3 Easy Steps for Frugality Beginners
Frugality is a rising trend in response to ramped consumerism. At first, frugality can seem boring and restrictive. The idea that you reduce spending and find cheaper methods to live is an outlandish idea when you have grown up in a culture that normalizes unnecessary spending. Societal messages reinforce the idea that “things” will make us happy, successful, and more desirable. However, with household expenses growing at a faster rate than income, frivolous spending is more likely to be a source of stress and depression.
In order to achieve financial freedom, you need to spend less money than you make. Often there is a debate around whether to spend your time making more money or finding ways to spend less money through saving. The truth is that both strategies are important and necessary for building wealth in different ways. It is often more risky and involves more effort to increase your income but the amount you can make is unlimited. It can also speed up your wealth building.
On the other hand, saving money is usually easier and more efficient way to increase your income/outcome gap. Frugality can have several benefits in addition to saving money. Frugality forces you to be creative and have new experiences, you learn that you can be happier with less, and you tend to place more value on things when you do spend money. You also may find yourself living a simpler and easier lifestyle.
Frugal living can sound intimidating at first. But don’t worry about comparing yourself to seasoned frugal savers. First, identify your values, or what is important you, and list your values in order. This will help guide you to reduce spending without sacrificing your happiness.
Second, review your budget and look for automated spending that you don’t use. Cancel any automated spending that is not important to you and notice any fees that you may have been paying without realizing it.
After you have the automated spending and fees under control, notice where you are spending the most money and list your top spending categories. According to the Bureau of Labor Statistics, the top expenses in the Average Americans budget are:
Consider how you can reduce your living expenses either through buying or renting a smaller space, moving to a less expensive area, or renting out one of your rooms. There are a lot of good reasons why you may end up not changing your living situation, and that is fine because costs can be cut in other areas. It's important to at least consider your options and if any might work for you in this large expense area.
The second largest expense in the American budget is typically transportation. One of the easiest to avoid financial mistakes is financing a new car that you do not need. If your car payments are eating a large chunk of your monthly budget, consider trading your car in for an older used car. It is always important to do your research with frugal living so make sure you are buying a cheaper car that is still in good condition so that repairs do not ruin your savings. You may also think of ways to reduce your driving, by moving closer to your job or batching errands together.
The third largest expense area is food. This is also one of the easier areas to reduce spending. Begin by developing habits geared towards cooking food at home and buying less processed food. This will improve both your bank account and your health. Remember to start with small easy changes first and work your way towards more drastic changes later.
Once you have incorporated these new habits, start noticing where you can get food items cheaper, such as buying in bulk or from smaller stores. Fresh and frozen produce tends to be cheaper than processed food. Buying dried goods such as rice, beans, and oatmeal from bulk bins can be significantly less expensive than buying them prepackaged.
Make sure to research any savings apps, websites or cards based on your shopping habits. For example, apps such as Ibotta give you cash back for shopping or the Target Red Card that saves you 5% on your Target purchase.
Spending time to review and adjust your top spending categories is a good way to start your frugal lifestyle. There is no one perfect ways to do this. Everyone has different life circumstances and personal preferences that will dictate what expenses can be cut and what cannot be changed. However, you will save the most money if you can reduce expenses in these largest spending areas.