As we enter the holiday season, it can be easy to get caught up in the fervor of wanting to buy all of the presents on your loved one’s list. However, it is also easy to overextend your means and credit line in order to do so. This is why it is important to be meticulous in your planning and prudent in your spending.
Frugality is an underappreciated quality. Like a muscle, it can be developed over time, even by those who struggle with compulsive spending. The key is a combination of keeping a budget, cutting costs, and engaging in targeted spending that will ultimately provide a high return on investment.
Benefits of living frugally
Frugality isn’t about choosing to be miserable — it’s about minimizing the unnecessary spending that doesn’t contribute to long-term happiness and, instead, saving that money for things you find more important. Depending on your priorities, those savings could be directed towards retirement, education, travel, or presents for your family.
How to be more frugal
Frugality is a lifestyle — and achieving this type of lifestyle may take some adjustment. Mostly, however, it takes awareness. Detailed below are a few steps you can take to integrate frugality into your everyday life:
Track All Spending
It is impossible to know where or how much you can cut back until you are fully aware of what you spend in the first place. To accomplish this end, keep all receipts and upload spending information on a spreadsheet. Your spending may fluctuate from one month to the next, so plan accordingly. Advance planning is especially important as the holiday season and other periods of heavy spending approach.
Think About Wants Versus Needs
When you want something badly enough, it can quickly come to feel like an absolute necessity. In all likelihood, however, many of the things you purchase and services you use are nonessential. After you’ve determined your typical monthly spending, look for areas in which you can cut back without suffering.
Find Affordable Substitutes
Once you’ve determined that you want something more than you need it, perhaps you can find a more affordable, yet similarly satisfying alternative. Do you spend hundreds of dollars a year on a gym membership? You can easily get all the exercise you need with a good pair of shoes or a workout DVD. Do you rent movies on a regular basis? Many of those DVDs can be found at the library. Those regular trips to the coffee shop can be cut out if you invest in a good coffee maker.
The immediate sticker price should never be the sole factor when making purchases — especially big purchases. Your goal should be to invest in clothing, furniture, vehicles, and other items that last as long as possible. More expensive doesn’t necessarily mean better quality, but at the same time, a lower sticker price doesn’t always mean an item is more affordable in the long-term.
A few small lifestyle shifts can make a world of difference as you get your finances in check. And thankfully you don’t need an advanced degree to learn how to make those changes. Although let’s be honest, it wouldn’t hurt.