For many, being called frugal is the same as being called cheap. Frugal means someone is thrifty with expenses. However, on the other hand, being cheap means someone is spending the sheer minimum required to attain life’s barest necessities.
Becoming frugal is a powerful strategy for gaining financial security — it is the pursuit of optimum value in all things. It is an admirable quality many people wish they had but do not.
Anyone can become more frugal; it’s all about the mindset and developing a new way of looking at possessions and interests.
The first step toward frugality is a careful assessment of expenses. Everyone has standard bills for maintaining basic needs — utilities, rent, food, clothing, and the like — and is clear about the value they receive in exchange for the expense of these items.
Why You Don’t Need To ‘Be Cheap’ To Be Frugal
1. Save On Big Expenses
Consider housing, for example. A frugal person evaluates the home and considers whether a less expensive home would meet their needs and still make them happy. The same for a car. Would a less-expensive, more efficient vehicle meet their needs? Would public transportation work just as well?
For home, car, health, and death planning consider insurance costs. If a less-expensive home is just as suitable, rates will be lower. Eliminate car insurance by giving up a vehicle in favor of public transportation or find ways to save money on car insurance.
Healthier living, such as giving up smoking, can reduce health insurance rates. Adding death insurance can save on significant, unplanned expenses and is especially vital for seniors.
More savings can be achieved by increasing insurance deductibles and asking agents about bundling policies for a bulk-discount opportunity.
2. Lots of Small Savings
While home and car expenses are the source of significant savings for many, it’s not to say food and household items don’t also represent opportunities. Most families can spend far less eating home-cooked meals than by ordering takeaway or eating out.
The same applies to pets. For example, it’s common to spend about $800 annually but sources suggest you can care for a cat for as low as $162 per year by making a few small changes.
Splurges are budget-busters. Entertainment, hobbies, and travel are problematic items to fit into standard budget planning because they differ so much from person to person. A quick evaluation of these parts of a budget is sure to pinpoint savings opportunities.
Take a close look at credit card bills, bank statements, and store receipts for these expense types and isolate those that have provided lasting value, great memories, or exceptional experiences.
In the future, preserve the budget by being more frugal and putting money in savings. Reduce a night out on the town to coffee with friends or a famous music show to a movie night.
3. Become A Considerate Buyer
Change from being an impulse buyer to being a considerate buyer. Instead of making a purchase decision at the moment, wait 30 days to see if it still has the same priority, the same appeal.
Frugality isn’t about denying oneself all the pleasures in life; it’s about careful consideration of the value of indulgences.
The anticipation of future events and purchases can work to your advantage. Enjoying the build-up is a gratifying part of spending money, especially when it comes to making large purchases.
Consider routine activities — if it’s a habitual feeling, it’s time to quit and save for something new of higher value.
4. Free is Best
When there are many things to do or purchase, think the expense through and deliberately place a high value on those that are free or low cost.
If the options are eating out and cooking a meal — opt for eating in. Give it higher value by inviting a friend or setting the table as though it’s a party and getting the kids involved.
By learning to enjoy long series of inexpensive, ordinary days and making the most of exceptional occasions, they will seem extraordinary.
5. Being Frugal is Not Hard
Becoming more frugal is not hard, and the rewards are many. With a budget set and savings in hand, extra-special occasions are so much more enjoyable when the event or item is not adding to a family’s financial burden.
Putting money toward important life goals such as building a fund for emergencies, paying off debt, saving for retirement, or creating a college fund gives families financial freedom and security.
Being frugal means learning about the value of things, spending wisely to attain them, saving more, and enjoying life.
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Author: Luke Fitzpatrick