Frugalism: Reaching Financial Freedom With a High Savings Rate
Key takeaways
- Frugalism is a deliberately frugal lifestyle aimed at financial independence.
- Its core is a high savings rate: frugalists save 50–80% instead of the usual ~10%.
- The money saved is invested — usually in broadly diversified ETFs.
- Frugalism is not stinginess but conscious consumption by clear priorities.
Frugalism is the fastest known route to financial freedom — not through more income, but through a radically high savings rate. This article shows what lies behind it and who it pays off for.
What is frugalism?
Frugalism is a way of living in which you deliberately live frugally in order to save and invest as large a share of your income as possible — with the aim of becoming financially independent early.
The term comes from the Latin frugalis (“modest, thrifty”). Frugalism is the consistent application of the idea behind the FIRE movement: whoever spends little needs less capital and is free sooner.
Where the movement comes from
In Germany the scene goes by the name Frugalismus and has been a topic since around 2015/2016. One of the people who made it known is the blogger Oliver Nölting (frugalisten.de), who by his own account saved 60 to 70% of his income at times. If you read German, his blog is the place the German scene gathers; if you do not, the English-language FIRE community covers the same ground with a US lens.
The core: a high savings rate
The decisive lever is the savings rate. While private households in Germany save around 10% on average, frugalists aim for 50 to 80%. That shortens the path dramatically — starting from zero, with a 5% return after inflation and, for comparison, 7% before inflation:
| Savings rate | Years at 5% (after inflation) | Years at 7% (before inflation) |
|---|---|---|
| 10% | ~50 | ~40 |
| 30% | ~27 | ~23 |
| 50% | ~16 | ~15 |
| 70% | ~9 | ~8 |
Calculate where you stand and what a higher savings rate does:
Frugalism is not stinginess
The most important distinction: stinginess saves at any price, frugalism prioritises. Frugalists deliberately spend on what genuinely matters to them and cut the rest consistently. It is not about a joyless life but about more freedom per euro spent.
Criticism and limits
- Not healthy for everyone: very high savings rates presuppose a certain income and can tip into deprivation.
- Quality of life today vs. tomorrow: the balance between saving and enjoying is individual.
- Income does count for something: anyone earning very little hits hard limits on the savings rate — then raising income helps as well.
- Rent is the German ceiling. In Munich, Frankfurt or Hamburg, housing alone can consume what a frugalist elsewhere saves. The lever here is the size and location of the flat, not the coffee.
Frequently asked questions
What is frugalism?
Frugalism is a deliberately frugal lifestyle aimed at financial independence. Frugalists save and invest as large a share of their income as possible in order to live off their wealth early.
How high is a frugalist’s savings rate?
While private households in Germany save around 10% on average, frugalists aim for 50 to 80%. One of the best-known German frugalists, Oliver Nölting, has said he saved 60 to 70% of his income at times.
Is frugalism the same as being stingy?
No. Frugalism means conscious consumption: spending money deliberately on what really counts and saving consistently on the rest. It is about priorities, not going without at any price.
Read on
- Financial freedom: the complete guide in 7 levels
- The FIRE movement
- Calculate and raise your savings rate
Sources
- Federal Statistical Office (Destatis): household savings rate 2025 = 10.5% (press conference on 2025 GDP, 15 January 2026, in German).
- Finanzrocker: interview with Oliver Nölting of frugalisten.de (in German) — savings rate 60 to 70% at times, by his own account.
- Grant Sabatier: Financial Freedom.
This article is for information only and is not investment or tax advice. Investing in securities carries risks up to and including total loss.
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