Frugal living is a growing trend in today’s world. Most of us are struggling with less cash and lower income than ever before. That means that we need to be cautious about where we use our cash if we want it to last longer. The problem is, as valuable as it can be to plan your spending habits, it’s also easy to feel restricted and deprived if you cut your costs too much.
The more you begin to feel like you don’t have any control over your own money, the more likely it is that you’ll ignore your budget, or get into dangerous spending habits because you want to break free. The good news is that there are things you can do to make your lifestyle more frugal without feeling too deprived. Here are our top tips.
First things first, you’re bound to feel more in control of your spending if you already know how much you should be spending on each area of your life. Assigning a job to every penny in your bank account can be an empowering process. For instance, if you want to start simple, you can use the 50/30/20 rule, which asks you to divide your money into a segment of 50% things you want, 20% savings, and 30% cash spent on your luxuries.
You can switch the 20 and 30% categories around depending on whether you’d rather have more money now or reach your savings targets faster. Different people have their own priorities to consider, so there’s no one-size-fits-all.
There’s a common saying in the world of financial freedom that tells you to pay yourself first. This basically means that before you start divvying your cash up into different segments, you pay a specific chunk of money into your savings. This allows you to put your money away before you’re tempted to spend it on something else.
Another good idea to boost the amount you place into your savings is to simply convert any ongoing payments that you get rid of into additional transactions for your savings account. For instance, when you finish paying the interest and fees for your personal loan, start paying the same amount you would usually use into your savings instead.
We often assume that good budgeting means cutting all the things that we enjoy out of our lives, from nights out with friends, to games and fashion investments. However, you may be able to maintain some of your fun spending budget if you begin cutting meaningless expenses first. Go through your regular monthly bills and ask yourself if you’re paying for everything that you don’t use, like a gym membership or music subscription.
After you’ve gotten rid of the things that you don’t need, consider whether you can get a better deal on the things that you do want. For instance, many people can save a fortune just by switching to a better energy company or using an insurance brand with lower fees.
We’d all love to live in a huge house with several extra bedrooms and a few sports cars on the drive. The reality is that most of us just won’t be able to afford that standard of living. If you’ve been trying to hold yourself to unrealistic expectations of what your life should be like, it might be time to get real. Think about how much you can actually afford to spend on things like housing and car costs, so you can look into potentially downsizing.
If you’ve recently changed your situation, because your kids aren’t living at home with you anymore, or because you’ve retired, then it might be time to completely rework your entire financial strategy.
Finally, just as you should be keeping an eye on your outgoing expenses to ensure that you can live within your means, it’s also worth looking at the progress you’re making with your financial changes. You might discover that you’re actually getting closer to your goals at a much faster rate now that you’ve stopped paying for things like excess credit card interest and gym subscriptions.
Tracking your success will help you to determine whether your budget is really working for you, or whether you may need to make a few simple adjustments. This can also be a great way to keep yourself motivated if you start struggling to stick to your budgetary rules.