Saving Pension with 30

Frugalism and the FIRE strategy

How to retire at 30

Author: Thomas F. Pfeifle

How to retire at 30

What is our objective, going to work every day for 8 hours 5 days a week? Well, we want to finance our life, pay the rent, buy food and clothing, have fun and fund our pension, to get enough pension payments when we stop working with 67 years. We will need the money to guarantee our self a feasible standard of living, to pay medicine and medical services, to pay the retirement home and the nursing services and want our descendants to receive some heritage when we pass away.

Basically, we go to work every day to have enough money left when we are old and exhausted. We spend our active days at work, raise our children while working, buy our houses while working and live our life working. How many of you can claim to do what they really love? To have time to follow their passion and to spend their time living their best life’s? I guess few people who read this sentence here can say that about themselves. Including me.

These thoughts about our retirement and our financial dependence, caused some people to question and rethink the system. They realized that this is not the life they want to live in. They realized that they do not want to spend their good days working and their bad days receiving the money, they worked so hard for. The understanding of this misconception lead to a movement called the FIRE movement, which Wikipedia defines as follows: “Financial-Independence-Retire-Early movement is a lifestyle movement whose goal is financial independence and retiring early”. Basically, it describes the seeking for early retirement, by earning much, spending less and investing the rest. It is a frugal lifestyle which gave the participants the name “Frugalists” and the movement to be described as “Frugalism”. 

There exists no concrete definition of being a Frugalist, but many define it as being a person, who lives permanently below their financial means, but still enjoys a good quality of life and thereby following the goal of reaching financial independence by investing their savings, to receive more time and freedom.  

The roots of Frugalism lie in the United States, founded by a blogger called Mr. Money Mustache, who first blogged about the modern lifestyle. He came up with the idea, of saving the most and spending the least, to invest the rest for reaching the goal of retiring at the age of 30. By retiring at this young age, he promised himself to have more time to focus on what he truly is passionate about and enjoying a high quality of life as being freed from being financially dependable on a job.
With increasing income comes increasing consumption. This phenomenon is deep in the mind of humanity. If you have more money in your bank account than yesterday, you have more money to spend. But, our need for more does not increase in relation to our income. You do not need a new car, because you have more money to spend. We think that possessing more and new stuff, ameliorates our standard of living and simplifies our life, apparently this is not true! Modern society and advertisement are influencing our minds and blending us from perceiving the true reality.
It is true, that the possession of tangible objects may increase your well-being and happiness in short term. But everyone reaches a certain point, where buying new things stops you from increase your happiness, instead it takes away your precious time and energy. Indeed, there is something funny about money. The presence of money alone does not increase your well-being and overall happiness, but the complete absence of money can make you extremely depressive, threatened and frightened. 
Frugalists try to use their money for the right purpose, to not spend their assets for consumption, but for their social and financial security, which enables them to follow their true passion and sources of happiness. They eliminate the factor of creating short-term happiness by spending money, instead they guarantee the presence of money as security to focus on their personal long-term happiness. 

Many people perceive Frugalism to be equivalent to Minimalism, which is an incorrect assumption. Minimalists reduce their items and stuff, to focus on the important parts. They try to get rid of everything, which does not create value for them and hinders them to unfold their happiness and freedom. Their goal is to eliminate useless tangible things, to regress to a simpler live with more freedom, space and less problems. The financial benefit from less consumption is just another positive side effect, which is initially not intended.
In contrast to that, Frugalists actively strive for financial independence by reducing their standards of living and actively searching for methods to let your money passively work. They adapt certain aspects of minimalism, with the intention on consciously reducing their spending and consumption for a financial benefit. 


The 6 Steps of becoming a Frugalist 

Step 1 Know your finances 

It is of extremely high importance, to be aware of your expenditures. Knowing where your money goes is the first and very important step of becoming a frugalist. It is hard to reduce your spending, if you have no clue where your money goes and for which purpose you spend it. Take 3 past months and try to recapture your spending with the help of your account statements of the past months. Try to investigate your money in-and outflows and differentiate them into different categories. The two main categories are essentials and nonessentials for daily living. You can see the different categories in detail below. 


Living: Rent, Groceries, Hygiene articles, Insurance etc.

Transport: Car (insurance, taxes, fuel, repairs), Public Transport
Clothing: Essential clothing for work and free time 


Clothing: Shopping for non essentials, Fast fashion etc.
Technical gadgets: Smartphone, Laptop, TV etc.
Free time: Bars, Clubs, Activities, Smoking, Alcohol etc.

By Knowing and categorizing your expenditures, you have access to an overview over your total spending, which will help you, to reduce your spending and eliminate stuff, which is not essentially needed and does not improve your life. 

Step 2 Set your Savings rate

According to researches, the average savings rate in Germany amounts to only 5 to 10%, which totally is not enough to guarantee a feasible financial buffer.  In comparison most frugalists have savings rates between 60 to 80% of their net income. Despite many thoughts, it is totally possible to only live with 1 500 Euros a month to save the rest and invest it in financial products. 
Certainly, you are not obliged, to dramatically cut down your spending and to follow a 60% savings rate, this is not possible at once. Increasing your savings rate is a process, as one must have certain assets to cut down the expenditures to only variable products and services. If you already own your flat and you have repaid your dept, you do not have to pay rent anymore, which certainly eases the process of increasing your savings rate. 
It is up to the individual to find the perfect savings rate and to set their personal goals. To start your frugal lifestyle, you can try to reduce your nonessential spending, to get to a constant savings rate of 10 to 15%. This is a good start and a solid base for growth. 

Step 3 The 10 Days Rule

Consumption is affected by emotions, impulses and drives. When we go shopping, we often buy more, than we intended to, because our brain connects consumption with happiness and joy. It gives us a warm feeling of happiness if we buy something and can claim our self the owner of this brand-new sweatshirt or technical gadget. People refrain from thinking about the products and their purpose and follow their impulses shouting, “buy it”! 

This is equally the case for bargains and discounts. We see bargains and red numbers and our minds perceive that we would be saving 10 Euros by paying 90 instead of 100 Euros for a sweatshirt. We think we made a good deal and achieved to pay less than others. But this is a fallacy, because we end up buying more stuff we would not have bought without the discount and end up spending more money than we intended to. You did not save 10 Euros with the discount, you just spent 90 Euros and that’s it.  

In order to avoid this over consumption and to disempower advertisements and emotional consumption, frugalists make usage of the 10 Days Rule. This rule is tremendously simple but effective. Whenever you see something you want and would normally buy immediately, take 10 days to rethink if you really need it. If you forget the item after 10 days, it was not important, and you certainly did not need it and the 10 days rule protected you from spending money for useless and unimportant things. BUT if the item is still buzzing around in your head and you still like it, go and buy it on the 10th day! Because if you still want the item after 10 days, it really means something to you and adds value to your life. 

Step 4 Learn how to cook

Yes, you have read correctly. One of the most important things to become a frugalist, is to become a cook. The margins for restaurants, take away meals and instant meals are often 4 to 5 times higher, than the costs for the ingredients and the production. So, if others can cook your meal in a restaurant, you can be your own cook and spend 4 to 5 times less money! Learning how to cook does not only decrease your spending, it has multiple advantages. You acquire a new skill and hobby, you live a healthier live in contrast to eat instant noodles all day, it is a social hobby where you can invite friends and family which additionally saves money if you do not have to go to a restaurant or bar and   it increases your health which prevents you from being less sick and having to pay medication bills etc. 
Learning how to cook is so easy but so also so effective. Just watch YouTube videos and try to recook the meals or you can get a cooking book for less than 10 Euros which is a good investment in yourself. If you know how to handle ingredients, and how to cook a healthy food, you can create meals, which cost you not even 3 Euros per meal and saves you a lot of money!

Step 5 eBay and Co. are your friends 

Whatever you need, you will certainly find an offer in eBay for half the price. Buying things like furniture, technical gadgets and others on eBay will save you a lot of money and still gives you a huge level of quality. You can get the latest version of every technical device for 70% of its market price and older devices (which are totally enough) for 20% of their initial price and in perfect condition. For many things you do not have to possess and original from the market and it lasts to be it’s second or third owner. 

Step 6 Develop financial knowledge

Developing and acquiring financial knowledge is probably the most important and most difficult step of becoming a frugalist. To reach your goal to retire early and to increase your wealth by saving, you have to invest and have to know what you do. Frugalists normally have huge sums in ETFs, Shares, Real Estates etc. to generate themselves a passive income through rent, dividends and growth rates.

In order to be successful on the stock exchange, you must know your trade. You must be aware of the risks and costs it takes and acquire enough knowledge. The process of learning how to invest correctly, does take some time and effort but is totally worth. Everybody, now matter how rich or poor can have success on the stock exchange by investing wisely, taking the 6 Rules of Wise Investing into account and acquiring knowledge about the Stock Exchange, Shares, ETFs, Real Estate etc. through website through books, Online courses or websites like ours. 

Everyone who is willing to reach his or her goals, can have success and generate passive income to achieve financial freedom and to fulfil the dream of being independent and free by becoming a Frugalist. 


The average Frugalist is highly educated, earns an over average income and is due to this able to save a huge percentage of his net income to invest it. For the average worker it is certainly not possible to save 60 or 80% of the income fulfill the dream of retiring at the age of 30 or 35.
Nevertheless everybody, also low earners can build themselves a financial buffer by living a frugal lifestyle, reducing expenditures and acquiring knowledge to invest their money. Even if you can only afford to save 25 Euros a month, you can still invest these by following the 6 Rules of Wise Investing, to grow their wealth. Certainly, this won’t be sufficient for retirement, but nevertheless generates some more money for living and creates more financial security.
Another aspect which is often criticized is the risk of the Frugalists investments. Due to the fact, that they have a very ambitious aim of becoming financially independent, they need investments with high returns on investments. The higher the return of investment, to higher the risk which may jeopardize your investments and makes them less secure. In order to avoid that, Frugalists try to spread the risks with investing in ETFs and multiple branches, countries and companies. 
Furthermore, the money which is saved for retirement is only enough, if the frugal lifestyle is continuously executed. It is acquired that the lifestyle of living with less is performed for the rest of life, otherwise the savings won’t be enough to cover the whole retirement period. 

To come to an end

All in all, Frugalism and the FIRE movement are very feasible alternatives to follow your dreams and to live a fuller life. By having financial backup, one can concentrate on what fills him or herself with true happiness and joy. Even if Frugalists and the FIRE movement speak of retirement, they often continue working or work in part time jobs, which enables them to focus on their personal hobbies and dreams but still earn 450 Euros per month to contribute to their budget. 

In our modern consumption-poisoned society, being a Frugalist takes away the stress and pace. The financial security calms your mind and allows you to see daily problems less dramatically and severe. Living a frugal live means to consciously decide what makes you happy and what can be eliminated to facilitate your life. It is a way of focused living and consciously having the power over decisions, which others have lost in shopping malls, online stores and supermarkets.