In the past few years, I had to get creative with how to stretch our income and grow our savings. Although our financial circumstances have changed, the act of living frugally is something that has stuck with me. I’ve learned living simply has impacted our lives for the better. Primarily, making a budget and sticking to it has given us more control over our finances and helped us save money.
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1. Make a Budget
This first step is the most important: Make a budget.
To get started, determine your monthly income. Then, add up all your bills and monthly expenses and subtract from your total income. This will show you how much money you do or don’t have leftover after paying for necessities.
I’m a big fan of “zero-based budgeting” (popularized by Dave Ramsey) because every dollar has a purpose. If you use this method, be sure to include your saving along with your spending into your budget. For example, you will allot a set amount of money to both your savings accounts and groceries, shopping, travel, gifts, etc.
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2. Cancel Unused Subscriptions
If you’re really trying to save, start by eliminating unnecessary subscriptions. Do you really need Netflix, Hulu, Paramount, Apple TV, HBO, and Disney? Probably not. You can always cancel your subscription and re-subscribe if you find you’re really missing that streaming platform.
If you go through your bank statements, you might even find you’re paying for subscriptions that you forgot about. When I did this during COVID, I realized we were paying for TWO Netflix accounts, one of which we didn’t even have access to.
3. Cut the Fat at the Grocery Store
I’ll admit, this one can be hard, especially since the cost of groceries has gone up. However, it is a flexible part of the budget, and there are many ways to save. I’m still working on perfecting our grocery budget, but here are some tips that have helped me:
- Buy the store brand
- Buy essentials in bulk
- Shop grocery store sales
- Grocery pick up
- Meal planning
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4. Withdraw Cash for Spending Money
We’ve found this is the easiest way to stick to our budget. My husband and I each withdraw a certain amount at the start of each month to use for things like shopping, eating out for lunch, and going out with friends.
Another trick I recently discovered is withdrawing $100 a month to put away for Christmas. If you start at the beginning of the year, by December, you will have $1,200 set aside.
5. Make Food and Drinks at Home
Eating out adds up big time! If you spend $5 on coffee and $10 on lunch every day for five days a week, that’s $75 a week. That equates to almost $4,000 a year! I’ve became a stickler for making coffee at home and packing our lunches every day.
We also save a ton of money by eating most of our meals at home. When our family of four goes out to eat, it’s easily a $100 outing, including the tip.
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6. Shop Around for Insurance or Refinance
Once a year, shop around for the best rates on car and home insurance. You can get big discounts for bundling the two together, and even more for paying car insurance in full every six to 12 months.
Refinancing is also a good option to lower your monthly payments if your interest rate is high. However, keep in mind that when you refinance you’re usually adding time onto the length of your loan. Better yet, if possible, try to avoid financing at all. (See tip number 7.)
7. Pay Off Debt and Pay Cash for Everything
Let me preface this by saying I understand this isn’t a reality for everyone to achieve overnight, myself included (hello, student loans). However, it’s always a good goal to be debt free. Interest is essentially throwing money away, so if you’re able to pay off any of your debt, do it as soon as you can.
There are several methods for paying off debt. A popular method is the “snowball method.” In this method, you tackle your smallest debt first regardless of the interest rate. Once that small debt is paid off, you add that payment amount to the next smallest debt, essentially paying more on your next debt to pay it off faster. Repeat for your next debt payment.
You can also work towards paying off debt with the highest interest rate first — especially anything with an interest rate over seven percent.
Instead of financing things like furniture, pay cash. If new items are not in the budget, shop resale or Facebook marketplace.
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8. Live Beneath Your Means
Once you create your budget, you will better understand how much money you have to work with every month. If you’re spending more than you’re making, you’re living above your means. The goal is to spend less than your income to live beneath your means.
This one can be really hard to hear. I heard a statistic that most people spend the majority of their money on a home and car. It might be time to downsize your house or car if you are still unable to save money after cutting out unnecessary spending in other categories.
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9. Save Money for Retirement
If your employer offers a 401k, contribute! This is a smart option. Even better, if your job matches contributions, it’s a good idea to put in at least as much as they match.
If you don’t have a 401k, you can ask a financial planner about setting up a Roth IRA (see tip 11).
10. Teach Your Kids How to Budget
It doesn’t make sense that schools don’t teach finances (or at least not in depth). Many of us took out student loans without truly knowing the life-long financial implications. After all, we were 18 years old. Many of us didn’t have parents who taught us about finances. It’s really up to us to pass on good habits and attitudes regarding money.
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11. Seek Help from a Financial Advisor
Collin County has many knowledgeable financial advisors who are happy to help get your finances in order.
Living frugally and saving money can be challenging, especially when the cost of living continues to rise. I hope this list gives you a few ideas to cut back on your spending. I would love to hear your tips on living frugally and saving money in the comments!
