I often find myself chatting with friends who are totally puzzled by how I spend my money. I'm rocking ₱60 gym shirts, the ones I snagged off Lazada five years ago. I only buy shoes when my current pairs bite the dust, and I upgrade my phone like, once every seven years. My friends just don't get why I'm so thrifty. They think money's for enjoying life: if you want something and you've got the cash, just go for it.

For them, that means always having the latest phone, a closet bursting with trendy clothes, and a running list of dream cars and watches. Thankfully, they're pretty responsible and stick to buying things they can afford, avoiding debt. Still, for me, if something works well and looks decent, I don't see the point in replacing it.

I've gotten into this habit because I've noticed that having the fanciest stuff doesn't really lead to lasting happiness—experiences and conveniences are way more worth it. People are always raving about travel or getting handy home gadgets like a washing machine, but you rarely hear someone say they wake up thrilled just looking at their expensive watch or car. Usually, they get a rush when they buy it, and then, bam, a month later, they're back to baseline—and let's not forget, those things cost a fortune! That's why instead of blowing cash on pricey objects that give you a fleeting buzz, I save up for experiences and conveniences.

For a lot of people, the ultimate convenience is financial independence, where your passive investments cover your lifestyle. That's total freedom to work any job you want or retire whenever you feel like it, and it's the big goal for folks in the FIRE community, which stands for "Financial Independence, Retire Early."

Crunching the numbers, I've figured out that being frugal is a super effective way to hit financial independence faster. Take the famous "4% Rule" from the Trinity Study, which looked into safe withdrawal rates for retirees. The study suggests that, in most stock market situations, if you invest your savings in a mix of stocks and bonds, you can safely pull out four percent of your capital each year for up to 30 years—which is longer than most retirements. While some recent research suggests a more cautious two-three percent withdrawal rate, let's stick with the classic "4% Rule" for now.

The "4% Rule" means you need a retirement fund about 25 times your annual expenses. So, if you spend ₱400,000 a year, you'll need 25 times that—around ₱10 million—to fund a 30-year retirement in most cases.

This formula shows two main ways to reach financial independence quicker: earn more or spend less. And between the two, cutting expenses has a big advantage—it works both ways. It boosts your savings rate so you reach your retirement goal faster, and it also lowers the amount you need to save.

Let me break it down. Imagine two people, each making ₱500,000 a year. One spends ₱400,000 annually, saving ₱100,000. Using the "4% Rule" rule, they'll need at least 25 times their annual expenses—₱10 million—for retirement.

Now, picture the second person who's living more frugally, spending only ₱200,000 a year. Not only do they save ₱300,000 annually, way more than the first person's ₱100,000, but they also need less to retire. Multiply their ₱200,000 annual expense by 25, and you see they only need ₱5 million to retire—half of the first person's ₱10 million.

By spending less, the second person gets to retire faster in two ways: they save more each year and need a smaller retirement fund. This double whammy makes frugality a powerful tool for reaching financial independence. By spending intentionally, your money will give you the best returns in enjoyment, convenience, and long-term financial security.

Keith Lim is a personal finance writer and stock market investor. His insights can be found at keithblim.com.