If asked, most people would agree that frugality is generally a good value to have. In practice, many people struggle to put frugality into action. However, you might be surprised to learn how important being frugal is to building wealth. Most people do not become rich by throwing their money around. Multimillionaires famously often dress modestly, live in normal houses and don’t necessarily drive the latest model of car. With the tips below, you can also adopt a more frugal lifestyle that will help you use your money more wisely.
Before you do anything else, you can begin to cut your expenses. Look at your spending and where most of your money is going, and ask yourself how to reduce that. If you are a renter, maybe you could move to a cheaper place or get a roommate. You might have expenses that you think of as fixed, such as your student loan payments or your home and auto insurance, but you may actually be able to get cheaper rates for these. You can visit one place to shop for personalized rates for these as well as for personal loans. If there’s something you need to finance that you don’t have the money for, a personal loan is often a better option than a credit card since it usually offers a lower interest rate.
Making some quick cuts is an important start, but when hoping to achieve your savings goals and sustain them long term, you should dig a little deeper and think about what money means to you. For some, it can represent security while for others it can be a source of stress. Maybe you are one of those lucky individuals for whom it has an entirely neutral connotation as a means to an end. Whatever the case, better understanding your relationship can help you understand some of your motivations around saving and spending.
In addition to understanding your attitudes, it’s important to know your reasons. Why do you want to be more frugal? Do you want to become one of those multimillionaires, or are you simply seeking financial independence? Maybe you want to pay for your child’s college education or you want to be able to purchase a home with cash in order to avoid all debt. Perhaps you think it’s important to regard time itself as a resource and money as one measure of how you use that resource. Whatever your reasons, keeping them in mind can help you focus during the next step, setting goals.
Having concrete goals is one of the best ways to ensure that you stick to a frugal plan. Build in ways to measure your success by naming specific figures and dates. Maybe you want to have $2000 in your savings account by the first of May in the following year. A goal this specific gives you the opportunity to review it later and determine whether you are on the right track. Your goals can be short-term or long-term.