Yes my friend, develop these frugal habits that will save you from going broke. Frugal living is not for everyone. Some people have a natural inclination for living frugally while others love spending. Those who love spending, blow their money before it comes. It feels so good to have lots of money and buy everything you want. Spending money on what we want takes a toll on our financial health. It causes an unending cycle of lifestyle inflation.
To avoid this, the first thing to do is never increase your expenses with pay raise, because this will never let you save money. Living below your means is the key to creating wealth.
“It’s not your salary that makes you rich, It’s your spending habits” Charles A. Jaffe
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Frugal living doesn’t mean you have to be a real miser, you just need to be mindful of your finances. Keeping finances under check and spending wisely is the key to frugal living. Your earning potential may increase or decrease depending on circumstances, but your spending habits will decide how you respond to those conditions. Moreover, this is life and we may get hit by emergencies, pay cuts, job loss, having money cushions and frugal habits help us move smoothly through those stages.
There are many examples of rich players and performers who went bankrupt due to the poor financial choices they made during their peak time.
- Take the example of Mike Tyson. Tyson raked $30 million per fight at the peak of his career, but he was blowing that money quite fast. Due to his poor choices, he had to file bankruptcy. But he learned from his mistakes and recovered as a calm man.
- Michael Jackson: Michael Jackson passed away with a debt of 500 million dollars. He filed for bankruptcy in 2007.
- Nicolas Cage: This great actor from the movie Treasure Island went bankrupt due to his poor choices about spending money. He spent money on exotic pets, big castles. Moreover, Cage’s ex filed a 13 million dollar lawsuit against him. He was sued by a real estate company the same year for not paying millions in loans.
Most of us are not that rich or have that earning potential right now ( But you may increase your earning potential to any heights ). Lives of these celebrities teach us that our financial future depends on how we use our hard-earned money. The best thing a normal person can do is live below the means. Whatever you are earning, you should save from that. Say 10% of your salary or income.
These are some frugal habits that can have a huge impact on how you live and save money. Being frugal means spending wisely and keeping everything in check.
1. Live below your means
This means, whatever you earn, just spend less than that. To make this possible, make a strict budget and stick to it. When you have an idea, how much you will need to live comfortably, saving becomes easy. Automate those savings and you don’t have to think about saving again.
Never depend on your credit cards for buying expensive items. You don’t own that money, right, the bank owns it. If you use that money before earning anything, you will never be able to come out of the spending mindset. I think you will agree with me on this one that using credit cards thinking that money is yours, takes you on the path of debt accumulation.
I myself have gone through this, shopping from credit card felt so good. But I never thought I had been accumulating bad debt, which we had to repay before buying our house. Believe me, it was so difficult financially as well as mentally.
” Beware of little expenses. A little leak will sink a great ship.” Benjamin Franklin
2. Cut your food budget to half
Is it possible? Yes, it is possible to cut your food budget to half. Few steps taken towards this will save a lot. The basic step is to buy fresh ingredients and start cooking your own food at home. If you don’t know how to cook, start watching food channels. This is how I got interested in cooking. I have seen my mother and ladies in our households always cooking from scratch, but I didn’t like cooking at all.
When I started watching cooking shows, it increased my interest in cooking and you got to learn new cuisines. Accordingly, if you want the recipe for anything, Youtube is there.
3. Meal plan
How do you feel when you have to throw out damaged or spoiled food? I really feel very bad as it is similar to throwing dollars into the bin. To combat this, you can start meal planning. Planning your meals ahead not only saves you money but time also.
This is possible due to the fact that you already know which ingredients you need for the particular recipe, you are going to make. It reduces the pressure of looking for ingredients and thinking about what you will be planning for dinner or lunch. You save both time and money. As we all know, time is the most precious commodity of this world.
4. Make a strict list of ingredients
Before going for shopping, always take a strict list of ingredients according to the meal plan with you. Stick to this list. Though it will be difficult initially, after some time, you will develop a habit of always buying only from the list.
5. Take your lunch with you
I know what we all think about spending a few dollars here and there, and how it is going to make us poor. The first thing is, few dollars individually doesn’t sound much but they add up at the end of the year. For example, if you are spending 10 dollars every day, It will roughly come out to be 300 dollars a month. And $3600 for a year.
One of my friends told me one day that she feels like whatever she is earning, she is spending just to maintain her job. She spends the money on childcare, coffee, lunch, clothes, and fuel.
She said sometimes she wants to quit her job. But I always encourage her to stay with her job because she very much likes it. Gradually she has started making some changes in her eating habits. Instead of buying her lunch from outside every day, she cooks most of her food at home.
Not only this, both of them made some changes in their working schedules which helped in slashing some child care fee also. The conclusion is that little changes have helped her save some money.
6. Buy seasonal produce
Seasonal produce is always inexpensive and has a better taste as compared with unseasonal cold storage food. Buy from the local market and seasonal fresh produce to save money.
7. Create a budget
Creating a budget gives you insights into your own money matters. Have a budget and stick to it, it will let you save a lot.
There is no right or wrong way to budget, whatever system you chose, just do it consistently. Normally as with exercise and weight loss programs, we start with enthusiasm and then stop after some time. While done consistently and deliberately, it makes you save a good amount of money in the long run.
Consequently, the main goal of budgeting is to save money as well as keep enough for your basic needs. It is not difficult but you need to create a plan as well as be patient and determined. There is a lovely quote and my all-time favorite:
” Money grows on the tree of persistence “
7. Eat frugally but healthy
Maintaining health is required for a happy life. But you don’t need to spend a ton of money on food. Just eating simple seasonal home-cooked food helps in a healthy body. When you cook your food from scratch, you know which ingredients you are using and in what quantity.
You and your wallet, both will be healthy.
8. Track your spending
Tracking your spending is the first component of saving. It gives you insights into how much you are spending and where you can cut to save extra dollars. These saved dollars can easily go into fulfilling your financial goals. Try to squeeze money from every expense. Make it a habit of writing down how much extra are you saving and put that money right away in your saving account. If you will not do that, your saved money will be spent somewhere else.
9. Earn money from your shopping
Shopping can earn you some cash back. Whenever you have to buy something, shop though shopping sites and get some of your money back. I just love the idea of getting cash after shopping. If you love online shopping then don’t leave this money on the table. Grab that money and try to shop through these cashback sites.
10. Go for free entertainment
Living on less doesn’t need to be boring. You can really enjoy your life without spending a huge amount of money. Go for free entertainment. If you already have the internet, you can watch Youtube videos. Everything is there.
Watch free to air TV. And go for an outing that doesn’t need to get tickets. Go to the library and read free books and magazines. These are small expenses but if you will count the money, you will be amazed how much you can save from these.
11. Analyze finances every 3 months
All of us know the importance of tracking our goals and setting. But financial goals are overlooked. Make financial goals and track those goals. Analyze your finances every 3 months and make the required changes.
12. Ask questions before making big purchases
Before making any big purchase, ask yourself do you really need this particular item or you can wait for some time. In the meantime, look if you can find that item on low price. Never buy on a whim. Because it is a big purchase and will take a big chunk of money from your pocket.
- Make a list of big items you want to purchase
- Give some time to yourself so that you can find that item on a good price
- You may skip the idea of buying that item and save that money ( this happens so many times)
13. Look for hidden fees everywhere
You have to look for things that may be recurring fees. I happened to me last year. I had a bank account that I was not using but I was paying a fee of 4 dollars every month. That made me pay 48 dollars in a year.
I closed that account otherwise I would have finished all the money in that account. It is better to look for banks that have bank accounts without a fee.
14. Cancel unused subscriptions
Unused subscriptions are of no use. If you have a magazine subscription, gym membership or other memberships which you never use, just cancel them. If you cannot find time to use those subscriptions today, it is highly that you will not have time for them tomorrow.
Instead of keeping those memberships, use that money to save for the future.
15. Buy used items where possible
Buying used items can save you money. You can buy a second-hand car, furniture or some other stuff. It will help you in saving a lot of money. Or wait before buying and buy when prices are slashed.
16. Make frugal friends
If you have friends who love to spend money a lot. You will be tempted to spend but with frugal friends, you will try to save and be frugal like them. Some people like to spend money and feel happy that way.
This should not be the case. Instead of spending money, create happiness with good relationships and be happy with your own self.
17. Pay yourself first even if it is a small amount
Whatever you are earning, make a habit of saving money and adding to any investments before anything else. Keep some percentage for saving then start your budget. This way, you will have that money set aside even if you earn less. The saved money will not be available for expenses.
18. Automate your savings
Automating your savings will save you from the stress of saving. If you know that you may forget to save money or could succumb to your buying impulses, automating your savings is the best option. Also, your savings should be on top of your budget. Everything else should come after that.
19. Think about long term financial future
Never make decisions about buying something for a shorter time. While making decisions, be it buying something or investing, think about the long term. If you have to make a purchase, buy a quality item so that it will last longer. Same is with investments, longer-term investments give you better returns.
20. Turn your hobbies to side hustle
Everybody has some kind of hobby or craft. Turn that into your side hustle and earn money. If you have some skill of craft, you can sell your crafts on Etsy. Some people have very expensive hobbies and they become masters of that.
Instead of spending money on your hobby, earn money from that hobby by teaching others or making products and selling.
21. A manageable mortgage
As we all know, housing, whether it is a mortgage or renting, takes a big chunk of your income. If you really want to save money for your self, it is in your best interest to buy a house which you can afford. Saving enough money for the down payment before buying a house saves a lot on the mortgage.
22. Build your emergency fund
There are so many reasons to build your emergency fund. Having a money cushion for your emergencies like medical, car breakdowns, emergency house maintenance will give you peace of mind. Now is the time to start building it up and making it a habit of keeping growing. If you can save $25 every week, you will have 1400 dollars at the end of the year. So let us start building it from today
23. Review your bills every few months
Make it a habit to review your bills every few months. If you find that you are getting huge bills, talk to your energy provider or switch to the one which is less expensive.
24. Earn money instead of spending
There are many ways to earn money in your spare time. Start surveys now and you will be able to make extra $200-300/month. Believe me, it is quite good money if you want to build an emergency fund or start investing.
Here are a few survey sites you can sign up to start doing surveys and earn money
25. Start some side job to earn extra money
Starting some side hustle will let you make extra money and you don’t need to leave your traditional job for that. Here are some ideas to start some side job if you are serious about it.
If you are good at finding errors then you can start proofreading. These 25 sites will help you find proofreading work.
26. Track your debt and grow your wealth
- Housing: Housing is the biggest expense, if you haven’t paid your mortgage or if you are renting. It is huge. Here in Australia, half of the salary goes into the mortgage. Or if you are renting your house, it is also a very big expense. Write down how much you are paying for your housing needs.
- Car loans: Write down how much you are shelling out for your car loan. If you own your car and don’t have any debt, be happy and leave this point.
- Credit cards: credit cards are an expense in their own form. If you have credit card debt, try to pay them as soon as possible. Because the interest rate on credit card debt is huge.
- Any other loans: Write down any other loans you have. Loans make a huge part of our lives. Paying attention to them and paying everything on time saves a lot of money.
27. Start a side hustle
If you feel like you are doing everything to save money from your tight budget but still you are struggling with money, start some side hustle which can help you in earning more. And believe me, starting a side hustle is not that difficult.
28. Use everything to the point you can use no longer
This one is really important because we spend money on buying everything then why not make use of every dollar spent on it. Use every item to its last point.
29. Pay bills and credit cards on time
Paying all your bills and credit cards save you on late fees. Not only this, you can negotiate better rates with utility providers if you pay on time as a good customer.
30. Stay away from gambling and lottery
Buying lotteries and gambling become a habit with time. People get addicted to these habits. While there is a very tiny chance of winning a lottery and we have never come across a person who became rich with gambling, except the casino owners.
31. Stay with basic insurance policies
Always choose basic insurance policies and pay attention don’t overdo it. Sometimes insuring companies provide so many items in their policies which are not needed too much. Stay with basic things so that you don’t have to pay higher premiums.
32. Go for No spend week/month
This one is my favourite. I always go for no spend weeks because it is easy and No spend months for some specific items. I went No spend year fr my own clothes. Otherwise, I always buy something while going for shopping.
33. Start gardening
If you have a backyard and love to eat fresh produce, start gardening and plant some veggies. We always have mint, capsicum, hot chillies, Fenugreek, Spinach and eggplants in our backyard. They taste so good and save us a lot of money.
34. Use the library for books and magazines
We all know that libraries are free to use and have loads of books and magazines to read. Use those free resources instead of buying a new book every now and then.
35. Use your appliances wisely
Always make sure t use your appliances with great care and switch them off when not in use. This will save energy and will save the appliance from damages.
These are some of the frugal habits I myself have incorporated in my life to improve my finances. I hope this will help you too in creating a better financial future.
If you are keen on earning more and starting a side hustle, read these posts as you may find what you are looking for,
- The greatest list of side hustles to make extra money
- how to save money with apps and surveys
- 11 side hustles to earn extra side income
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