A common error that people make when considering frugal living is to view it as a life of deprivation, one of doing ‘without’ things. Get this out of your head, since it will make all your efforts at frugality like a punishment. If you follow these basic guidelines, you will not only enjoy a richer and fuller life, but you will feel good about the contribution you are making to the future of life on planet earth.
Even if you have never budgeted before, you can do it simply. The first step is to list out all available money or income for the month, then list out all expenses, such as food, mortgage, utilities, loans and credit card payments, savings, transport, recreation, taxes, etc. Tally them up. If your expenses are more than your income, reduce the amount apportioned to each heads, and remove expenses that are not essential till the two tallies. Discipline your spending so that you do not exceed what you have planned in your budget. An old fashioned but very effective way of doing this is through the ‘real-cash-in-envelopes’ way. Take the entire money available for the month in real currency, and put it away in envelopes marked with the expense heads. The goal is to stay under the budgeted amount, so that the excess amount can be put away as extra savings.
2. Repay debts:
Debts have become so prevalent that we don’t think twice about getting into debt or staying in debt. Debts are nothing but a way of selling out on your future earnings. In addition, the cost of servicing debt is tremendous. The debt trap is a vicious circle that many people fall into and find impossible to get out of it. However, with a little planning and strategy, you can become debt free. Two methods that have been proved useful are the snowball and snowflake methods:
List out all debts you have such as loans, mortgages, credit card payments etc. From your budget, see how much money you have earmarked for debt repayment. Pay the minimum amount on each of the debts except the smallest debt. Make the largest payment that you can do. Do this every month till you have cleared this debt. Now apply this same principle for the next smallest debt you have, but remembering to add what you were paying earlier for the debt you have cleared also to that payment amount. As you ‘snowball’ this repayment method, you will find yourself left with larger repayment amounts to service the larger debts without feeling constrained.
The snowflake method is also useful, where you take any small amount of money that you come across, and put it back into debt repayment. Regardless of how small it is, and from where it came, it goes into repayment. You can look out for seemingly insignificant sources, such as bottle refunds, piggy banks, loose change that you collect in a jar, yard sales proceeds, etc. It might seem awkward at first to deposit small amounts like these, or to write out checks for small amounts, but it will make an impact on how fast you will get debt free.
From the beginning of your commitment to frugal living, make savings an expense head in your budget. Most people trip up on their budget or fall into a debt trap precisely because they have not put savings as a priority. Even if it is a small amount, put it away where you will not spend it. Savings should be goal based. You should have an emergency fund, as well as specific saving for life targets, such as children’s education, buying a home, etc. An emergency fund should cover at least 6-12 months of living expenses at your present level of earning.
You are not the only person under a compulsion to live well on a tight budget. Stores, businesses, services, everywhere in the world are under pressure to sell more and reduce losses or increase profits. Plug into their need to get their stocks sold in order to maximize your budget. Look out for discount sales and coupons and group buying opportunities. Online stores often offer prices and discounts that their brick and mortar counterparts don’t. Online auction and bulk buying sites are another good option. Make the most of your loyalty points if you are a regular at certain supermarkets. Stores that sell products, often change their discounting based on the time of the week and even time of the day, depending on how urgently they want their stock to move. Plan ahead so that you can make the most of lower prices.
The easiest budget head to cut back on is entertainment and recreation, since there are healthier and cheaper alternatives than spending that money on overpriced sodas and popcorn, or eating oily salty food that you enjoy then but stay up at night belching up. Hire DVDs or borrow them from a library, pop your own corn that you can buy by the pound at your local store, have a fresh fruit juice, and snuggle up with your loved ones. Removing big ticket, eating out and movie going can not only significantly increase your savings, but also open up a whole world of healthier, more life enhancing recreational activities that you can participate in with your family, at pretty much no cost.
Use these simple guidelines to smoothen your entry into frugal living. As you start getting a feel for the improved quality of life that it brings, you will be motivated to search out more ways of adding value to your life without subtracting value from your wallet.
About the author: Amanda Kidd is a blogger and writer who frequently writes on eco friendly gadgets. Business and tech help are some her favorite topics. Beside this she also loves writing on parenting and health. She makes sure that her lifestyle includes only healthy ways of living. These days she is writing on natural blood pressure.