Without frugality none can be rich, and with it very few would be poor.
Here are some simple rules that I hope that we've instilled in our children.
1. Live within your means.
This one is pretty self-evident, but very few people practice it. Always base your expenditures upon what your income is today, not what you expect to earn in the future. Don't let realty agents or cars salesmen, or anyone else talk you into spending more than you know you can afford.
2. Plan ahead.
This is a good rule for everything from planning a shopping list to eliminate extra trips to the grocery store, to saving for a big car repair when your car has 100,000 miles on it. You know it's going to happen, so start preparing now. I know an acquaintance that lives on a fixed income. She is diabetic and knows that she must pay for medicine, but whenever she has a few extra pennies, she spends them on goodies at the thrift store, fast foods, and she never economizes at the grocery store. She even manages to go on a vacation. But then asks to borrow money because she doesn't have the money for her medicine. I know it isn't fun to go without little luxuries, but the medicine is an essential. Which leads me to the next rule...
3. Know the difference between a need and a want.
Take care of your needs first. Prepare for future needs and then and only then should you indulge in a luxury. Of course differentiating from a want and a need is difficult for some people. You have to question every purchase, even something as mundane as a box of Little Debbie snack cakes.
4. Don't try to keep up with the Joneses.
You can bet dollars to donuts that they are in debt up to their eyeballs trying to keep up with someone too. You simply cannot afford a $250,000 home, a new SUV, a trip to Disneyland, and a walk-in closet full of clothes on the wages of the average American (around $40,000). Which leads to rule number five...
5. Be happy with what you have.
Sure John Smith down the road may have more than you have, but you've got plenty. My grandmother always said if you have a home and a car, you were doing alright in life. There are many who don't. Be grateful.
6. Never a borrower be.
I know that the average American cannot afford to buy a car with cash, but if you buy a less expensive model or maybe a good used one, you can pocket the difference in prices between that and the latest, greatest model. Save that money and maybe you can pay cash for your next car, or at least put down a large down payment. Do you really need a McMansion with a bedroom and bathroom for each child? A den, living room, and media room? Buy a modest priced home that doesn't cause you to break into a cold sweat each month trying to make the mortgage payment.
7. Set goals.
Whether it's how much to spend for Christmas or when you would like to pay off your mortgage, if you don't know what your goal is, how are you going to work toward it? Budgets and goals keep you focused.
8. Plan for the worst case scenario.
Life has a way of throwing a monkey wrench in the best plans. An unexpected illness, a job loss, or world events. Right now I'm listening to the news talk about all the unrest in the Middle East. What will that do to the cost of oil? Can your family's budget stretch if gas gets to $4 or $5 a gallon? What will the cost of groceries be if it does? Start thinking about how to stock up a pantry, grow a garden, alternate ways of getting around now. Maybe now would be a good time to install a woodstove (as we did in the 1970s when we had an oil embargo) It's a lot easier to plan when you are not in a crisis mode. Become as independent as you possibly can.
9. Be thrifty but not miserly.
There's a big difference you now. Being thrifty means not squandering your money foolishly. Being miserly is to begrudge others and yourself when you can afford it. I'll tell you the true story of one woman I knew who never would give her children anything in her house. They had young families and were struggling to make ends meet, but instead of giving them things they could have used when the needed them (and she didn't) she would always say "Put your name on it and when I die, you can have it." The items would go into the basement and end up rusting or getting covered in mold. The children managed to establish their homes without her assistance. Well, years passed and the woman grew old and feeble and had to be moved out of her home. All those things that she had stored in the basement had to be thrown out. The family now in their middle ages, had homes of their owns, bulging at the seams. They no longer needed those things and they were unusable anyway. The old lady was quite put out that no one wanted her old junk and it had all gone to waste. The moral of this story is if that the time to give is when someone needs it. If you can afford it, give when you are asked. Even if you may need to sacrifice to do so.
10. Finally, enjoy life.
Take up a hobby. Learn something new everyday. Be generous when you can. Remember what's important in life (and it aint things).