Being frugal can pay off in the long run

Gary Clement for The National

I know a couple of people who can come across as destitute. But guess what? They have both amassed a few rental homes in various countries and have passive income that more than pays for their lives. These are people you'd least expect to be "sorted" because of the perception that they are penny-conscious and therefore couldn't possibly have any financial standing - otherwise why would they be so very money-aware?
A better way of describing them is frugal - and we'll be looking at the meaning of this word later. But first let me tell you a bit more about one of them.
This person has just had her stay (ie work) renewed for another three years in the UAE, against all expectations: she is well over retirement age and was convinced that she'd have to relocate to her native Australia - come to think of it, she's been convinced of this eventuality every year for the past decade or so.
She lives in what used to be a single-storey old traditional house for years - one that has been all but demolished around her because it turned out that certain permissions had not been obtained from the authorities by the landlord. It's not exactly what you would call comfortable - with outhouses housing the kitchen for example, and the living quarters in what seems to be a converted garage.
Sounds hellish, but it suits her to the ground. Having lived in the UAE for decades, it keeps her cocooned in her beloved "old Dubai", plus there's the bonus that she pays very little rent. And it perfectly perpetuates the "I am living on a knife edge" vibe.
But it turns out that this is far from the truth. In fact, she has four homes rented out in Australia. She has bought a bolthole for herself within a three-minute drive radius of a few people she knows - a vital ingredient for us expats looking to have a "home" somewhere other than our expat pad, and has even more passive income coming in from a veal farm.
The simple truth is that this person is in this fortunate, solvent position precisely because she has been frugal. Don't get me wrong: she hasn't moped around and sat in her eclectic home-with-a-difference penny-pinching. Not at all. She travels the world, is involved in all manner of charities and support groups and has an enormous network of friends and acquaintances. She is not mean, cheap, miserly or tight-fisted. She is simply very aware that her tenure in the UAE is temporary - that has put a fire under her feet and perhaps a tinge of fear - to get as much done in the way of investing as much money as she can muster because the gravy train won't chug along for ever.
She was described as "frugal" by a mutual friend just recently. And yes, that is the word for it. Through being aware, mindful and conscious of what her priorities are, this person has amassed a lifelong income and no longer needs to concern herself with where money is going to come from to live the life she wants.
Granted, not all of us want to live in property that's been part-demolished and includes being fried by the summer inferno to get lunch on. But this is an extreme situation probably born of an eccentric outlook on life, as opposed to being miserly. Again, let us go back to the word "frugal". Come to think of it, it makes perfect sense that a frugal person would choose to live an eccentric life, because by virtue of being frugal - ie not caring for the norms of the Joneses, frugal people are by default "different".
The other person I refer to at the start also comes across as living hand-to-mouth and is also quite sorted, with houses rented out in the UK and the UAE as well as some passive income from a business. She too has been thought of as "tight-fisted" by people who don't see why she doesn't just splash out on a fabulous holiday or rent a plush place when away looking for her next property purchase. These people see someone who is a landlady, but don't see how she got to be one in the first place, nor that she wants to grow her portfolio so that she can continue to call the shots in her life and be her own boss.
There are two lessons to be learnt here: one is that frugal is good.
The other is that it's fine to go against the crowd. If these people cared about what others think, or got sucked into what people tend to squander their money on, they would not have the assets and income they have amassed. These women have worked as teachers and administrators. They have never earned anything close to the mega-bucks that a corporate bod does. But they probably have a lot more to show for their earnings than most. Don't be afraid to be different. Think your life through and do what you believe is best for you.
Nima Abu Wardeh is the founder of the personal finance website www.cashy.me. You can contact her at [e-mail]
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