Just before I get into this article I wanted to clarify something that typically comes up as people often see people who are frugal the same as someone being cheap. If you want to become financially independent, especially in the early phases when you’re paying off your debt you need to change to having a frugal mindset. So before I get into what I mean about this I just wanted to clarify the big difference.
There’s a difference between being cheap and being frugal. A frugal person cuts down frivolous expenses, sticks to budget and saves money. On the other hand, a person labeled as cheap wouldn’t pay a premium price irrespective of the quality of service.
Warren Buffet is considered as a frugal person whereas your neighbor, who doesn’t pay a tip to the waiter even after having a sumptuous meal at a restaurant is a cheap.
Being frugal and being cheap – A real life scenario
Just because you chose to stick to a budget doesn’t mean you’re cheap. There’s a subtle difference between the two and you can know about it from the following example.
A frugal person would skip the drink order at a restaurant and pass on the appetizer to save money. But, he would calculate tax properly and pay a good tip to the waiter unless the service is really very bad. On the other hand, a person labeled as cheap would deliberately forget to pay a tip. He would eat very less on his own money and but would have a ravishing meal at others expense.
A frugal person would try to live on his household budget make a positive change to his finances. Him/Her wouldn’t deprive himself or herself of all the comforts of life. An individual labeled as cheap would try to pinch penny at every occasion and stop enjoying life altogether.
For instance, a frugal person would stop having a cup of latte from his favorite coffee shop everyday. He or she would perhaps have coffee at home and save money throughout the year. On the contrary, a person who is cheap would stop having yummy coffee completely.
Hopefully you understand now the clear differences and why you shouldn’t be afraid to start changing towards a frugal mindset. Some people are afraid to be label by their friends/family of being cheap so make sure you make them understand that your just frugal next time your at a restaurant and you don’t want to pay that $4 for a coke with your meal.
When I spend money, I seek out value. I want the best quality product at the lowest price.That is how I explain my spending habits to people when making purchasing decisions.
Here are 11 ways to become more frugal
1. Accept frugality and stop believing the myths.
First, you will need to accept frugality.
The word “frugal” has many negative associations. People think that if you are frugal, then you are cheap, boring, and even a bad person. Many assume that frugal people only eat rice and beans (and nothing else ever), that they just sit at home all day and do nothing, that they have no hobbies, and more.
Many people think that happiness comes only from spending money. However, that is a sad way to think about money. Yes, money can help improve your life, but it’s not everything. And, if not managed well, it can lead to debt, stress, and more.
Being frugal isn’t always what happens when you are out of options.
Sure, there are times when people must buckle down and spend less than they usually do, like if you are living paycheck to paycheck. However, living a frugal life can go beyond cutting things from your budget. It can be something that isn’t just a short-term solution– it’s one that you can benefit from for the long-term.
What I’m talking about is just living your own life and learning how to stop wasting money by not engaging in needless spending just to keep up with others, going into debt, spending beyond your means, and so on.
There is absolutely no reason to go broke in order to have a good time. I believe that you can balance living a good life while saving money.
The power of frugality means that you can still live a great life while on a budget. Money doesn’t have to dictate how good of a life you have.
There are many reasons for why a person may choose to be frugal, such as:
- You want to avoid debt.
- You want a simpler life.
- You know that you can still have fun while being frugal.
- You want to appreciate everything and anything around you.
- You want to stop trying to impress others.
Despite all of the negativity that comes from saying you’re frugal, it’s still how I’ve chosen to live my life. Sure, I still have my splurges, but I am very conscious about how I spend my money.
I don’t feel like I’m missing out on what life has to offer.
I know a lot of people that are choosing to live a more simple life by being frugal, and they are some of the best people I know.
Sadly, those negative assumptions and myths about frugality cause many people to avoid it all together.
And, for many people, it isn’t until they are much older that they realize how much money they wasted when they were younger. They realize that they could have been more thoughtful about their purchases, saved more, and spent more time focusing on finding happiness through simplifying their lives.
However, by that age, it can often feel impossible to try to make up for all of that lost time when it comes to saving, earning money, and investing.
So, in order to become more frugal, I want you to be more realistic with your spending and understand that frugality isn’t a means to an end.
Instead, it’s just the beginning.
2. Ditch that expensive car.
The other day on Facebook, someone mentioned that they finally bought their dream car as a reward for their new salary. Their new salary? $40,000 a year. Their new car? $40,000!
You’re telling me that you are fine with working a whole year just to have that car? And, that doesn’t even include what you’ll spend on financing costs, fuel, maintenance, insurance, etc.
Sadly, this isn’t completely surprising.
The average person in the U.S. spends $483 on a new car payment and $361 on a used car payment.
This is crazy especially when considering that many take out high-interest rate loans in order to make their car payments.
While $483 a month may be affordable to some, I’m going to assume that it’s a lot of money for most people. Plus, once you add in gas, maintenance, insurance, taxes, registration costs, and more, that number is going to be much larger.
If you want to be more frugal and take charge of your financial situation, then you will need to analyze your car expenses.
3. Quit with the excuses.
Everyone is guilty of making excuses, and I know that people will continue to make them until they realize that excuses are just that– excuses.
Just think about the last time you said, “That won’t work for me because (insert your excuse here).” Or, “I can’t cut that expense out because….”
I always hear a lot of reasons for why a person can’t be more frugal.
There are plenty of legitimate reasons for why some people have financial setbacks, but there are still many people making excuses for why they can’t achieve their goals or why their life is bad.
The problem with making excuses is that this bad money habit can hold you back, which means that you may never reach your financial or life goals.
To put it simply, excuses prevent you from living the life you want. You’re giving up before you’ve even begun.
Next time you think that you can’t go without a certain expense, be realistic with yourself. For example, so many people are drowning in a paycheck to paycheck lifestyle, and yet they pay hundreds a month for their cell phone. For many people, you’re probably making an excuse for keeping your cell phone. Instead, you need to be more realistic with your spending.
4. Know that you don’t deserve everything.
Yes, you may be awesome and think you deserve something, but should you really be buying it? Just because someone else bought a 100 inch 3D TV (or a mansion, nice car, gadgets, had a crazy-expensive wedding, etc.) that doesn’t mean you should as well.
You might think, “Oh, well they have a comparable job to mine, so, if they can afford it, then I can too.” Or, “They’re the same age as me, I should be able to buy that as well.”
However, you have no idea how this person is paying for it. Maybe they saved for years, or maybe they are just putting everything on their credit card.
By thinking that you deserve everything, you are hurting yourself. Instead, you should be realistic with your financial situation and only buy what you can truly afford.
5. Be happy with what you have.
If you’re able to read this blog, then you probably have a better life than many other people in this world. It’s important to realize that not everyone has access to a computer, an internet connection, or a comfy spot to read from.
So, the next time you think that you can’t survive without something, be honest with yourself about whether or not that’s actually true.
This doesn’t mean that you can’t enjoy life and have a good time.
The power of frugality means that you can still live a great life while on a budget. Money doesn’t have to dictate how much you enjoy life.
There are plenty of ways to live an awesome life while saving money. Yes, you can still see your friends, have fun with your loved ones, and more– all while staying on a realistic budget.
6. Realize the less money you spend, the less you need.
By spending less money, you’ll decrease the amount of money you need in the future. This includes money for emergency funds, retirement, and more.
This will help you to build your emergency fund quicker and reach retirement sooner.
Just think about it: If you are already living a frugal lifestyle, then you will be used to living on less in the future. This means that your retirement savings doesn’t need to be as large, which means it may be easier to reach that savings goal.
Also, if you spend less money, you probably won’t need as much in your emergency fund, which can also help you fund that sooner!
According to the U.S. Bureau of Economic Analysis, the personal savings rate in the United States has averaged around 5% in the past year, and averaged 8.33% from 1959 until 2016.
Mr. Money Mustache has a great graphic in his blog post The Shockingly Simple Math Behind Early Retirement that shows you how your savings rate can dramatically impact when you’ll retire. For example:
- With just a 5% savings rate as mentioned above, it would take you 66 working years until you reached retirement.
- A 25% savings rate means that it would take you 32 working years to retire.
- A 50% savings rate means that it would take you 17 working years to retire.
- A 75% savings rate means that it would take you 7 working years to retire.
So, by saving more of your money, you are likely to retire sooner. Sounds amazing, right?
7. Finally stop paying for cable.
The average monthly cable bill is over $100. By the year 2020, the average cable bill is expected to be around $200 a month.
That is just crazy talk.
If you need to be frugal, then getting rid of your cable might be the first place to look.
I don’t pay for any form of TV (not even Netflix!), and it definitely helps me to live simply.
However, if you aren’t ready to quit paying for TV all together, there are lots of options that allow you to only pay, usually much less than cable, for the shows you want.
8. Don’t let your wants turn into needs.
One of the problems in understanding wants and needs is realizing that sometimes our needs can cause us to spend more than we should, meaning needs can turn into wants.
Here are some examples of basic needs turning into wants:
- Water- To stay hydrated, all you need is water. However, this need can turn into a want with things like bottled water, soda, coffee, etc.
- Food- Food can come in many forms, and the healthier the better. But, going out to eat all the time turns this need into a want and can cause you to spend more than necessary.
- Shelter- The place you decide to live doesn’t have to break your budget. You can rent a room from someone, live in an apartment, a tiny home, a mobile home, etc. But, this need becomes a want with overspending and thinking you need something way above your means.
- Clothing- Clothing needs are things such as pants, shirts, and underwear so that you can go out into society and not be naked and put in jail. You can get affordable clothing by shopping at a thrift store (such as Goodwill or Plato’s Closet) or buying items that fit within your budget. But, wants are expensive clothing and shoes, such as Louis Vuitton, $10,000 suits, etc. You don’t need these items in order to survive.
9. Declutter and downsize.
Frugal people LOVE having less stuff. So, if you want to be a frugal freak, then you will probably want to declutter and downsize.
Decluttering your life to simplify it can lead to many benefits. Here are some examples of how decluttering and downsizing your home will allow you to,
- Save money. In some cases, a bigger home can cost more due to higher utility bills, more clutter being bought, higher insurance, more maintenance and repairs needed, higher purchasing price, etc.
- Have less clutter. The bigger your home, the more likely you’ll have empty rooms that you feel the need to put stuff in.
- Spend less time on maintenance and repairs. If all the other factors between two homes are the same (age, location, etc.), a bigger home is more likely to take up more of your time and money due to more things breaking.
- Spend less time cleaning. A larger home is going to take a lot more time to clean than a smaller one.
10. Quit spending money on entertainment.
If you truly want to be more frugal, then you should (and can) find entertainment that is free and/or affordable.
Cutting down your entertainment budget doesn’t just save you money, it is just one of the ways to simplify your life and be more frugal.
Have you tried having a no spend weekend before?
11. Stop wasting money impressing others.
As you probably noticed, there was a common theme above– in order to be frugal, you need to stop caring about what others think about you.
You’re probably thinking, “Well, I don’t care!” However, for many people, that’s simply just not the truth. Many people constantly spend money to impress people and to keep up with the Joneses. This may mean buying a nicer car than you can afford, moving into that McMansion, and more.
Now, I’m not saying you can’t buy nice things. But, I am saying that you need to be realistic with your spending and truthfully tell yourself whether you need or even want that item, or if you are just trying to impress someone else.
No one cares about what you have or what you’re trying to show off.
No one likes a show off anyways.
So what are you doing today to become more frugal?