Anyone who knows me, knows that for me, frugal isn’t something that I turn on and off, but a way of life, a set of behaviours that have now become habits which have meant large rewards over time.
For me, budgeting strictly for a time period has never worked. I would be able to do it and pay off what I needed to do, but then huge restriction on my finances would yo yo and I would splurge. Much like a physical diet to try and lose weight, it has been proven that healthy habits and a sustainable diet and exercise plan have shown to have the best results; and it is this philosophy that I have applied for my finances to really make them fat (ok this is where the weight loss comparisons end)
This is going to be an individual process for everyone, depending on your expenditures and salary. How I worked this out was creating a table.
First column, things I NEEDED that had no room to wiggle on.
Second column, things I wanted, that I considered my main wants and things that gave me happiness
Third column, Things I wanted but felt I could use less of, could restrict.
Fourth column, Downright wastes of money and purchases I regretted.
Looking at this formula, it is probably easy to see where to start. The fourth column may seem obvious but sometimes when it comes to spending we can have short memories and its important to track the regrets and really acknowledge them.
My fourth column was filled with cosmetics that weren’t quite right or expensive skincare products that didn’t work as good as the budget buys. Once I had a solid list of regrets and the dollar value next to lose regrets, it very much solidified them and became very clear to my mind next time I walked in to get my skincare or cosmetic fix.
The third column was next, looking at this like trips to the movies, drinks etc. I didn’t want my savings to restrict my life, but was there little parts I could cut back on. For the next 6 months I gave myself a 3 drink minimum and cut out cocktails and other expensive drinks and stuck to wine (I love wine, so it was just exchanging one like for another cheaper like) and realise I saved over $350 during this period without restricting how much I went out or the time that I had. Trips to the movies, which in Sydney are so pricey have been reduced and changed to watching a movie on Netflix and some cheap take out have changed a $40 night (minimum for a cheap sit down dinner and a movie ticket, add on $10 plus if you want popcorn etc at the movies) to a $10 night. As someone who loves to go to the movies, its not a swap I always want to do, but have just saved movie visits for the occasional movie I really want to see.
The second column for me was things that maybe aren’t needs to survive but things I hold pretty dearly to being able to live a happy life. Netflix gets a lot of use, but realising that we never used more than one devise at a time meant it was pretty clear we could cut down our plan. A fast and effective internet with lots of data, but making sure you get the best plan available and shop around.
These same principles can then also be applied to the first column, yes these are things you need, but doesn’t mean you need to spend more than you need on them.
Many people try budgeting and setting out their future spending, but fail to learn from their past spending habits. This method makes it more about habits and setting challenges based off the past experiences, tailored to your own living. Its about saving as a lifestyle.