How to be financially smart without being frugal

Increase your income by getting certifications, switching jobs or having a side hustle

One way to save money is by putting off spending until you are more financially secure. Getty Images

As I sit looking out of my window at the beautiful water and city views, I know I could save more money. I just don’t want to.

Today, I’m not feeling frugal. Instead, I feel like splashing out, buying organic, getting some new clothes ... And you know what? That’s okay. I can do that and still meet my financial goals.

In fact, I’ve already saved so much money over the past several months that I met my savings goal for 2021 six months ahead of time.

I often write about how to be more frugal. Saving money is kind of my jam. But it’s not the only factor in reaching your financial goals.

There are ways to be financially smart without frugality. Today, I’m going to write about the two ways to do this. The first focuses more on the income side of the equation.

In the personal finance space, there’s a concept called “growing the gap”. The gap is the difference between what you earn and what you spend, it’s how much you save. Growing income is often perceived as “playing offence”, while cutting spending, or frugality, is “playing defence”.

In the end, though, there’s only so much spending you can cut. You will still need a place to live, clothes to wear and food to eat. But potential income has no ceiling. This is why the most important way to reach your financial goals without being frugal is to increase your income.

There are three main ways to do this. The first is to get more training and certifications in your field, enabling you to do more difficult tasks and get promotions and pay raises. To do this well, though, you need to know your field and interests. Don’t sign up for training that’s not going to make you professionally fulfilled or more valuable to the company and clients.

As a teacher, this is why I opted for IB training so that I could teach IB classes and didn’t get a National Board certification from the US. The former decision has provided me several jobs, while the latter has no tangible benefit and also drains time and energy.

The second way to increase income is to change companies. According to employment website monster.com, those who change jobs every few years come out way ahead of those who don't. I've experienced this in my career, growing my income with every new job offer, especially my last job switch that led to a 33 per cent raise.

The third way to increase income is to have a side hustle. This is where you monetise your hobbies and skills. For me, it is photography, music and writing. I enjoy doing these things and they’ve made me a lot of money over the years.

The more defensive ways to meet your financial goals without frugality are also important. The first is to not fall victim to lifestyle inflation. Just because you got a raise, it doesn’t mean you have to upgrade from a one-bedroom apartment to a three-bedroom apartment because you feel pressured to do so by family or culture.

If your car works fine, don’t get a shiny new depreciating asset just because a great ad campaign attracts you. You also don’t need VIP treatment every weekend at the club.

You could also simply put off spending until you are more financially secure. The new car might put a huge dent in your finances now, but if you wait a few years, it will account for a much smaller percentage of your net worth.

The same can be said for putting off having kids or buying a pet. It’s not that you can’t afford it now, but if you wait, you’ll be able to have it more easily later.

You don’t have to be frugal to reach your financial goals – just smart.

Schoolteacher Zach Holz (@HappiestTeach) documents his journey towards financial independence on his personal finance blog The Happiest Teacher