Frugal living tips with a big impact on your finances

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Here are some Frugal living tips with a big impact on your finances, since money doesn’t grow on trees.

First, we take a look at where you probably burn most of your money and then you can read some of the methods to stop that.

Where you spend most of your money

Let me show you where You probably spend your money:

As data from Eurostat, OECD and U.S. Department of Transportation show clearly that the expenditures are quite similar: (Ranked by most to least expenses)

  • 1. Housing
  • 2. Transportation
  • 3. Food
  • 4. Personal insurance and pensions
  • 5. Healthcare
  • 6. Entertainment
  • 7. All other expenditures
  • 8. Apparel and services
  • 9. Education
  • 10. Personal care products and services
  • 1. Housing, water, gas
  • 2. Transportation
  • 3. Food and beverages (no alcohol)
  • 4. Other
  • 5. Recreation and culture
  • 8. Restaurant and hotels
  • 9. Furnishings, household equipment
  • 10. Clothing
  • 11. Health
  • 12. Alcohol and tobacco
  • 13. Communications
  • 14. Education

Track your spending and make a budget!

First, the data is always an average, which means that it could look different individually. Therefore, it is so important that you take a look where you spend your money!

Ask yourself this question :What if I go part-time or quit my job?

You have to take a look at your finances and figure out for how long you can survive without. 

The idea of being frugal can and should be a reduction in your spending and therefore be able to spend more time doing your stuff rather than working.  

Your Personal Finance and Budgeting Spreadsheet

Take a look at this Google Sheets document from Tom Allen where you can put your numbers. It is actually a nice table that shows you on one page where your money flows.

Frugal living tips with big impact

Make a budget and track your spending

The first step is the most important and that’s why I repeat it here. 

To buy or not to buy

This method is well known, but also not often used. The idea is that if you want to buy something, put it in your cart and wait. Wait for a whole month and decide then again if you really need it. 

I actually did this for clothing or my razor. I waited a month and I actually didn’t remember them. 

Reduce your spending

Take again a look above at the biggest household spendings or at your google sheets table. Go into the details and try to remove a few things, almost like becoming a minimalist. 

For instance, if eating out or takeaway is quite expensive, try to work on that and research for meals and tupperware that you can take with you. 

However, do not blindlessly buy 10 tupperware, but look for the best solution. A nice sandwich works too.

Do not keep up with the Joneses

I found this on Reddit and it shows the saying perfectly:

“My husband and I are high income (~$300k combined gross) in a relatively HCOL big city (not NY or SF). We bought a house recently that was comfortable, great location, good school district and big enough for a family […] Trouble is I’m starting to regret our decision. Our friends/co-workers are buying nicer, bigger houses and it feels kind of bad. They are looking for big forever homes and I feel like our “forever” home sucks in comparison. Will we be the “poor” friends? “ Source

If you compare yourself with others, you just lose. This happens not just with houses, but everything else. In my case, it was for instance the newest phone and the need to upgrade it to match my friends.

Pay your bills in time. Always.

Another cash-eater are the fines you get if you don’t pay your bills. Therefore, always pay your bills or set up an automatic recurring payment.

In addition, if you can’t pay your bills, you need to drastically cut your expenses since that can’t continue.

Cancel your subscriptions and cable

This is one of many ways to reduce your spending. A small 10 dollars a month may sound not much, but if you have several subscriptions it really adds up fast. 

Compare your mobile subscriptions and search for a cheaper one, cancel Netflix and do more that could save you hundreds. 

Get a smaller home or flat

Do you remember the statistics above? Everything around housing, water and gas are the biggest chunk of the expenses. That’s why you should also take a look at your situation and try to go cheaper. 

However, do also consider time and transport. It doesn’t make sense that you live outside the city, if you have to pay more on transportation, gas, time and more.

Buy some things second-hand

Try to look up on ebay or other platforms if your item is available second-hand. It can be a car, a phone or clothes. You don’t need the newest things and if you recently bought something, use it as long as you can. 

Every cent counts

Every point I made before is part of a bigger scheme. The frugal living tips with a big impact do not just come from one or two reductions, but from the mass.

Try not only to reduce spending on one thing, but on every category. Every cent you save from wasting is a success. Therefore, establish a budget and try to reduce.

Finally, I hope that you have learned a few tips with a big impact on your finances. Nonetheless, I recommend you to read this article which shows a breakdown of your spending.

While you have learned the big money burners, do not forget that also the little things add up! Here you can read Frugal Living Ideas and Tips.