5 Ways to live more frugally within your means

Author: Kedy Jk

With the current financial crisis, it is becoming increasingly important to learn to live within your means. Financial strain can have a negative affect on many areas of your life, including your personal well-being and your relationships. The time for taking control of your finances in order to live a more frugal life is here, and by following a few simple tips, you can work toward improving your financial situation for the future.

Assess the Damage

One of the most important steps in living within your means is to assess the damage that has already been done to your credit history, and this is where your quest for frugal living should start. By taking a look at your credit report, you will be able to determine how well you have done with living within your means in the past. With this information in mind, start keeping track of everything on which you spend money each month, and jot down each of the items you purchase in a notebook. This information will help you to get a sense of how much of your hard-earned money is being used on actual essentials, and you can begin to see which items you may have been able to do without.

Determine the Cost of Your Debt

To start living within your means, determine the balances of your outstanding debt. Even more importantly, look at your statements and determine the total interest amount you are accruing each month, as seeing this number can motivate you to set financial goals and stick to them. Additionally, this information can help you to determine which debt you should pay off first, as it would make the most sense, mathematically, to pay off the debt that has the highest interest first. Make sure that you pay the minimum on accounts with lower interest while paying off as much as you can on the account with the highest interest until that debt is paid off.

Set a Budget

Setting a budget and sticking to it often sounds like a daunting task, as it is a lot more work than the mentality of “spend it and forget it.” However, establishing a budget is one of the most important ways for you to get a hold on your finances and to get them back on track. When you are establishing a budget, start small by budgeting only one or two expenses at a time. You don’t have to go out and buy a fancy software program, so stick to the basics and write down your income and expenses. Remember that your ultimate goal should be to spend less money than you earn, so your income should be higher than your total expenditures.

Use Cash

One step in your quest for frugal living should be to pay in cash whenever possible, as this strategy can help prevent you from falling into a trap of debt. Paying in cash allows you to find the items that you need without accruing interest, and once your cash is gone, it is gone. Consult with your bank to determine if there is a way to adjust your personal settings so that you can set a spending or withdrawal limit for yourself. These strategies may help you to become more accountable for your spending habits.

Find Ways to Save

Take a hard look at your budget and consider ways that you could save money, as there may be areas in which you are financially overextending yourself. For example, when you go to the grocery store, be prepared by making a list of the items you need and print out any relevant coupons. Stop paying retail and price shop online, and if possible, consider buying secondhand items over the Internet, at thrift stores, or at your neighborhood garage sale. Examine your expenses and determine which are necessities and which you can cut out or cut down. Some of these may include:

  • Nail and hair salons. Buy self-application hair color or nail polish.
  • Gym memberships. Find fitness options you can do at home or for free.
  • Cell phone bills. Consider switching from a Smartphone to a standard phone plan.
  • Cable TV. Select cheaper options or stream movies and shows to your computer.

Learning to live within your means can be a difficult process, especially when you are used to spending now and worrying later. However, a few simple steps can take you a long way in terms of getting back on track financially. View your credit scores, track your expenditures, find ways to save, and you will be on your way to living within your means in no time at all.