

Alcohol

I used to be quite a big drinker. As I was getting older and wiser I have realised its impact on my health, weight, motivation, wealth and fitness. And I hated hangovers. We have not gone completely without it as I like to have ONE beer or ONE glass of red wine occasionally. To give you a picture, case of 24 beers we drink about 2 months including with some visitors and bottle of wine stays usually opened whole week in a fridge. So last decade alcohol is not large item in our family budget which I am sort of proud of.

Sport

Spending on sport is reasonably sized item in our budget. I play soccer (boots, accessories, membership), wife goes to gym and I do Brazilian jiu-jitsu (membership, uniform, accessories) and surfing (I don’t spend much here as I have all necessary equipment). Would you believe that soccer membership fees exceeds $400 per season (that is about 7 months) or that martial arts would come over $2000 annually. I consider sport important for our wellbeing and I am happy to spend on our sport shoes multiples of what we spend on our casual shoes.

Clothes

Luckily none of us is a big spender on clothes. Again I am quite bad here and Queensland fashion of singlet, shorts and thongs which are perfect for our hot weather. I like nice shoes (or thongs) and ocassionally I buy expensive ones. Most of my clothes  are now from K-mart. I am happy with the value for money and quality. Also I got bit sick of spending $60 for surfing brands shorts which lasts mostly as long as the $10 from Big W. We definitely do not spend much on clothing as we live in warm place, don’t work and don’t have high fashion demands. For example southern European countries are famous for having men well dressed. They are also famous for not being richest ones in Europe or for amount of over 35s still living with their parents. On the other side I never heard of Dutch being best dressed. Though they are one of richest nations in Europe. Choices and priorities.

One funny item in our budget, which is hard to manage is insurance. Total of all insurance payments is large expense for our family. We do shop around but once you own something you usually should or must insure it. Cars insurance circa $1800, private health (almost $3000), house insurance (almost $2k for 3 houses – no contents insurance), Medicare ($2500). There you go. Almost 10 grand only on insurance and we do shop around and swap the providers when necessary.

I consider ourselves quite frugal, as we are always living under our means. Usually we are buying much cheaper things than we can afford. But I can understand that some people might consider our annual spending of about $60k for family of 4 extravagant. Also I don’t think we are limiting ourselves too much as we are having all we need and most of what we want. Currently it works but I know there is a bit of padding in our budget and we can always start spending less if necessary. I feel like spending is similar to maintaining correct weight. Any decisions should be sustainable for extended period of time to have proper effect.