Some people look at being frugal with their funds as a quick fix solution to a money problem they are dealing with now. However, if you want to be really money savvy, you need to think of it as more of a lifestyle choice, rather than something you do for a short while. That’s not to say that you can have fun, and enjoy yourself in life, it just about keeping an eye on where your money is going and balancing out the necessities with the treats. Keep reading to see what we mean.
Immediate
Draw out cash
One of the quickest ways to save as much money as possible is to work out what you have left for the month and then take that amount out in cash from the bank. It should include anything that isn’t a direct debit or standing order that goes straight from your bank accounts.
The purpose of this is to make spending a more tactile and thought-provoking process. It may be easy to just waft that debit card over the reader to buy things because your balance remains something that is apart from and you.
In fact, if we were honest, the figure we have to spend in a month is usually quite nebulous, as not many of us know exactly what we have got left at all times. However, by taking out all the cash you have to survive on (like you would do on holiday), it makes you much more aware of what you are spending and whether it’s really worth it.
It also gives you a visual reminder of exactly what you have left, something that can help you to not overspend on smaller everyday items.
Just remember that it not the best idea to carry an entire month’s cash around in your wallet at one time. Instead, separate out each week and the major bills and only take out what you need each day. Otherwise, if you lose your wallet, you are going have a serious problem to deal with.
Write a shopping list
Are their truly people that still head to the store without a list? Unfortunately yes, there are, and it costs them a fortune!
Supermarkets, as wonderful and convenient as they are, are actually temples to consumerism. They are designed in every way to direct your attention to certain products and get you to part with your money.
If you think about it makes sense really, as the profit in each individual item is so small that they would have to sell a lot to make any money, and you can be sure they do.
The best thing you can do to protect yourself from their temptation is to write out a list of ingredients for the entire week before you go. Yes, I know it may take a little extra work, but is definitely worth it for all the money you can save.
Save on groceries for a short-term financial benefit.
Also try to limit visits to once a week, as even if you go for the list system for you big shop, popping in every day for one or two items that you forget is sure fire way to spend more than you want to. The reason for this being that you will get caught up in their promotions and end up coming out with a basket full of groceries is that you haven’t budgeted for.
Set yourself a no spend challenge
The last thing that you can do in the short term to give a more frugal life is set yourself no spend challenge. That is when you see how many days you can go without spending any money at all.
Of course, this does not include your usual outgoing of bills and such, but more your personal money or any that isn’t accounted for. Read more about this sort of challenge here.
Medium term
Pay off debts
The most important medium-term action that you can take to live a more frugal life is to get on top of your debt situation. The reason for this is that debts actually costs money! That’s right using credit for your purchase will cost you more than if you had just bought the item outright. It is their fee for letting you pay it off over a longer period, as you are essentially borrowing from them.
The problem with this is that if you aren’t paying off these debts quick enough, you end up accruing load of charges and extra fees, making it an incredibly expensive way of buying things.
To deal with this it first necessary to identify which debts are costing you the most. They will be the one with the highest interest rate. Then knock them off one by one. While you do, this is OK to pay just the minimum balance for the rest as you will get to each one in turn.
Be selective with your credit
Once your debts are paid off, it’s time to get a bit more selective with your credit purchases. Now I’m not saying don’t ever buy on credit because actually, the whole system is such that you need to have a decent credit history to get larger loans for things like cars and houses.
However, you need to let your frugality and financial savvy lead you in this, rather than your burning desire to have the latest pair of trainers or the newest three-piece suite.
Controlling your credit is a big part of being frugal.
To help you with this you should pick credit schemes that offer pre-qualification because then your credit score won’t be affected by the application. Also, find one with the lowest interest rate you can, and if possible look for 0% interest buy now pay later schemes. Just make sure that you pay them off before the interest gets added on at the end of the term.
Having saving goals to work to
Last of all of the medium term methods for living a more frugal life, it very important to set goals for your savings. Aiming to have a great big pile of money like Scrooge McDuck may seem like a fun idea, but it’s all too easy to let life come in the way if you haven’t got something more tangible to work towards.
Instead, make a list of all the big-ticket items that you want in the next 10 years. Then order them from the most important to the least, and bingo number one is your saving goal to work to now and near future.
You can even work out how much money you will need for each and then break that down into average monthly savings you have to make so you will know the sort of timescale you will be looking at. Something else that is guaranteed to keep you motivated.
Long-term
Medical insurance
Longer term frugality is something of a paradox, as it usually entails spending money now on a smaller scale to save money in the future.
Private healthcare insurance is an example of this, as you have to pay out for the policies monthly now, but it can save you an absolute fortune later on if you or your family do experience a serious medical issue that needs expensive long-term treatment.
Just make sure that you shop around before signing on the dotted line for your insurance, as there are many providers out there offering slightly different coverage thing at different rates. Check out things like this private health care comparison guide for some additional information that can help you identify the key things to look out for when making your choice. After all, you will want to be certain that conditions you are most concerned about will be covered by your policy.
Buy a house
Another spend now and save later issue for a frugal life is that of buying a house. Yes, they can seem like a huge purchase at the time, especially when you have to save up for a deposit, but buying your own place is actually a great long-term investment.
This is because to live as an independent adult you will have housing cost in the form of rent or a mortgage anyway. Paying rent may be slightly cheaper in the short term, but all you are really doing in lining the pockets of the landlord. You don’t come out with anything in the end, and then you have start from scratch.
However, when you pay a mortgage for your own place, you are slowly knocking amounts off of what you owe. Something that can reduce your monthly housing cost to zero if you pay the entire mortgage off. Alternatively, it can mean that you make a larger profit when you sell the property.
You are then free to put this towards another property, or you could downsize and use that money for some of the more fun things in life. Things such as taking early retirement, a holiday of a lifetime, or even that classic car you have had your eye on for years.
You see living frugally isn’t about reusing tea bags and never having anything new. In fact, you can be frugal and have a very nice life. It’s all about being smart financially and ensuring that you stay in control of your money, rather than your money being in control of you.