Frugality is the act of sparingly using and maximizing available resources. Most people mistake it for being a mean person or a miser.
However, it is a powerful tool when steering toward your goals.
Frugal living operates on two fundamental principles: the exercise of discipline and the wise use of your resources.
We are currently in a financial crisis coupled with uncertainties and high inflation. The cost of living rising month by month and our incomes remain virtually the same.
Embracing frugality and minimalism will help us navigate these troubled times.
The Financial Crisis
A financial crisis is a consistent fall in asset value accompanied by rising debt levels. This strains the people around whom the economic model we build around.
Factors such as excessive borrowing, spillovers from other countries, and currency devaluations come to bite as our economies are interdependent.
For example, coming from a pandemic where things seemed gloomy and people lost their jobs and, for some, tragically, their lives.
The government printed more money to cushion her citizens. This fuelled inflation a few years down the line, and we’re all feeling the pressure now.
Similarly, the 2008 financial crisis was orchestrated by over-leveraged mortgages, and eventually, homeowners couldn’t liquidate their assets when they needed cash most.
Consequentially, couldn’t afford their mortgage repayments leading to eventual housing market collapse.
Impact On Personal Finances
What does this have to do with me now? You ask.
Our financial well-being depends on the prevailing economic circumstances. Therefore, it is important to take charge of our financial lives and control the controllable.
By focusing on what is in our control, we steer our lives in the right direction. Guess what you are in charge of? Your Income. Expenditure. Assets and Liabilities.
Stand guard at the door of these four avenues as frugal living revolves all around them.
Evaluate Your Current Financial Status
How do your finances look? Every day we talk about politicians needing financial/lifestyle audits and compel them to declare their source of wealth.
However, it doesn’t occur to us; we need to do the same for ourselves.
This creates self-awareness and keeps us on our toes, as we can tell when we are faking ourselves out.
Identify Areas of Financial Vulnerability
What are your sources of income? To be financially secure, we need to create multiple sources of income.
The average millionaire has at least seven streams of income. This isn’t by accident. They must know something, right? To avoid overreliance on one source of income.
We evade the need to start all over again in case our only source of income takes a hit.
Therefore, we should look into having more sources of income. Consider them as taps that fill your tank (Read: bank account) from which you draw.
The more the taps, the better.
Similarly, check your debt levels. Debt can wreck your chances of living a financially fulfilling life if mismanaged.
Set Realistic Financial Goals
Set SMART financial goals: Specific, Measurable, Achievable, Realistic, and Timely.
Most people drift around with a vague idea of what they need their lives to be. This shouldn’t be you. Set more direct goals and break them down into chewable bite-sized steps.
Finally, set a timeline in which you intend to achieve them.
Fund Your Dreams. Your dreams give you a sense of purpose and staying on it will be a significant source of motivation.
Tie a part of your expenditure to this and watch yourself grow. Having nothing to shoot for breeds complacency.
4. The Budget: Strategies for Frugal Living
As we’ve seen, financial allocation and goal setting form the basis of our expenditures.
However, we need a brick-and-mortar strategy to follow with every paycheck.
A. Create a Comprehensive Budget
Living on a budget is a crucial part of our lives in our quest to create lasting riches.
It is setting a plan to direct our finances to things that matter to us. i.e. family, recreation, investing, etc.
Let your budget reflect your values, income, and expenses wholly. Then knit it down to the last dime.
That is Income - Expenses = Zero Balance.
A good budget should cover your day-to-day expenses and incorporate upcoming expenses through a sinking fund.
A sinking fund is a bucket in which you put funds for upcoming enormous expenses such as college education, weddings, birthdays, anniversaries, etc
B. Identify and Cut Unnecessary Expenses
To effectively live on a budget, define your needs. This gives you leeway when deciding what expenses to cut.
Make your life easier by giving your expenses a scope in which you operate. For example, housing, food, utilities, and Transport are non-negotiable basic needs.
Therefore, they come to the forefront of your budgetary allocations.
5. Frugal Living Tips: Basic Needs
After satisfying your basic needs, we will then squeeze value out of every dollar we spend. Use the following strategies to milk the juice out of your hard-earned money.
Carpooling:
Share a car with your neighbors when headed off to work or dropping their kids to school.
Use public transport
Public transport is a cheaper alternative to private cars as you cut on expenses such as fuel, insurance, and regular maintenance.
Renting out an extra bedroom
Rent out the spare bedroom as Airbnb and have it bring you a few bucks every month.
Get a roommate
Consider getting a roommate to help in cost sharing. This is a helpful tip for singles and college students. However, do your due diligence before bringing someone on board as a roommate.
Bulky Shopping
Enjoy economies of scale by purchasing the things you need in bulk. For example, doing a month's worth of shopping at ago.
6. Reconsider Brand Loyalty
Shop around for companies offering similar products at discounted prices. Be loyal to yourself and your finances.
6. Smart Shopping and Saving Techniques
Frugal living is about getting the best deal for our money as well as detaching from our material possessions.
To get the best deals, do comparison shopping before the actual purchase. This not only helps with saving money but also “kills” the emotional attachment we may have to a product or a particular store.
Make use of shopping apps to make the process painless. You can then negotiate with your favorite store and see if they’re willing to match the best price provided by their competitor.
B. Strategies for saving on groceries and household items
Food is our biggest expenditure. Consider growing your own groceries or food produce. This will save you a ton of money and get to eat healthy foods.
If you’re unable to grow your own foodstuff, consider buying groceries in bulk and refrigerating them to avoid wastage.
Buy eco-friendly appliances to save on energy and switch them off when not in use.
C. Use cashback and couponing apps
Take advantage of cashback deals offered by credit card companies when shopping.
However, repay them in full at the end of every month to avoid falling into the debt trap.
When doing online purchases, make use of couponing apps to help you find the best discounts on your purchases. That way, you get to save a ton of money in the comfort of your couch. Some apps even have Chrome extensions to help you lock in those deals. It doesn’t get any easier.
7. DIY and Homemade Solutions
Embrace a Do It Yourself mindset to fix minor issues in your home. For example: Clean your own backyard, fix leaking sinks/taps by yourself, learn about basic car repairs, etc.
You get the idea. Only call a professional for problems you can’t fix yourself. Your future self will be thankful.
Also, explore the option of homemade beauty cosmetics and shaving at home instead of going to the barber. That way you get to save a few bucks.
8. Maximizing Your Income
A. Exploring additional sources of income
There is a limit to how much we can cut back without sacrificing a decent living.
However, there is no limit to how much money we can make.
In that spirit, look beyond cutting back on your expenses and increase your income. By growing your income, you’re giving yourself a bigger basket to draw from; as well as more options with your money. Go for it.
Explore part-time job opportunities to earn an extra buck. Even better, begin a scalable side hustle outside of your day job to give yourself a better chance at succeeding.
Starting a scalable business online hasn’t been easier. Make use of content mill sites such as Crowd Content, Upwork, and Fivver to source cheap labor.
You can as well use the platforms to sell your services.
B. Renegotiate Your Salary and Benefits
Probably you work a 9 to 5 job and setting up an online business isn’t possible or selling your services on content mill sites. How about setting up a meeting with your employer and asking for a raise?
You won’t get any if you don’t ask. Well, you’ll have to write a letter showcasing your abilities and how valuable you’ve been to the company.
Show them the disparity between your rate and current market rates, and even better, present an offer letter from a different company.
A word of caution: Be weary of your timing in this discussion and, two, be ready to walk in case things take a wrong turn.
Good Luck!
9. Embracing Frugality and Sustainable Living
Frugal living makes us all better and should be a part of our daily lives. It is the wise use of our resources by being a benefactor to others.
For example, giving out that dress you’ve outgrown to some charity helps someone in need and declutters your wardrobe.
Or donating books; your kids no longer need since they moved to the next grade, helps a child in need.
Using eco-friendly appliances not only helps with your electricity bill but also cares for the environment.
As you can see, frugal living is a great way to make the world a better place, detaching from material possessions and helping others.
10. Thrifty Entertainment and Recreation
Entertainment can eat a good chunk of our paycheck. From dining out with friends and gobbling a couple of beers to tv subscriptions.
Cancel out Tv and other subscriptions and only use them on a need basis. Adopt healthy ways of having fun, like outdoor activities on a budget. Consider family get-togethers and taking your beer home instead of going out clubbing.
Join think groups to troubleshoot ways to be resourceful and have fun without hurting your pockets.
Book clubs and chess clubs are great ways to exercise your brain and get to have fun.
11. Seek Community Support and Resources
Hey! Walking this path won’t be roses. Especially in a world where we’ve normalized consumerism and the emergence of the microwave generation.
Staying at will require you to join like-minded people and support groups to walk the journey with you.
Look out for Facebook communities or Reddit threads to engage in as you endure the journey. Look for support groups in your neighborhood for the personal touch and belonging effective it brings with it.
That way, it’ll be easy to navigate the tough seasons of your life.
12. Build Resilience for Future Financial Challenges
Besides having a support group to help you outlast your difficult phases, you need a good understanding of the basics of financial planning.
Build an emergency fund to cover 3 to 6 months’ worth of expenses. This cushions you against getting into debt in case of a crisis.
Use cash instead of credit while shopping.
Develop a long-term outlook in your investment decision-making process. This enables you to reap the fruits of the compounding effect. Having good habits leads to the same effect, too.
Most important, don’t forget to take care of yourself. Self-care is a crucial part of minimalistic living since you’re the driver. Staying healthy will see you outlast your difficult times and eventually succeed. Seek spiritual, mental, and physical development to keep up with the tides of life.
Conclusion
In conclusion, frugal living is less about being mean to ourselves and more about being a benefactor to those we care about.
We do this by maximizing the resources we’ve and still being able to lead a fairly comfortable life.
Having a long-term outlook, supportive groups, and financial planning are essential for minimalist living.
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