Oct

5 Frugal Tips for Better Living

site management on October 10th, 2011

Top Frugal Living Tips
By Jerry Hanel

In today’s economy, some people are getting scared. But there’s no need to fear if you have a good budget and a plan for how to implement that budget.

Unfortunately, that’s where many of us go wrong. We have a budget that can show us exactly how to spend our money without getting into trouble, but we don’t have any formal method for helping us stick to that plan. Let’s take a look at a few tips that can help you stick to your existing budget and stretch your hard-earned dollars that extra mile.

First, we have to make sure that we have plugged the leaks. The first two tips look at how to do that.

1) Money at the end of the week should be saved, not spent. I know this should probably go without saying, but it doesn’t. Many of us have a budget, and at the end of the week, after all of the bills have been paid, we may have some money left over. Our initial reaction is to spend that on a treat for ourselves for doing so well at sticking to the plan. But in doing that, you just shot yourself in the foot. Instead, take the money that is left over and stash it away into a savings account where it can earn interest. I know you want a treat, but in the future — when something unexpected comes up — you’ll have a little extra cash.

2) Have an emergency fund. Each week, plan to save a specific amount. Not for retirement. Not for treats. Not just what’s left over. Sure, we add the step from tip number one in here, but this is above and beyond that.

You need this fund specifically for the fact that we don’t know what waits around the corner. If we have learned anything in the past month as a country, it is that the economy we enjoyed for the past several years isn’t guaranteed. While we can work to get the economy back on track, we can’t guarantee that everyone else around us will work as hard. And an economy isn’t about what we — as individuals — can do. It is about what we — as a collective — do.

Put aside 2% to 5% each paycheck into an emergency fund until you have a minimum of 6-months of your current income in there. If you can, use your company’s direct-deposit features to directly put the money into the emergency-fund account. You probably won’t even notice that it is missing, but it will be a nice padding should you lose your job or face some sort of financial snag.

With these tips firmly in place, we can move on to the tips that will save you money each and every month.

3) Reduce the waste. Each month we spend untold amounts on things that some system or other said we used, but we didn’t get any enjoyment or service from. For example; when we leave for work, if we leave the lights on in the house, the electric meter is still spinning even though no one is home to enjoy a well-lit room.

Go through your day-to-day routine and see if you can find places to trim out waste. Specifically look at anything that is hooked to a meter or auto-bill system. Good places to start are your electricity usage (including heat and air), your cell-phone usage, natural gas usage, telephone and internet charges, and even your cable TV.

Unplug items that are not currently in use, and trim down services that you can do without. While it’s true that a single electronic device doesn’t “trickle” very much energy, if you have ten or twenty, you now have a leaking seive, each “trickling” out a steady stream of electricity — and money. Unplug them and just watch how much electricity you can save.

4) Get accountability. My wife and I share the responsibility of the budget. We also share what we’ve spent each day. Our usual first conversation when I get home starts with “I spent X on …” and we list each item we purchased that day.

Why? Because if you have to hold yourself accountable to someone, you are much less likely to purchase something that, deep down, you know you shouldn’t.

And finally,

5) Fun isn’t expensive. There are many ways to have fun and enjoy life. My wife and I found that the majority of our “discretionary funds” were directed toward entertainment and eating out. We were really good with money, until it came to trying to find something to do. Then we would go to a movie, or go out to eat. But now, we are exploring new ways to keep ourselves amused and entertained without the need to pay someone to do it.

One way we are keeping ourselves entertained is to walk around the neighborhood. In the process, we’ve discovered a quaint little trail bridge that crosses a nearby river. I never knew the bridge was there. My wife will fix peanut butter sandwiches, and we make a picnic out of the walk. We go out occasionally and take pictures or pick flowers for her crafts. Since we already own a digital camera and computer, we can take pictures for free. We look at them when we get back, and keep only one or two to remember the fun evening. Total cost for a great day with my wife: $0.

While I’m certain that you already have a great plan, the idea here is to plug the gaps where your cash can sift out. Then re-evaluate some of the numbers in your plan to ensure that each category has cash left over at the end of the paycheck. With the money that is left over, don’t spend it, but save it. You never know when it will come in handy, and when that day comes, you’ll be glad it’s there.

Jerry Hanel is a freelance writer, computer programmer, and over-all financial scrooge… but in a good way. You can find more frugal living tips and financial information on his blog.

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