Like most people who acknowledge how bad their financial situation is, chances are you have considered frugality in search of a financial turnaround. If this sounds like you, your decision is a sound one.
Frugality is an effective strategy that, when carefully implemented, can lead to instant results. Deciding not to spend, or spending significantly less, you are sure to see results. Your wallet will be fuller with extra cash to spare.
Several personal approaches lead to financial independence. A part-time job, getting another degree, investing, or getting a part-time job are some of the common strategies. Unfortunately, these tactics take a while to give returns. On the other hand, frugality is spontaneous and that is why most people struggling to reach financial independence.
But is frugality an ideal long-term strategy?
Frugality is viewed as a less effective long-term strategy based on a simple argument. You cannot really save much with frugality. Regardless of how many avenues in your life that you optimize, you will hit a limit where you cannot squeeze further.
Too much of this strategy will drain the joy from your life. The best long-term strategy would be to improve your sources of income by investing wisely. That way, your path to financial freedom will gradually begin to take shape.
As humans, we tend to complicate even the simplest of ideas. We are wired to always look for shortcuts that in reality are not short, tricks to give us a push, and hints that are in most cases anything but. This can be said of frugality and attaining financial freedom. Below are the rules of frugal living that will transform your financial situation.
Know your money
Whatever it takes, you must be extremely acquainted with your income, expenses, and where every dime goes. This is the key principle of a frugal life. The lack of knowledge, proper budgeting, and a saving habit, your quest for financial stability is doomed.
Live below your means
You have probably heard how you should live within your means. While that is a great way to live, living below your means is the ultimate way to unlock the real financial magic in your life.
The extra cash in your wallet is the capital you need to invest and the fuel behind your financial muscle.
If you are unable to raise a surplus, be it by trimming down on your expenses or increasing your income, you will never experience financial freedom.
Spending vs investing
Although spending and investing tend to feel the same, these are two different things. Investing is all about using your money in return for tangible returns. On the contrary, spending is using your hard-earned cash on items that will depreciate in value or with no long-term benefits.
Frugality does not mean investing and never spending. Instead, it is about understanding the difference between the two and knowing how to put your money to work most of the times.
Say no to consumer debt
The interest you pay on a consumer debt is a form of taxation paid for living above your means. Although the credit card has saved you several times, using credit to finance your lifestyle comes with disastrous consequences. The hefty charges and interest will strain your financial life and hamper your financial success.
Wants vs needs
As you read this post, there are millions of advertisers across the globe skimming new ways to confuse your wants and needs. Our needs are usually straightforward and they include nourishing food, healthcare, and shelter among others.
On the other hand, the smart lavender-infused kitty litter box that is also self-cleaning is not a need. But we would be primitive beings without life-changing devices in our lives.
Here are more strategies to help you succeed in a frugal life:
- Reuse old items. As times goes by, you have accumulated several items in your house that are no longer used. Such items are ideal for a yard sale. Despite decluttering your space, you will also earn a few dollars in the process.
- Loose change. Stop leaving loose change on the counter. Instead, put them in your coin bank. After a while, you will be shocked at the amount that you will have saved after a month.
- Coupons. Lookout for coupons and always cut the ones that are useful to you. Although tiny, these papers will save you tons of dollars on every purchase.
- Manual work. Another great way frugal living can help you to attain financial freedom is by taking up jobs that you would have others delegated to a professional. Such chores include gardening, cleaning, carpentry, and plumbing among others.
- Extra income. In addition to your regular monthly salary, you should always endeavor to direct any extra income to make all your payments and savings. Do not fall for the expensive holiday trips and spontaneous buying. This should come only after paying off your debts.
- Be resourceful. Frugal living with the aim of attaining financial freedom does not mean depriving yourself of essentials in life. You must, however, put your creativity to use in order to get them. Instead of signing up for health club membership, use your backyard or a park near your home for exercises.
Frugality is common among students and recent graduates due to limited sources of income. For people who are not naturally frugal, this might be an unpleasant tactic that you are likely to struggle with if you are to enjoy the full benefits.
The primary goal of a frugal life is to minimize expenses in areas that are less important and redirecting you cash to areas that are of more importance. As such, the areas in your life that you apply this strategy to are unique to you. Take time and focus your effort on developing your frugal fingerprint. However, the result should not feel uncomfortable.