Being frugal is not as hard as it seems. Sure, you have to make a few sacrifices, but it is well worth it in the end. Being frugal can allow you to hit your ultimate financial goal years ahead of schedule. Whether you want to retire early. buy a new home or take a dream vacation, frugality can help get you there. Let’s get started with 7 tips that will put you on the right course.
1) Start A Budget Right Away
If you do not have a written budget, you need to get one right away. You can not be frugal if you do not know where your money is going. So, get a budget.
Writing out a budget is luckily, not as hard as you might think. Simply write down all of your fixed expenses and include allotted amounts for things like food, entertainment and fuel. Also, do not forget to budget some money for long term saving. Even if it is just 200 dollars a month, you need to be saving something.
A simple paper budget will do the job, but even better is to put it down on a spreadsheet. That will allow you to play with your expenditures and see the resulting change.
2) Do The Little Things
When cutting expenses, there are only so many big expense that you can cut. Once you refinance the car or cancel your cable service, where do you turn? You turn to the little things.
It is all of the little expenses that can add up in a big way. Skipping that cup of gourmet coffee, downloading only the free apps on your phone or buying a generic brand of macaroni and cheese. These little savings might seem trivial, but they add up in a big way.
In the aggregate, all of these little things can add up to hundreds of dollars a month or thousands in savings over the course of the year. Simply cutting out the store bought coffee by itself can save almost 100 dollars a month.
3) Don’t Be Cheap
Wait a second, isn’t that the whole point here? Not really, because there is a difference between being frugal and being cheap.
If you are cheap, you purchase the lowest price item all of the time. The cheapest item though, is not always the best value. No, being frugal means buying smartly.
For example, you are looking for a new car. You could buy the cheapest model out there but it might not end up being reliable. It also could depreciate faster than a more renowned but more expensive vehicle. This means, in the end, it might be a more frugal decision to spend more money initially.
The same thing goes for all kinds of product from batteries to diapers. Those store diapers might be cheaper but if they leak and ruin baby clothes, they might cost you more. Be frugal by being smart.
4) Pay Off Your Debt
You can not be frugal if you are carrying a mountain of credit card debt. Get it paid down first and do it before you start saving.
It is far more important to pay off credit card debt that could be costing you 15% to 20% in interest than to save money. A savings account will only earn you 2% interest at best and even a strong investment account may only earn you a 7% return.
It is a more frugal decision to prioritize the debt payback over anything else.
5) Earn As Much As You Can
This one seems obvious but not everyone does it. You should earn as much as you can to boost your savings account.
Earning as much as you can means more than just maximizing your revenue from your job. That is important but so is having a side hustle. If you are only working 40 hours a week, you have time to earn more.
Earning as much as you can is always important, but it is particularly so when you are young and have more time. As you get older, you will find that your free time gets quickly eaten up. Earn that money now and get it into savings.
If you are 20 and can squirrel away just 10000 dollars, after 40 years in an investment account, you would have 70,000 dollars. See the possibilities?
6) Take Advantage Of The Free Things
There is so much free in the world that we do not take advantage of. A lot of the free stuff centers around entertainment.
For example, why do we pay for music when you can use a free streaming service? Why pay for cable when you can get free on demand entertainment from Crackle or IMDB? Every dollar that you can save without drastically changing your quality of life is well worth it.
7) Set Some Goals
Without goals, you are just wandering through life. Take a minute or two and write down, or at least think about, your goals. Where do you want to be in 10 years, 20 years or more?
Once you have your goals, you can use them to reinforce your devotion. It can be tough being frugal, sometimes there are hard decisions to make. If you have a goal to work for, it can make things much easier.