Want to be more thrifty but not sure where to start?
Change can always be a little overwhelming.
Frugality is not so much a destination, but a journey. And like any journey, it starts with a single step.
Or in this case, six steps to significantly reducing your expenses, save money and be in a better financial position.
Being thrifty isn’t so much about saving money, but changing spending habits. Once you change your habits, the savings follow.
6 steps to becoming more thrifty
STEP 1. START WITH THE GROCERIES
Of all the places to start saving, why start with the groceries?
Because of the big three expenses (housing, car payments and groceries) the groceries are the most flexible and it’s easy to save money on the groceries.
You also see immediate results, which can be an important motivational boost. And it feels less like deprivation – a good way to ease your way into becoming more thrifty.
So how do you start saving money on the groceries?
PLANNING is the first important step to saving money on the groceries. Planning ahead what you’re going to eat at each meal, writing out a shopping list and sticking to it when you shop will save you significant amounts of money when you shop.
You don’t need to plan with the precision of a military campaign. A menu plan is simply a list of meals: a few ideas for breakfast and lunch will suffice and 7 nights worth of dinners. You can allocate those dinners to a particular night, or choose a dinner from your list each day.
While menu planning is easy, there are a few things you can do to maximise your grocery savings:
- Use a family favourites list to make menu planning super easy
- Use your menu plan to plan the easy batch cooking that even busy people can do
- Use your menu plan to prep food in advance
- Make meal planning easier with a meal rotation
Other articles on grocery savings include:
- tips on saving money on meat
- seasonal guides for eating in season
- extremely tight budget? check out these grocery saving tips
- cleaning for less than $3 a month
STEP 2. NO-SPEND MONTH CHALLENGE
One tip you’ll often hear is to track your expenses for a month to get a really good idea on where your money goes.
Don’t get me wrong, this is a very valuable and enlightening exercise! The downside is, you’re not actually saving any money for a whole month and it’s a tedious exercise – most people give up after a few days.
We can reverse this idea with a no-spend month. You still get a pretty good idea of your money leaks because for the whole month you’re not spending on auto-pilot. The challenge helps you to become aware of your spending habits just like tracking your expenses does, but you also have the benefit of saving money straight away.
To start a no-spend challenge, agree what expenses count as necessary expenses and what counts as stuff you don’t really need. Bills, groceries, rent, debts, fees – that stuff counts as necessary expenses. Spend on the necessities, avoid the rest.
As part of your no-spend month, whenever you don’t spend, write it down. Become aware of where your money goes. Then do a few calculations.
We’ll use the example of takeaway coffee, because it’s a common expense that adds up, but do this exercise for all the discretionary expenses you say no to this month.
- how many times do I buy this each month?
- how much does it cost each time?
- how much is it costing me weekly? monthly? yearly?
Write it all down and add it all up. How much yearly is all of your discretionary spending costing you? Is it worth it? This is not a rhetorical question, the answer may well be yes! Or would that money be better spent on something else?
Read more: How to have a no-spend challenge
STEP 3: BECOME A MINDFUL SPENDER
The point of a no-spend month is to make you more aware of your spending habits and to give your savings a quick boost – it’s not meant to be a long term strategy.
The key is to find the balance between enjoying today and saving for tomorrow. That’s going to look different for each of us.
Now that you’re more aware of where you money goes, it’s time to get creative with how to meet your needs and wants in a savvier way and save money.
Here’s a great example from some friends of mine.
On the weekends, my friends take the kids to the beach. They pack their own morning tea so that’s a fun morning outing for the family for free.
They do love their coffee though. Instead of spending up to $5 each for a cup of coffee, they pop into the service station on the way and get an 80c cup that they say is just as good as the expensive stuff. Not only that, they can drink their coffee in peace in the car with the kids are strapped into the back and diverted.
My point is, they’re not depriving themselves, and they’re not feeling deprived. They have found a savvy way to meet their wants without spending a fortune. A trip to the coffee shop for the whole family can set you back around $30 or more, and it’s in no way relaxing and enjoyable with toddlers. Their solution is a win all round.
So where are your discretionary spending black holes and how can you fill wants more cheaply?
To give you some ideas, check out:
- How to Haggle
- Frugal at Home Date Night Ideas
- What to buy in the sales
- Frugal Footwear
- How to save when buying clothes
- Work Lunch Solutions
- Budget Entertainment
Once you become savvy with your spending, it’s time to take it to the next level. Being thrifty encompasses bigger things than saving a buck: it requires a shift in perspective.
It’s about seeing the beauty of things that aren’t new and shiny and belong on the cover of a glossy magazine. It’s about thinking through the impact of our spending on the wider environment. It’s about finding contentment with imperfection and happiness that has nothing to do with consumer goods or how our house looks or what brand of clothes we wear.
It’s about being creative – inventing solutions that aren’t found in a catalogue or on the shelves of a big box store on a Saturday afternoon.
For frugal inspiration, check out:
- How to shop at Second Hand Stores like an Expert
- Frugal Tips from the Depression Era
- A Thriving Life: Frugality is just the Journey
- Alternatives to disposables
- Washing without a dryer
STEP 4: GO FOR THE BIG WIN ON THE BILLS
So far, we’ve looked at gaining immediate savings. Now we’re going to go for the big savings that pay off in the long run and we do that by negotiating a better deal on our bills.
If you’re not negotiating your bills every year, you could be putting hundreds, if not thousands of dollars into someone else’s pocket when you don’t need to.
So it pays to shop around each year and take the time to compare prices and get a better deal on your bills.
Then, once you have a better deal, take steps to reduce your bills.
STEP 5: CREATE A SAVINGS PLAN
A savings plan is a great tool for helping you stay thrifty in the future and cover the bills stress-free. Different from a budget, a savings plan is a proactive plan for your money.
To create a savings plan, divide your bills into the number of pays you receive. For example, if you get paid fortnightly, and you pay your car registration yearly, divide the rego amount by the number of fortnights left until it’s due. If you pay your phone bill monthly, divide it by 2.
Do this for every bill and then add up the amounts. This is what you need to be putting away into a separate savings account each payday to cover the bills.
As part of your savings plan, don’t forget to save for emergencies.
An emergency fund is a separate savings account to cover the unexpected financial upsets in life. Car motor blown? Unexpected medical bill? That’s what your emergency fund is there to cover.
Build an emergency fund the same way you would your savings plan by automatically transferring a set amount each payday to a separate savings account.
For more information see:
STEP 6: GET OUT OF DEBT
It’s hard to be thrifty and save when you’re forking out interest for yesterday’s purchases.
Here’s the easy 3 step plan to get out of debt:
1. Stop using credit to make purchases. It’s impossible to get out of debt if you continue to incur it. From now on, no more new debt.
2. Automate your debt repayments just like your savings plan. If your minimum monthly repayment is $100, pay $50 each payday and do it automatically, so you can’t spend that money on something else.
3. Snowball your repayments. That means paying the minimum on all your debts except for one. On that one debt, pay as much extra as you can afford. Once that debt is paid off, use that whole amount as the extra repayment on the second debt, and so forth.
The combination of being thrifty with your money and having a solid savings plan in place will practically eliminate the need for consumer debt in the future.
For more information see:
The secret to becoming more thrifty can really be summed up in one little phrase: spend less money.
In reality though, you’re not actually trying to spend less money, you’re changing your habits to ones that will cost you less money. Focus on the habits and the savings will come.
Melissa Goodwin is a writer and the creator of Frugal and Thriving who has a passion for living frugally and encouraging people to thrive on any budget. The blog is nine years old and is almost like her eldest baby. Prior to being a blogger and mum (but not a mummy blogger), she worked as an accountant doing other people’s budgets, books and tax.