Are you tired of barely getting by each month? Living paycheck to paycheck?
Do you feel like you are doomed to living this way for the rest of your life? Are you worried that you don't even know where even to start living frugally?
Have you heard of people living frugally and how it has changed their lives? You can change too!
In this post, we will introduce you to the world of frugal living, how you can get started and make the most of it.
What Does Frugal Living Mean?
Frugal living is the act of being economical and not being wasteful with your spending. It also means prioritizing things that are important to you personally so you can spend your money on them and reduce your spending on things that are less important to you. Many people also refer to frugal living as thrifty living. They both have to do with the economic management of your finances and other resources you control.
Frugal living is getting the most out of the money you have and making it go even further. It is a lifestyle change. It is a conscious choice to be a better manager of your money and not spend extravagantly on things you don't need.
More people are learning to live a frugal life, especially during the Covid-19 pandemic. People are finding they like the idea of living more responsibly and thinking more purposefully.
You now know what frugal living is. Let's take a look at how it is different from being cheap.
Frugal Living is Different Than Being Cheap
There is a difference in frugal living versus being cheap. Living frugally does not require you to always purchase the cheapest items without any thought to quality. You don't have to trade in your Apple Jacks cereal for generic cereal. It does not mean you have to forego paper napkins for cloth napkins. And it does not mean you have to cancel your adventurous vacation for a staycation. However, it does require that you be smart about how you spend and ultimately save your money.
“Frugal living is building a life that outputs the same level of happiness on a fraction of the cost.” – Unknown Wise Man.
Should You Learn to Live Frugally?
Do you know how many people in America are living paycheck to paycheck? Maybe you are one of them. According to a 2019 survey by the American Payroll Association, 74% of employees would experience financial difficulty if their paycheck were to be delayed for even a week. That is almost 3 of every 4 Americans.
If you want to live like the other 26% of working Americans, then maybe you should make an intentional decision to live frugally. Live frugally today, so someday you will not have to.
Benefits of Living a Frugal Lifestyle
You Could be Debt Free Faster
Don't continue to be a financial slave to your debt. Today, Americans now have a record $14 trillion in debt. The majority of that debt comes from mortgages, followed by student loans, auto loans, and credit cards.
Use the money you save due to living frugally to put towards your debt. How good would it feel to one day go to your mailbox and find no credit card bills or other loan bills or any overdue notices?
You Could Raise Your Credit Score
As you lower your debt, your credit score will begin to rise. Of course, there are other factors besides the amount of debt that will help increase your credit score.
A higher credit score will lead to opportunities for lower interest rates. The lower the interest rate, the lower the overall amount you will generally pay, especially if you pay off debt early.
Your Bank Account Could Increase
As you pay off more of your debt and raise your credit score, you might be able to put more money in your bank account. Having more money in your bank account might ease the burden of any emergency expense that arises.
You Could Pay Off Your Mortgage
How freeing would it feel not to have a mortgage payment anymore? Paying off your mortgage early could be one of the most freeing feelings you will financially experience. Paying just a little more each month towards your mortgage can shave years off your payment schedule. Typically, a mortgage is the highest amount of debt. Knowing you do not have to make that monthly payment and realize that you could use that money to continue to save, or invest for future activities, or put away for retirement.
You Could Save More for Retirement
It is predicted that over 40% of Americans will retire broke and have less than $10,000 in retirement savings. Living frugally could help you not become part of this statistic. Taking charge and managing how you handle your finances could have you ready for retirement without the money worries. Take advantage of the retirement savings opportunities available to you: 401k, 403b, SEP, IRA, and Roth IRA.
You Could Have Money for a Rainy Day
Bankrate.com reports that nearly three in 10 or 28% of U.S. adults have no emergency savings. Living frugally will help you save more money so that you can cover those emergency expenses. You can be prepared for whatever financial issues come your way. You could be able to replenish your rainy-day account easier as well.
You Could Have Less Stress
Many people worry about money, even those with a lot of it. Money is the number one thing people worry about and is the number one cause of divorce. Having a system in place may help you to worry less and allow you to focus your thoughts on more positive things in your life. You could put yourself in a position of self-control and have fewer things to worry about.
Common Myths About Frugal Living
Most people think about having to have cheap things when they think about living frugally. Some people imagine having to cut coupons, pinch pennies, and being miserable, and never having fun. These and more are what most people think when the term frugal living is alluded to.
These perceptions are actually incorrect. It would help if you started thinking differently when it comes to living a frugal life. It can be a practical lifestyle with many advantages that could positively transform your life.
Saving Little by Little Won't Help
The typical American thinks the only ways to get rich are by coming into a load of money from selling a company or a big inheritance. They believe that saving little by little is a waste of time and will not help. But it's better than you think. Through the use of compounding interest and dividend reinvestment, your money can grow. Investing your money on a regular basis is a technique called dollar-cost averaging.
Living Frugally is Boring
Most people want to think they live a fun-filled life. Many people buy on impulse, so they believe it is fun. The reality is many of those same people also fall into buyer's remorse, and suddenly, the fun feelings are gone. Frugal living is fun, especially if you set a goal and reward yourself. It can also allow you to prioritize your money for fun things you and your family enjoy.
You'll be Known as Cheapskate
Many people do not understand there is a vast difference between being frugal and being cheap. Think of it this way, if you steal office supplies or steal extra condiment packets, you are cheap, plus you are a thief. Using cloth napkins in place of paper napkins or changing your own oil makes you frugal.
You'll Have to Live Without Certain Items
Living frugally does not mean you will have to go without items like a house or a car. There is a possibility that you choose to go without certain items in order to get started with saving your money, but it will be your choice. Living frugally can allow you to pay off your debt and afford you the ability to get a lower interest rate and have greater negotiating power based on how much money you pay upfront.
It's Impossible to Live Frugally These Days
In today's environment of the constant bombardment of ads, many people believe it is impossible to live a frugal lifestyle. Plus keeping up with the Joneses' is a real trap that many people fall into. But if you fully commit yourself to this lifestyle, you can do it. All it takes is getting started and building new spending habits, and you will be well on your way.
As people learn that these are just myths and start to understand the benefits of living frugal, many will make a choice to start living a frugal life. Let's now take a look at how to get started on the journey of frugal living.
Simple Frugal Living Ideas to Get You Started
Now you have learned some of the benefits and myths about living a frugal life. Now it is time to learn how to get started on this lifestyle's journey and all it has to offer. The ideas listed below will get you started on your way to accomplishing the goal of frugal living.
- Create a budget that fits your lifestyle – If you do not create a budget, even the best frugal living tips may not make much of a difference. A budget is simply a plan for where your money should go and actually goes every month. There are several different ways to budget, so you need to find and use the one that best works for you:
- There is budgeting backward where you focus on your expenses and not on your income. The idea is to meet your financial goals FIRST, and then spend what is left…however, you want to spend it. Of course, your income must be higher than your expenses.
- There is also zero-sum budgeting where you allocate every dollar you make to each of your budgeting categories. The idea is that your income minus expenses, and savings equal zero.
- 50/30/20 budgeting which allocates 50% of your budget to "Needs" (housing, groceries, utilities, insurance, car payment, etc.), 30% to "Wants" (dining, hobbies, shopping, etc.), and 20% to "Savings."
- Increase your payments toward debt each month – Paying back your debt faster will generally save you money on interest in the long run. Increase the amount you pay toward debt even if you can only do it by a couple of dollars. You can also round up your payment to the nearest $10 (if your payment is $372/month, round it up to $380). Gradually increase the amount paid where you can, and soon you should be able to pay off all your debt earlier.
- Check online for the best deals — It is easier than ever before to find the best deals online. Multiple sites also provide coupons, membership clubs, and other ways to not pay full price for items. Spend a few minutes or less to do what many others are not willing to do. This may help with your frugal lifestyle.
- Use the local library — If you are an avid reader, this can be a real money saver. Books on Amazon typically cost $13-$25 each. An avid reader can get through a good book every 7–10 days. You could easily spend $100/month on reading material. Using the library for your reading material would allow that money to go towards other expenses.
- Downsize your home – If you live in a house too large for your family, it probably costs you money that you might not need to spend. If you have a couple of rooms you no longer use, it could be time for you to downsize.
- Plan your meals in advance – Planning your meals could save not just money but also save time too. Having a plan for your meals could keep you from buying unnecessary items that could spoil or expire. You can save time by spending less of it in the grocery store wandering around with no plan. Planning for meals can be an easy way to slash your grocery bill.
- Buy in bulk — Become a member of a wholesale club like Sam's Club, Costco, or B.J.'s and buy your staple items in bulk. Buying in bulk is a great way you could save money in the long run. Stocking up on paper products, frozen items, trash bags, and more will keep you from having to drive out to the store every time you run out of something.
- Learn to cook at home – Eating out can be one of the largest monthly expenses, outside your house and car(s). You can save hundreds or more each month by cooking your meals and eating at home. Watch videos online and learn to cook your favorite restaurant meals in the comfort of your own kitchen. You might even find it more fun. Also, there are hundreds of thousands of recipes online to help you try out new meals.
- Eat leftovers – This one can be a difficult one as some people do not enjoy eating the same meal twice. Learning how to eat leftovers can reduce your budget and even food waste.
- Take your lunch to work – It can be hard to avoid going out for lunch, eating at your desk or in the break room might not sound appealing, however, taking leftovers, preparing something the night before, or even having ingredients at work to make a sandwich are easy ways to cut down on eating out for lunch. You can plan and even prepare meals in advance for the entire workweek.
- Share a meal when eating out – One way to save money if you do decide to go out to eat is to share a meal. Some restaurants will even divide the meal before bringing it out to your table. Sharing will also save on the amount you tip. Remember, for every dollar you spend potentially costs you $1.20 with a tip. Plus, you also save on the tax.
- Make coffee at home – Coffee is something many people enjoy. However, many people get coffee on the go at their favorite local coffee shop. Depending on how much coffee you're purchasing at the local coffee shop, you can save $10 or $20 a week. That might not sound like much, but if you annualize that, it's $500-$1000 a year that you could save. There are a variety of quality coffee beans on the market. You may even discover a coffee you enjoy better than your favorite local coffee shop. You might have to spend a little more upfront, but you will see the savings long-term.
- Cut back on alcohol – Beer, wine, and liquor can be an expensive line item on your budget, especially if you buy drinks at a bar or restaurant. If you commit to drinking only at home, you can save by purchasing alcohol cheaper at the store than at bars and restaurants.
- Drink more water – Staying hydrated will keep you feeling full longer and allows you to cut down on your calorie consumption. Often, our bodies confuse hunger for thirst, and we eat when we're really just thirsty. Drinking more water means you may eat fewer snacks and have more leftovers, saving you some money. Water is also a healthier option than most other drinks.
- Stop buying bottled water – If you have to use purified water, it would be cheaper to buy it by gallon and not single-use bottles. The even better option would be to use a purifier. You can buy purification containers that use a filter to purify the water. You will need to change the filter every so often, depending on how much water you drink. But in the long run, doing so is still cheaper than buying bottled water plus, you will help with the environment and save money at the same time.
- Sell items you don't need – Many people have extra stuff lying around the house they purchased at some point. It might be a good idea to downsize those items and sell them. You might have a collection of handbags or have multiple tools that you never use anymore. Have a yard sale or post items on your local online marketplace. You could quickly turn that clutter into cash with a little bit of effort on your part. You could use that money to pay down your debt.
- Borrow instead of buying – There are many items you can borrow instead of buying. For example, instead of buying a new saw just to cut a couple of pieces of wood for a new shelf, borrow a saw from a friend. Borrowing could save you hundreds of dollars. It is important to return the item(s) borrowed quickly. Doing so will show that you care about your friendship and will make it easier to borrower other things in the future.
- Shop insurance for the best deal – Insurance can be a considerable expense. Not having insurance could quickly derail your financial goals in the event you need it. Every year call around and find the best insurance coverage for home and auto at the best price for you and your family.
- Learn to be a DIYer — Repairs can be expensive, mostly due to having to pay someone else. Nowadays, you can search on YouTube for "how to fix [insert problem]," and many videos are available showing you step-by-step instructions on how to do that specific repair. It should be noted that you always need to be careful when working with electricity unless you know what you are doing.
- Have date nights at home – Having a date night does not mean you have to go out to dinner. Date nights are about spending time together and focusing on each other. You can accomplish this by cooking a special meal together and then playing games or going for a walk together.
- Shop store brands – Each time you go shopping, swap one name brand item for the store brand. Doing this each time can help you determine which of the store brand foods you enjoy. One aspect of frugal living is experimenting.
- Seek alternatives to cable/satellite tv — There are cheaper ways to be entertained than forking over hundreds of dollars each year for a cable/satellite tv bill. Most of the time is spent surfing through all the channels for something to watch. Cut the cord and find free streaming channels you can watch. There are paid streaming services as well, even if you subscribe to several, it may be less expensive than cable or satellite.
- Switch to a low-cost wireless phone plan — There are several wireless phone companies you can receive service from. The large, nationwide companies are not the only choice today. Sometimes the smaller/local wireless companies will provide you with a cell phone for your service. Explore other non-mainstream carriers to find out if one might work better for you.
- Reuse gift bags and tissue paper – As you receive gifts during the year in gift bags, you can save them and reuse them and the tissue paper. Most people just throw these things away, but if you think about it, you can save money and reduce waste.
- Cancel magazine subscriptions – You can read most magazines online nowadays. Plus, you can get up-to-date information instead of waiting until the next magazine arrives in the mail. Check if your favorite magazine is online and cancel those subscriptions. You could find yourself saving hundreds of dollars in doing so.
- Seek alternatives to using your vehicle — There are alternatives to driving your vehicle on a daily basis. One of the first things to do is ask your employer if you can telecommute. You could try carpooling if available. Both options could stop you from using your vehicle every day, thus saving gas and increasing the time between repairs. You might also consider becoming a one-car household. Many families have switched to a one-car household if one person works from home. The person working from home can use driving services like Lyft and Uber for short trips. This could be much cheaper than having a car payment each month.
- Create a capsule wardrobe – A capsule wardrobe is a small collection of only a few simple and essential clothing items that can be reused again and again to create new outfits. Reducing your closet down to a minimal number of quality items will allow you to wear everything you have and reduce the number of new items you buy. Doing so will save on your clothing budget line.
- Call utility companies for a budget billing plan — Ask each of your utility companies if they offer a budget billing program. Budget billing creates a set monthly payment based on your average utility costs over the past year or more. This type of billing will allow you to have a predictable monthly utility bill. This billing will cut out the spike in cost during the winter and summer seasons.
- Don't buy anything on impulse — This may be the last frugal living tip on the list, but it is undoubtedly the most important. Never buy on impulse, as it is more of an emotional purchase that can derail you from your budget and financial plan. You should plan your purchases ahead of time to help save money.
With this guide, you now have the knowledge you need to get started living a frugal life. Along your frugal living journey, you may discover other great ways to live frugally. Do not let the fear of uncertainty keep you from getting started. The idea is to just start. You do not have to wait until the beginning of the year to get started. You do not have to wait until the beginning of the month or week to get started. Get started now, and you won't regret it.