For some people, frugal living is the key to helping them improve their financial situation. After the Great Recession, a lot of consumers were introduced to the idea of using a frugal budget. This is the budget that allowed them to lower their expenses so extra money can be freed. This freed money is then used to rebuild their shattered financial lives.
Some people used a frugal budget to help them survive after an unexpected job loss. Others had to pay off a lot of debt. Everyone was spending a lot less than what they used to and it was proving to be a difficult time for the country.
Now, the economy is doing great and things are picking up once more. Credit is being used with so much confidence that some people may be going back to their old habits.
This is probably a great time to reassess our financial position and see if we should go back to frugal living just so we can practice smart spending. In a society that upholds consumerism, this may not be an easy transition for everyone.
The thing is, living frugally is not really about depriving yourself. If you do it correctly, you can actually enjoy what you love to do while leaving a lot of room in your budget for savings. Of course, it all boils down to your perception of what frugality really is.
A lot of people may have varying definitions but this lifestyle is simply concentrating on what is important to you and letting go of the expenses that put up appearances. It is focusing on what you want and not what society wants you to have.
According to the analysis found on MoneyBoss.com, there is a great change in the way Americans spend on things. For instance, Americans are spending 23% more on food outside of the house compared to 40 years ago. That means more of our budget goes to dining out. If you think about it, food is a necessity. However, someone who practices frugal living will eat more of their meals at home because that is how they can lower this particular expense.
This is why the first step to living a frugal life is to define your wants and needs. Unless you have a firm grasp of what these are in your life, it would be difficult to implement frugality.
Frugality is knowing what is necessary and what you can live without
To start with, a need is something that you absolutely must have in order to survive. These include food, shelter, water, clothing, utilities, and health care.
Wants are the other expenses that you have in your life. It is not part of the basics and you will find that you can live comfortably without it.
While it is easy to define the two, it is hard to identify the lines that separate them. You see, food may be a “need” but spending on expensive restaurants is not. If you really want to be successful when you try frugal living, you have to know how to draw the line between the two.
While there are categories in our household budget that we should never sacrifice, that does not mean we should be careless about how we will spend. As illustrated with the food category, it is a need but there are expenses that can classify it as a want. We need to eat but we do not necessarily have to do it in a restaurant.
Let us go through three different “basic needs” that will help us live a comfortable life. Then let us identify when it is a necessity and when it already becomes a luxury.
Let us start with the most expensive part of our budget – housing. This includes your mortgage/rent, utilities, repairs, taxes, etc. It is a bit tough to lower this expense but there is one simple trick – live in a smaller house. Of course, if you are a family of 6 or 8, you need a bigger house. But do you really need to give all your children their own room? Wouldn’t it be more practical to have the boys share one room and the girls share another while you and your spouse have one room? That would mean you can live in a 3-bedroom house. Shelter is a basic necessity but you do not need a big house. That is when it becomes a want. Unless you work from home and you need an extra room to do your work, then keep the rooms to a minimum. Not only will it cost less in terms of mortgage or rent, it will also cost less when it comes to your utilities.
Food and Water
The next category is food. We have mentioned one example of how this need can sometimes become a want. However, there are other ways that you can cross the line when it comes to your food costs. For instance, buying branded items when there is a cheaper alternative may be a want – at least, this is true if the quality is practically the same. Wasting food is also another thing that you need to be careful with. Frugal living frowns upon anything that is excessive to the point that it is being wasted. You may have saved money buying in bulk but if a lot of that goes to waste, then you are not really practicing frugality.
This is another need that can easily cross the line to become a want. It is a popular justification that we need proper clothing because it projects who we are. This is important for those who are building a career. While this is true, you cannot justify expensive clothing when there are so many cheaper alternatives out there. Nobody will look at the brand of what you are wearing as long as you look clean and put together while wearing it. The same is true for your shoes. Who cares if your shoes have seen a lot of winters as long as it is clean and keeps your feet warm and dry. If you want to implement frugal living in your wardrobe, try to find out how you can use one piece and style it several ways. All it really takes is some creativity to make your clothing look great without having to spend a lot on it.
The other basic necessities follow the same pattern. Frugality is all about using your skills to make something yourself rather than spend a lot of money on it. If you can learn how to sew your own clothes, that would be great and probably cheaper than buying new ones.
How to transition to a frugal lifestyle easier
There is no doubt that transitioning to a frugal lifestyle can be tough. This is especially true if you are a spender. One can even say that it can be a painful process. According to an article published on USNews.com, scientists at MIT, Carnegie Mellon, and Stanford have been studying how the pleasure and pain areas in the brain are triggered when a person shops. The study revealed that an acquisition of something makes us feel pleasure while a high price lights up the pain centers in the brain.
If you adopt frugal living, buying stuff will no longer be as common as you did in the past – which will lessen the pleasure that you will get from it. This can add to the difficulty of living a frugal life. But despite that, there are some things that you need to know about frugality.
- Your situation is unique. While you need to look at other frugal people for inspiration, your own frugality does not have to be defined by them. You all have various needs based on the type of lifestyle that you prefer. For instance, some people might think that a car is not a necessity but if you live in a place where public transportation is hard to reach, then it becomes a need and not a want.
- You need to be true to yourself. If you think that a “want” is necessary to make you productive, then it is okay to indulge. Depriving yourself of the things that make you productive might ruin you in the long run. Do not frustrate yourself trying to live a frugal lifestyle that is not appropriate for your specific personality and situation.
You need to surround yourself with the right people. According to an article published on Phsy.org, a frugal shopper is usually hard to sway and immune to the influences of society – at least up to a certain extent. However, when they are with close family or friends who shop excessively, they tend to make spontaneous purchases too. This is probably why you need to choose who you will be with if you want to continue with frugal living.