Being frugal gets a bad rap. People tend to go into panic mode when they think that the only way to save money is by being frugal. They conjure up images of living in a storage locker or cardboard box. They think it means never buying anything and living a boring, miserable life.
But this is far from the truth.
Frugality could be your best strategy for saving more money and meeting your financial goals. And it does not mean you have to live a boring, miserable life.
What Exactly Does Being Frugal Mean?
According to Wikipedia, “frugality is the quality of being frugal, sparing, thrifty, prudent or economical in the consumption of consumable resources, such as food, time or money, and avoiding waste, lavishness or extravagance.”
We’ve provided lots of tips in previous blog articles about how to cut out the waste from your budget. Cutting out waste or being prudent with how you spend your money is how to be frugal. And this is the way to get out of debt, save money and meet your other financial goals.
Tracking Your Money
If you have a modest income, you can still save money and meet your financial goals simply by being careful about where your money is going. If you track your money, you’ll be amazed at how much might be going down the drain and not in your pocket.
And, even if you have money, you don’t have to spend it all. Frugality should still be a part of your lifestyle so that you can funnel more money toward emergency and retirement savings, investments and life goals.
So, let’s take another look at being frugal. You don’t have to be miserable or deny yourself the things you need.
Wants vs. Needs
Being frugal does not mean that you don’t buy the things you need if you can afford them. But it does mean being more consciously aware of the difference between purchasing something you need and something you want. Most “wants” can be put off until later.
For instance: you need water, but do you need bottled water?
You need clothes, but if your goal right now is to get out of debt, maybe you can skip the designer labels.
Transportation is also something you need, especially if you work outside of the home. Let’s say you need to buy a new car because there’s no reliable public transportation. A car is something you need. But does it have to be a luxury car? With frugal consciousness, you will realize that a car loaded with all the stuff you want can wait until later. For now, you just need the basics.
Beware of Impulse Buying Triggers
One of the biggest triggers for impulse buying is social media. The FOMO syndrome inherent in social media surfing causes you to spend money you don’t have on stuff you don’t need. Targeted advertising by brands can also trigger impulse spending simply because everywhere you go online there is an ad tailor-made for you. Limiting your online time may be one way to keep more money flowing to your financial goals.
Make a “Later” List
Be clear about the items you need and the items you want. Put the “want” items on a list, kind of like the “save for later” option you find on e-commerce sites.
Being Frugal Means Developing Healthy Financial Habits
Refocusing your thoughts so that saving money becomes a habit is essential to meeting your financial targets. For instance, being frugal would mean taking measures to lower your monthly utility bill. Why give the utility companies your money? You can put it to work for you instead. Develop a habit of energy efficiency.
What about that money you give to the IRS? Frugality means making sure that you keep your money in your own hands. Do you need to revisit your W-4? Do you get a big refund every year because too much withholding is coming out of your paycheck? If so, you’re giving a free loan to the IRS. Be frugal and keep that money in your own savings accounts.
Being frugal doesn’t mean that you can never go out and have fun with your friends. It means being more conscious about how your entertainment expenses are going to impact your financial goals.
Many consumers living paycheck-to-paycheck spend several hundred dollars every month on coffees, meals out, take-home and entertainment venues.
If you love coffee, save up and buy a good quality coffee maker. Meals out with friends?? Suggest potluck and take turns hosting. It could be even more intimate and fun than eating out. Check community bulletin boards and news channels for free stuff to do. Almost every venue offers free or greatly discounted tickets at certain times.
Protecting Your Identity
What does this have to do with being frugal? Everything. Remember, we said living a frugal lifestyle is a mindset. It’s a shift in consciousness to prioritizing your financial goals over needless spending.
A poor credit score costs you money. You will receive the most unfavorable financing terms on credit cards and loans. Maybe your credit score is low because there are errors on your report. Perhaps there is fraud due to identity theft. Check your credit report at least once a year and take proactive measures to protect your personal data.