This guest post is by Kelly Rigotti of Almost Frugal - a blog about frugality, family and finances. Kelly’s popular blog is a wonderful resource for anyone who is on the journey towards living a full and happy, frugal lifestyle.
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When I first came to France as an American student here to learn French, I certainly wasn’t planning on learning much else, nor even on staying for very long. But stay long I did, to marry my handsome French frog. I’ve also learned a few things over the past eight years, about food, life and money.
The French have a very different relationship with money than Americans do. They don’t take out as many loans, especially for education, they don’t go into debt as often or for as much, and they rarely use credit cards. I almost had to relearn how to withdraw cash from the ATM!
Instead of using credit cards, which can cost up to €45 in fees, not to mention interest on charges, the French pay with cash, checks, or their debit cards. By doing so they avoid going into high levels of debt, considered shameful here. If they want to finance a project, such as a vacation, a new kitchen, or a car, they might take out a loan, either from a bank or a private loan agency. These have fixed terms, a clear end date and fixed payments, usually automatically deducted from your bank account.
So what have I learned from paying cash? To start, I’m a lot more reluctant to part with it. Once I have it in my wallet, I don’t want to spend it. It also feels nice having a little stockpile for later in the month; often times I withdraw money at the beginning of the month for groceries, tram tickets and the like. Once it’s gone, it’s gone? Finally, because so many places won’t take checks or debit/credit cards for less than €15 (about $20), I often don’t buy what would have been a smaller purchase. I don’t feel comfortable spending more than the limit, and I don’t have the cash for less. In the long run, not buying many small items adds up to quite a lot of money saved!
So what lessons can you learn from the French? First, try to pay cash. Also, follow their role as the savers of Europe and save for something before you buy it. My handsome French frog has bought five (yes five) guitars that way. And finally, if you do have to borrow money for something, take out a loan for it with fixed payments instead of putting it on your credit card; then you’ll know when it will end and exactly how much it will cost you.
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