Florian Wagner earns an average of around €6,000 net per month, but spends just a quarter of them. He puts the remaining 4,500 euros aside. The 37-year-old engineer is part of the growing movement of super savers, also called frugalists (from the Latin word frugalis – translated: thrifty), writes the German public media ARD. The goal of these people: to achieve financial independence as soon as possible. And for example to retire at the age of 40.
Wagner learned about the new trend a few years ago and completely rethought his spending: he started going to work by bike instead of taking the subway, cooked dinner at home, went shopping once a week and almost completely removed donuts and pizza from his menu. He also quit his well-paying job and started his own business. "Thus, I improved my quality of life," says the 37-year-old man. This is exactly the essence of the frugalist movement.
Investments in funds, bonds and property
But cost containment is not enough. Super savers invest a large portion of their income in stocks and other equity instruments. To minimize the risk, they also resort to investments in bonds or real estate.
Frugalism is a lifestyle concept that started in the US, explains ARD. It is popularized by bloggers like Money Mustache. Years ago, the Canadian described how he was able to retire at the age of 30.
During the financial crisis of 2008, the FIRE (Financial Independence, Retire Early) movement gained more and more followers and spread to Germany. According to his philosophy, anyone who has managed to save 25 times more than their annual expenses is financially independent.
Up to 70 percent savings
Frugalists typically save between 60 and 70 percent of what they make. By comparison, people in Germany save only about 11% of their income on average. And many of them can't even set aside anything.
Because of this, it is believed that frugalism is not for everyone, but only within the power of people with high incomes. "If you only earn 1,800 euros, you won't be able to save even half of it, because most of the money will go to the rent," expert Thomas Kell from the finance platform Finanzfluss told ARD.
Also, life often throws up twists and turns and unexpected situations that can get in the way of the goal of early retirement at age 40 or 50. Therefore, everyone must judge for themselves how realistic the set goal is. "Children, housing or prolonged illness can very quickly increase expenses and reduce the portion of income that is set aside," the financial influencer points out.
Abandon vacation too?
Financial experts also point to other risks. For example, a fall in the price of stocks can threaten a planned early retirement. Therefore, it is important for everyone to develop for themselves a plan for possible similar development.
Florian Wagner has already accumulated assets worth a total of €480,000. However, he has slightly changed his original plan to retire at 40. Now he has decided to continue working after 40, but only as much as he wants - and without having to give up rest or going to a restaurant. "I don't give up on things I love and I don't limit myself. I always say to myself: if I die in an accident tomorrow, I don't want there to be anything that I regret that I didn't do," says the 37-year-old German.
Applying the concept of superfrugality over a long period of time is a huge challenge for many so-called frugalists. After all, it is very unlikely that you will become financially independent in a short time, writes ARD.
Constantin Röse (ARD)