I get a lot of people visiting the website at this time of the year searching for answers on how to live frugally. Maybe because the Christmas frenzy is over and people have awoken from their spending somnambulance, maybe the credit card bills have started rolling in, or maybe people have made new year’s resolutions to save more money. Whatever the reason, welcome.
There are thousands of frugal blogs on the internet – mostly American, and I find they focus on only one aspect of frugality: saving money (although it also seems frugality has also become synonymous with self-sufficient living). Saving money is only one aspect of frugality. The complete definition of frugality is to conserve resources. Money is just one resource. Physical stuff is another. Our natural environment is a resource. So is our time, our creative skills, our energy, and our intelligence.
Frugality is the wise use of all of your available resources. It is a personal balancing act of prioritising your time, your money and the environment you live in.
The exact manifestation of frugality will be unique to your own personal circumstances. One person may save money baking their own bread, another may save time and buy bread but save by doing their own car maintenance. Another may make their own clothes or shop at charity stores while yet others may grow their own food. On this website you will find lots ideas on how to conserve your resources. Take the ideas that work for you; there is no one way to live frugally.
If you are beginning the journey to more frugal living, below are some of my rambling thoughts on frugality. You won’t find quick fix suggestions, or a simple ‘do these five steps and you will be frugal’, rather some ideas on how to examine your own life and work out how frugality can work for you.
Begin by understanding your current circumstances and the events that led to those circumstances. There is no-one judging you as you do this exercise, so be honest with yourself. If life has dealt you hard knocks that have affected your finances, acknowledge that. If, on the other hand, you’ve been mindlessly spending and wracking up debt without thought of the consequence, acknowledge that too. Before you can make change in your life, you need to have an understanding of yourself and your circumstances as they are right now.
So take time to take stock of what you have, what your current habits are (spending and otherwise), how you spend your time, how you spend your money, and what your future goals are. Why do you want to be frugal? There is no right or wrong answer to this question, it just helps you to make decisions about what aspects of your life you are going to change, and what aspects you want to keep as they are. What is important to you? What are your priorities?
Think about how you spend your day. When do you wake up? What do you eat for breakfast? What brand of bread do you buy? How do you get to work? What are your lunch time habits? How much TV do you watch? How much time online? How do you feel? What soap do you use? Why? What clothes do you wear? Why? How do you do your hair? Do you spend time with your kids? Your spouse? What do you do in this time? How do you relax? How do you treat yourself? How do you make yourself feel better after a long, hard day? What do you eat for dinner? What do you do before you go to bed? What are your thoughts on money? How did your upbringing affect your relationship with money and other resources? Do you care about environmental issues?
Frugal living is more than just saving a few dollars on the groceries, it’s a way of life. For example, in order to save money on food, you need to eat less takeaway, which means you need to find more time to cook, which means you may need to get up earlier or watch less TV, which means you need to sleep well, which means you need to be able to relax efficiently and de-stress. You may need to come up with some creative solutions to meet your needs without buying more stuff.
So above are just some of the aspects of life that you may want to consider evaluating, one at a time over a period of time. Some things you will want to change. Some things you will be happy with, thank you very much. That will be up to you.
Maybe I’ve made it sound harder than it really is. You don’t change your life in one day, you make small changes and form new habits over a period of time. Life isn’t compartmentalised, all aspects of your life are integrated and work as a whole.
Money, money, money
Now for some financial nitty-gritty. When it comes to your personal finances, the best (and only way in my opinion) to truly understand you spending habits is to track your expenses and then analyse the results. Boring, tedious, cliché advice, but it works if you do it. I’ve been doing this exercise for five years now and I can tell you with 100% certainty what we spend our money on, where we’ve reigned in our spending over the years and the areas that could use more work.
There is really no way of knowing for certain (especially if you use a lot of debt to make purchases) whether you are spending less than you earn, if you don’t track your income and expenditure. If the idea seems like a tedious chore, then this is where understanding your habits can be useful. For example, if you have dead time at 6:45pm then pick this time to plug your numbers into your budget and add up your expenses for the day. It really only takes 1 – 2 minutes a day, less if you have regular no spend days (an extra incentive not to spend).
It is hard to get an accurate picture of spending patterns when you don’t track your expenses because it is difficult to appreciate just how much small amounts add up. Two dollars here and there seems like insignificant small change, but once you add those amounts up over the course of a week, a month or a year, the total amount you spend can be quite surprising. Try the exercise. I can guarantee you will be surprised by the results.
Once you know specifically what you spend your money on and under what circumstances, you’re in a better position to make the specific changes that will have the greatest impact your own financial situation. If, for example, you are shocked at how much you spend on clothes every month, and upon more thorough examination found that you spend your lunch breaks wandering the shops and it is at this time you buy clothes, you can then form a new lunch time habit that avoids the shops and sees you spending less on clothes.
As well as developing an understanding of your own personal finances, get to know about personal finance in general, like how compounding interest works, which banking products are best for your circumstances, what insurance should you have, how much superannuation do you need, what investing opportunities are available.
The best way to keep money in your wallet is to stop spending it, by which I’m referring to discretionary spending on things that you don’t really need: books, new clothes, cosmetics, CDs, DVDs, the latest mobile phone, gadget or gizmo, restaurant dining, takeaway food, travel and all the other bits and bobs that make its way into our lives. I’m not advocating a zero spend policy (although depending on your circumstances, you may need to take this approach for a while), but what I am saying is the less you spend on non-essentials, the more money in your pocket, if that is what you need.
Consuming less can also mean turning lights off when not in a room, mending clothes instead of buying new ones, DIY what you can, buying second hand goods (or as it is euphemistically being referred to around the web: ‘second generation’ goods).
We live in a time that is all about ‘more, more, more’. Ask yourself, does more make you happy?
When it comes to paying for essentials, look for cheaper options. Do you really need a five bedroom house when a three bedroom one would suit you fine? Can you get a better deal on your electricity with another provider? Have you tried home brand groceries?
Consuming intelligently can also mean that you assess the other aspects of the goods you buy apart from their economic price. Is it ethically made? Is it sustainable? Is it good quality? Can you buy something with less packaging? Do you want to support local business? Is it good value? Is it going to last? Can you repair it? Is there a better option?
Sometimes buying ethically and spending less money can conflict. Sometimes it is necessary to forego our values in order to save money or even to just put food on the table. It’s a shame, but that’s life. It’s not necessary to make grand gestures or be ‘all or nothing’ with your values, you can assess each purchase you make on its own merit and decide the right option for you at the time. That is as much consuming intelligently as anything else. Guilt isn’t productive.
There are over 400 articles on this website about living frugally. I hope that you will find the inspiration you need to help you save money, get out of debt, and to live frugally.
Disclosure: Links to merchants within this post may be affiliate links.