As human beings, we tend to have the behavior of living extravagant lives that drain us of the money that we can save. As much as we aim to generate as much income as possible, there’s no way your savings can increase if you don’t start using wise spending habits. Frugal living is all about fixing the money leaks in your life while still living a fulfilling life and this can only be achieved if you change your perspectives.
Here are six tips to help you start living a frugal life:
1. Know your money
Your main aim should be to know how much you earn, how much you spend and where each dime of your money goes. These habits are the foundation of frugal living, and without this knowledge, saving is like a dream that can never come to be.
2. Start living below your means
Most people are used to living within their means, but living below your means is much better. The surplus amount from living a below-your-means lifestyle can be used as capital for savings and investing for long-term wealth building. If your income is low, you need to think of other ways of growing your income or start by cutting your expenses.
3. Differentiate between spending and investing
Spending is the act of using your money to buy something whose value is likely to depreciate over time and has no return value such as going out for dinner, vacations etc. Investing, on the other hand, is the act of spending money on tangible assets such as a house, a business etc. Nonetheless, frugal living doesn’t mean you should overlook spending, after all, its part of life.
4. Shopping quality
Frugal living is all about saving, however, don’t choose cheap over quality since you might end up spending more on cheap items compared to what you would have spent on a quality item. For instance, a pair of shoes selling at $20 seems like a great deal, but they are not worth your money if you need to replace them after every four months.
5. Avoid consumer debts
A credit card can save you money by enabling you to buy things on credit. Nonetheless, consumer debts add no value to your savings due to the interests and other charges billed to your credit card. Therefore, ensure you clear the amount you spend on shopping.
6. Differentiate between a need and a want
There’s a difference between what you need to live a normal life and what you want. Needs include nourishing food, good healthcare, secure shelter etc. Wants, on the other hand, are things that you can do without such as a car, a big flat screen TV etc. Being able to distinguish the two will help you in making wise buying decisions.