Thrift is knowing how to live well within one's means. It means spending less than you earn so that you can safely overcome a crisis when it arises, knowing that you can rely on both your savings and the habit of using your money wisely to survive. While some decisions could save you thousands of dollars, others just a few cents. However, remember that by looking after small change, money will take care of itself.
Steps
Step 1. Keep track of your expenses
You can't think of saving for tomorrow unless you already know how much you are spending today. As you use your money as you normally would, take note of every single penny you spend for a week, two weeks, or a month to get an idea of what your money is spending.
Step 2. Review your spending habits
Each expense can be fixed, variable or discretionary. Fixed expenses are mandatory expenses that are always the same and cannot be influenced by your decisions. Rent or health insurance are examples of this. Those variables, on the other hand, are compulsory expenses whose cost can be influenced. Some examples are utility bills and transportation costs. Finally, discretionary expenses are expenses that, if necessary, can be eliminated completely. Alcohol, entertainment and restaurant dinners are just a few examples.
Step 3. Reduce your expenses
- Eliminate discretionary expenses that don't give you any satisfaction. For example, don't participate in the gift exchange at the office if you don't like it.
- Cut the discretionary expenses that satisfy you to maximize the fun-money ratio. For example, indulging in a leisurely dinner once a month at a restaurant rather than visiting Mc Donald's once a week could save you 10 euros and give you more pleasure for the money you spend.
- Try to think about how to cut your variable expenses. Use the tips below. Think creatively about ways to cut costs.
Step 4. Get rid of debt
Debts cost you a lot of extra money. It may be wise to eliminate all discretionary fees until you have paid off. Interest on debt does not bring you any pleasure, and getting into debt is something you can choose not to do.
Step 5. Save for the things you want to buy
Buy only things that you can pay for in cash. Don't ask for funding, don't use payment plans, don't keep a debit balance on your credit card. Paying in cash will save you money.
Step 6. Celebrate your success
Enjoy the things you have, knowing that you have worked hard to get them. Note your peace of mind knowing that you have money in the bank. Share tips on how to cut costs with other thrifty people. Think positively about the frugal lifestyle.
Step 7. Cut your expenses further
Each budget has margins that you can still reduce. Streamline yours even more. Add a new tip every few weeks. Decide which one works for you and strictly follow it.
Advice
- The comparison of expenditure. Compare different brands and package sizes of the same product. Sometimes the bigger the container, the cheaper it is for weight. Compare prices from multiple stores. A supermarket will rarely have the best price on everything. On big purchases like cars, the savings can be even bigger when you compare the expense.
- Use public transportation. You will save gasoline and wear and tear on your vehicle. If possible, getting rid of your vehicle altogether would be an excellent cost-cutting measure.
- Cook your meals. Restaurants are expensive because you pay for the service, the atmosphere and the space in which you eat. Cooking your own meals allows you to customize recipes with maximum savings. If you have space, horticulture offers even greater savings when combined with preparing your own food.
- Buy things that are reusable. In the long run, throwing something away and buying it back usually becomes more expensive than buying a single but durable thing. Disposable versus cloth diapers are a good example.
- Use what you already have. Of course, buying nothing is always cheaper than buying something. Look around the house. Do you have another item that could do the same thing? Can you come up with a solution from the materials you already own?
- Only replace what needs to be replaced. You can buy a set to refill ink cartridges instead of buying a new one every time yours runs out. You can buy a new wheel instead of buying the whole stroller back.
- Repair broken objects. Repairs are often as simple as using a paper clip, applying some glue, or applying a coat of paint. While tools are required to repair, it may be cheaper to invest by buying some for future repairs.
- Avoid using your credit card. They look better than they actually are, but it's exactly like borrowing money from a friend. You will always have to pay back every penny, thus reducing the practical aspect. Save your money and instead get a checkbook and / or debit card if you don't have time to make withdrawals at your bank.
- Borrow things from friends or neighbors. In many cases, you don't need to own an item, you just need to use it on an occasional basis. If you have a good reputation (meaning you return items on time and in good condition), you may want to borrow it from neighbors or friends who are less thrifty than you. For example, unless you're a keen camper, you'll only find yourself using a camping tent a few times a year. Don't buy one, but borrow it from your parish boy scout leader.
- Avoid branded products. Famous brands are usually more expensive. There are often cheaper and lesser known alternative brands that provide products of equal or even higher quality.
