Unless you’ve won the lottery in the past year, the current American economy is forcing just about everyone to be more frugal in every aspect of life. For a lot of people, “frugal” may not even be a word they’ve heard or used a lot lately. Frugality isn’t taught in schools (what a great idea that would be, right?), but it’s a lesson most everyone is learning through the ‘school of hard knocks’ and in real life these days. As the need for living a frugal lifestyle becomes more apparent, we’re still getting a lot of advertising messages that being in debt is OK, that spending more than we make is part of “modern life.” I’m here to tell a different story…
Debt is not fine, especially consumer debt. Debt is an addiction and an expensive one. If you’re learning this the hard way, it’s time to look at trimming expenses. It’s even better to learn these lessons early, but better late than never.
The ultimate aim is to live on 80-90% of what you earn. Starting, you can bank the rest in an interest-bearing account. You don’t need to get into sophisticated investment vehicles; a suitable bank account that pays interest in both checking and savings and has no fees is an excellent place to start, and one that most people only aren’t doing.
First things first, tabulate your current expenses. Don’t guess! Look at the past three months of expenses… Find out the “real numbers” on what you’re spending on restaurants, coffee, eating at home, going to movies, and everything else. If you want to be detail-oriented about this, carry a small notepad – or use the note-taking function on your smartphone – and write down everything you spend for at least a month. I guarantee you’ll be surprised at what you see in 30 days!
What you find may be painful, but it’s worth the effort writing out your expenses. You’ll quickly notice that there are fixed expenses (like your mortgage and utility bills) and variable expenses (like food and entertainment). You’ll discover lots of ways for money to vanish down rabbit holes by examining your variable costs! Now comes the job of finding ways to trim those expenses:
Being frugal and learning how to save money takes patience and practice, but the rewards are worth it when you find you’ve saved enough money to get out of debt, go on vacation, or buy a new car.
Make small changes every week to form new habits, and before you know it, you’ll have a whole new way of living and extra money in the bank.