Posted: 18 Jun 2013 01:00 PM PDT
As we’ve discussed before, an average American family with two children – a seven year old and a ten year old – spends $1,252 a month on food according to the USDA’s liberal food plan.
If that family adopted just a few frugal practices and were able to switch their food spending to the USDA’s low-cost plan, the family is now spending just $826.60 per month on food. That simple shift results in a savings of $425.40 on food each month. I certainly don’t have to tell most of you about the power of frugality, of course. Most of you know the mountains of savings a person can incur if they’re careful with their spending. The challenge is that many people believe that a focus on investing means that you don’t have to worry much about frugality. After all, in the eyes of quite a few people out there, you simply can’t earn huge returns with frugality. So, we’re going to stick just with this $425.40 per month that you can save just via food and not even deal with the money you can save on your energy bill, entertainment expenses, household supplies, automotive expenses, and other categories each month. This is just to show how important that $425.40 is per month. For calculation’s sake, let’s remind ourselves that $425.40 per month is worth $5,104.80 over the course of a year. Now, let’s say you actually have some money to invest. You took that money and did the obvious thing with it and stuck it into a very broad based index fund – the Vanguard Total Stock Market Index. Since 1992, this fund has returned 9.02% annually, which is a very nice return. That’s the easy route – anyone could do this. Now, let’s say hypothetically you could spend ten hours a week focusing on investing strategy and find a way to earn 10.02% annually. If you were actually able to consistently beat the total stock market index by 1% year in and year out, you would be a total financial genius and ought to be working on Wall Street, but I’m trying to give investments the benefit of the doubt. How much money would you have to have in investments to make those ten hours a week spent on investment management worth more than the ten hours a week spent on frugality? Your target additional earning here is $5,104.80 – except, it’s actually more than that. If you’re investing these sums of money, you’re almost assuredly in the 33% tax bracket, so the amount we’re actually looking at is $7,657. Remember, money saved via frugality isn’t money you have to pay income taxes on. So, how much money would you have to have invested in order to earn a $7,657 annual return by beating the Total Stock Market Index by 1% instead of just investing in it? The answer is $765,700. If you have three quarters of a million dollars in your investments and you have the ability to find a way to consistently beat the market by 1% a year, only then can you earn as much via investing as you can via simple frugality. Given that 72% of American households live paycheck to paycheck, I think it’s pretty safe to say that the vast majority of American households don’t have three quarters of a million dollars laying around to invest. I’m not saying that investment is a worthless thing to think about. What I’m saying is that for most American families in their current situation, a focus on frugality is going to earn them much greater returns than investments will, and that statement will hold true for many years. If a family is very responsible with the money they save from frugality and use it to pay off debts and invest instead of finding other methods to inflate their lifestyle, then they will reach a point where investments matter more. The truth is that it’s only a tiny minority of Americans have enough liquid wealth on hand to make their time spent managing investments worth more than their time spent being frugal once they have an initial automatic investment plan set in place. After that, almost all of us are far better off reading the grocery store flyer and making sure our tires are inflated than reading the latest mutual fund data. The post Looking at Frugality as an Investment appeared first on The Simple Dollar. |
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© Jaymi Heimbuch
Readers loved the collection of Kelly's recipes from February, highlighting dishes that are seasonal and vegetarian. I've been hard at work in the kitchen with The Cooking Project whipping up recipes from our archives and focusing on what to eat in March. Here are 12 recipes I recommend to try this month for eating local, vegetarian and within the season (or at least mostly in season, depending on your location, of course).
© Jaymi Heimbuch
Lentil salad with roasted vegetables and lemon-rosemary vinaigrette
From the recipe: "You could use any roasted vegetable you like in this recipe, and it would still be delicious. Roasted cauliflower, broccoli, red peppers, kale, even little new potatoes would all work perfectly well. If you are lucky enough to have asparagus now, use that."
© Jaymi Heimbuch
Simple and easy navy bean bread
From the recipe: "The process is very simple -- no intimidating steps or warnings that you'll ruin the whole thing if you don't knead properly or have it rising at the perfect temperature. Any newbie to breads can make this recipe successfully. Coming out of the oven, the bread had a thin, delicately crunchy crust, and the hot fluffy inside with its mild, yeasty flavor was pure heaven."
© Jaymi Heimbuch
Mini quiche with caramelized onions, mushrooms and feta cheese
From the recipe: "When I took the first bite of one of the quiches hot out of the oven, I was floored. I cooked the onions extra slowly -- for about 30 minutes -- so they caramelized and were incredibly sweet, a perfect counter to the salty feta for a boosted the flavor. The richness of it was surprising."
© Jaymi Heimbuch
Edamame salad with avocado and radishes
You might not be in a location where avocados can be found this early in the season. If so, leave the avocado out -- I promise you won't miss it with the other wonderful flavors.
© Jaymi Heimbuch
Fingerling potato salad with jalapeno-cilantro salsa
From the recipe: "It would still be delicious if you made it with parsley rather than cilantro. This dish is great picnic material. It's easy to make, it's really good at room temperature, and there is nothing in it to spoil if it's a hot day."
© Jaymi Heimbuch
Braised coconut spinach with chickpeas and lemon
From the recipe: "This was such a lovely combination of flavours and we all really enjoyed it. The addition of the sun-dried tomatoes added a bit of a surprise undertone to the dish that would have been different if you had used regular canned tomatoes."
Photo: Kelly Rossiter/CC BY 2.0
Roasted Cauliflower Soup with Aged Cheddar
From the recipe: "Roasting the vegetable first adds a bit to the cooking time, but the reward is worth the little bit of extra effort. This is a very filling soup, and if you add a bit of crusty bread and a green salad, you would have a nice, light supper."
Pasta with Swiss Chard and Mushrooms
From the recipe: "If you want a thicker sauce for this, you could add some tomato paste. I like the fresher flavour of just using the juice from the jar, but you might want something that sticks to the pasta a bit better. Leave out the Parmesan cheese and you have a vegan dish."
Broccoli Rabe, Potato and Rosemary Pizza
From the recipe: " You can also make this on flatbreads, which works really well for customizing."
© Jaymi Heimbuch
Vegan chocolate cupcakes with strawberry filling
Strawberries are coming into season in some parts of the country, but if you're in a colder clime, try using strawberry preserves for the filling instead of making a sauce with fresh strawberries.
Photo: Emma Alter/CC BY 2.0
Brownie Batter Pancakes
From the recipe: "You could go the traditional buttermilk pancake route if you like, but this is a little recipe that my daughter tried and really enjoyed. It only makes enough for one person, so adjust the ingredients accordingly."
© Jaymi Heimbuch
Baked Apple Stuffed with Candied Ginger and Almonds
From the recipe: "I created this baked apple recipe for ease in preparation but mostly for the aroma. There's a reason real estate agents use the scent of apple pie to sell homes! It's so comforting and warm. And this simple, yet flavorful, recipe is bound to become a family favorite."