Amazon Tells Staff to 'Double Down on Frugality.' Should You?

New Amazon CEO warns we could be in for a 'difficult and rough' ride.

Amazon is tightening its belt as economic troubles around the world and rumors of a possible recession start to impact its business. Frugality has always been a core principle at the online shopping giant, but it's recently taken on even more importance. For example, one slide from a recent all-hands staff meeting told employees to, "Double down on frugality."

According to Insider, which accessed slides from the meeting and spoke to staff, Amazon's new CEO Andy Jassy told employees that the company would need to be more streamlined in 2023. "None of us know for sure what's gonna happen, but there are a lot of signs that point to this being a difficult and rough economy ahead of us," he said.

What is frugality?

For a big company like Amazon, frugality means cutting costs, accomplishing more with less, and reducing hiring -- or even freezing it completely. For us as individuals, it's about embracing a money saving mentality. That might mean mending things that are broken rather than buying new, or making a meal plan to reduce food waste, or using cash back apps to maximize rewards.

But frugal living is more about a mindset than the individual actions you take. Think of it as being intentional about how you spend your money. Living frugally isn't about embracing your inner Ebenezer Scrooge and refusing to spend a dime more than you have to. It's about focusing on what's important to you and what works for your budget.

That might mean turning the thermostat down a few degrees and wearing a warmer sweater so that you can spend more on your collection of luxury bonsai trees. It might mean skipping your takeout orders so you can turn the heat up this winter because you hate being cold. Choosing to be frugal means different things to different people.

Should you embrace frugal living?

I have a friend who refuses to make a budget because she doesn't want to be forced to change her lifestyle. The words "frugal living" would fill her with horror. It's an understandable impulse, but it misses the peace of mind that comes with controlling your spending. If we are about to enter a recession, which many economists now predict, people who live frugally will be better placed to cope.

Beyond surviving a recession, a frugal lifestyle could help you build long-term wealth so you can retire early -- or comfortably. It might mean you can meet other financial goals such as saving for the down payment on a house or becoming debt free. Living frugally involves living within your means and focusing on your goals, whatever they may be. To do that, you need to know what your budget is, where you spend your money, and what your goals are.

If you're considering a more frugal approach to life, here are a few steps that will help:

• Make a budget and set goals. To spend intentionally, you first need to know where your money goes, and what's left at the end of each month. See if a budgeting app can help if you're not a whiz with spreadsheets. Think about where you want to be in five or 10 years' time and where your money needs to go to make that a reality.
• Adopt a "how-can-I" mindset. Nobody's going to stick to frugal living if it makes them miserable. Instead, it's about looking for ways you can do the things you love without breaking the bank. For example, if you're a foodie who delights in restaurant meals, look for special deals. If you love travel, the question is how can you travel and still meet your financial goals.
• Look for ways to reduce your costs. Spending consciously can open up a world of money-saving options. You might save over $1,000 a year by buying used clothing and furniture. You might be able to switch insurers or cut a streaming subscription and reduce your other outgoings. Once you start looking for and celebrating those savings, you'll be surprised at how much you can save.

You don't have to do everything at once. The trick is to make small changes and slowly change your mindset. Having clear financial goals will make it easier to make minor cuts today as you can visualize what they might mean for the future.

Bottom line

With a potential recession on the way and bills that only seem to get bigger, it might help to take a leaf out of Amazon's book and see if a bit of frugality could help. Just don't assume frugal living involves shivering through the winter rather than putting the heating on. Think of it more as cutting back on the things that aren't important so you can focus your spending on the things that matter most.