DeKALB – Tim Michaelis isn’t cheap, but he is frugal.
Michaelis is an assistant professor of entrepreneurship in the Northern Illinois University College of Business. He received his undergraduate degree at North Carolina State University, his master’s in innovation management at NC State University and IAE-Graduate School of Management in France, and his doctorate in applied social psychology at NC State.
Michaelis focuses primarily on developing original research around the topics of resourcefulness and the efficient (i.e. frugal) use of resources in entrepreneurial ventures. Overall, this work is to help increase the survival rates and performance of startups and corporate spinoffs. His research has been published in Journal of Business Venturing, Journal of Business Venturing Insights, Journal of Technology Transfer and Academy of Management Discoveries, among others.
Michaelis spoke to MidWeek reporter Katrina Milton before Christmas about ways to be frugal this holiday season.
Milton: How do you define “frugality?”
Michaelis: Frugal people want to conserve their resources, use every little bit up that they can. When they need to get a new resource, they will spend a lot of time and effort making sure their new resource lasts a very long time. Their purchase will be a very economical and value-driven choice. … The reason people started studying frugality is because big companies couldn’t figure out why frugal people were not buying stuff all of the time compared to others.
Milton: What is the difference between being cheap and being frugal?
Michaelis: The best way I can explain being cheap and frugal is if you are using your tactics for someone you care about’s happiness. If your son or daughter heart’s is deadset on something, and thinking only about money, you buy something cheaper or the knockoff brand. To me, being cheap is only caring about price and not really thinking longterm about happiness, joy, wellbeing and mental health. ... Don’t let your cheapness get in the way of your friends and family. You can definitely go too far. When what you buy or don’t buy affects someone else’s happiness, you have to start thinking about whether that’s the right choice.
Milton: Why do you think more people aren’t frugal?
Michaelis: Being frugal takes time and effort, and I think most people don’t like taking time and effort to think about what they buy. I think they’d change their minds if they saw how valuable it can be in your lifestyle. I think it helps in trying to improve yourself the best you can: start by having your own income, try to improve yourself the best you can, have a job with much higher income, put it in capital and have it grow over time or invest it. I’m part of the financial independence retire early movement. By being very frugal, making sure the things you buy last a very long time and saving 50% to 60% of your income, your interest compounds and accelerates, so you can have a million dollars saved by the time you’re 30 to 50 years old and can retire early.
Milton: Have you always been frugal?
Michaelis: I was born and raised frugal. My grandparents lived through the Great Depression. When I wanted to do my PhD, I wanted to dive into the topic of frugality and how companies get started and how resourceful they are. My research is really the only research on frugality in business and entrepreneurship. … Have you heard the saying, “Penny wise, pound foolish?” It’s a hard habit to break. If you go to the grocery store, constantly looking at prices is something you do every time. But if you buy a car, you don’t put time and effort into finding the right car.
Milton: What are some ways to cut spending costs?
Michaelis: The No. 1 thing to cut is going out to eat. Financially, it’s the best move, and health-wise always making your own food at home is best. Sure, you can save money by eating McDonald’s every day, but it’s not very healthy. Purchase a rice maker. You can make curries, rice with chicken or salmon or rice and beans. Rice and beans is very nutritious and costs less than $1. Also, most people think fresh vegetables are the best choice; frozen vegetables last longer and are fresher because picked and frozen immediately. Certain stores are important to shop at: Aldi is a fantastic grocery chain and is very cost efficient. People should be more conscious about bulk stores, like Costco and Sams Club. You can spend a lot more than you think you would if you’re only shopping for one or two people and if you go once or twice a month.
Milton: What are some money-saving tips for the holidays?
Michaelis: You don’t have to buy everything before Christmas. A lot of the prices on Amazon are inflated by 20 to 30%. If you wait a week or two, you’ll be saving some money. Also, if you talk to your family, maybe you can have a smaller Christmas gift exchange. I spoke to my parents and my brother, and this year, we’ll be giving each other our favorite candies. Celebrating doesn’t have to be about spending a lot of money, it can be small, thoughtful gifts.
Milton: What are items you’d recommend not to buy?
Michaelis: It’s not what not to buy. If I want something, something that costs $500 or $1,000, I let it go from my mind. If it comes back two or three times, I know I’m spending a lot of mental energy thinking about it. That’s when I do my research to find the best possible version of that thing. Try not to buy impulse purchases. Let it sit in the back of your mind if you really want it. Best item you can get, that is the one that will last the longest. A website I’d recommend is buyitforlife.com. It has huge lists of products that will last forever, the best product options available.
Milton: Do you recommend buying name brand items?
Michaelis: I think it depends on how much you use the product. If you don’t run and buy running shoes that cost $200, that might not make much sense. But if you do run and are planning on using those shoes for a long period of time, some brands are very expensive and are worth it. ... For example, I only buy merino wool socks now because they last the longest. I like the brand Darn Tough Vermont because they have a lifetime warranty. They last forever, and if anything happens to them, you can mail them back and they’ll send you a new pair. Sometimes an expensive item can save you money in the long run. Just focus on the best item you can and then focus on the price.