Saturday, February 26, 2011

Frugal living: where to start?

I get questions about frugal living and many of them are the same, so I'm going to try to answer a few of them in the next few posts. The most frequently asked question about frugal living is simply, "Where do I start?"

You start where you are. Overly simplistic? Maybe, but let me explain.

Some people ask their question in the form of a wish list. "I want to get out of debt and buy a house. Where do I start?"

Others say, "I just want to quit living paycheck to paycheck. Is that even possible? I don't make much money so what can I do?" 


Both of these people need t start where they are, and neither of them know where they are, so that's the first step. Find out where you are. Frugal living isn't about magic or wishful thinking. It's about getting a grasp on your life. It's about controlling your money instead of letting it control you.

Anyway, if you're not sure where you are, how can you get away from it? So start here:

Track your expenses every day for at least a week. All of them, from a cup of coffee to the mortgage payment. Don't overlook anything because it's a small amount. Every penny is important for this.

Look over your expenses. Sometimes this is all that's needed to open your eyes to where you are wasting money. If not, separate them into categories, like bills that need to be paid, impulse purchases, things bought from guilt (office party, gift for someone you've ignored, etc,). Make your own categories as you sort through your records.

Now comes the fun part. Pretend that you had access to only 75% of the money that you spent during that week. What would you have eliminated? This will give you a look at the things that are unnecessary expenses.

Now you know where you are and you can get to work getting to where you want to be. Cut out the unnecessary expenses and pay off bills with it or put it in a savings account.

5 comments:

  1. So very needed common sense advice Pat...but some don't even have that...know where you are, know where you want to go, and set about a set course. Good Post

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  2. Oh, I like that idea--having access to only 75% of your income. Neat thought! It would definitely help me decide what is REALLY important in my life.

    What's important to some might not be to others. For instance, some people might love their daily Starbucks espresso. Not me, I'd rather splurge on garden seeds or trellises so I can get this year's crop started.

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  3. Thanks, Bevlion. It's not easy to see ourselves where we are. That's why tracking expenses is so important. It's easy to spend money and not realize how much or where.

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  4. That's exactly it, Stacie. Find out what's important, then you can go to work eliminating what isn't.

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  5. Money management is important if we want to start a frugal living.Meaning controlling oneself by setting aside the wants which are not important in life.A simple living style will help you achieve your goal.For instance, before buying a certain thing, take into consideration the importance of that item.

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