With the ongoing pandemic, inflation and the looming threat of another global recession, many of us are looking for ways to cut our costs and exit the proverbial rat race.
Households face still-growing financial pressure, leaving many to look for ways to relieve the burden. For most, that means finding a way to minimise our costs and embrace frugality.
Frugality offers a measure of stability - a way of approaching our lives that prioritises stability and our personal concept of “enough” over societal expectations. Financial success isn’t something we achieve all at once. Instead, it’s the result of years of planning and carefully developed spending habits. If we spend beyond our means, even a high-paying job or inherited wealth won’t ensure our financial security. Conversely, a frugal lifestyle can provide long-term financial stability even to those of us who earn relatively little.
What does it mean to be frugal?
Frugality is not about spending as little as possible on any given day. Rather, it’s about spending with intention. It means focusing on long-term spending efficiency, staying within your budget, and prioritising your savings over your spending. For many of us, this is difficult. We feel uncomfortable, even ashamed at the idea of not “being able” to buy things that we want for ourselves or our kids. A frugal mindset isn’t inherently one where you go without, though. Instead, it’s about using your money to buy something else that you want for yourself and your kids - financial security.
Identify and focus on your goals
When we’re out shopping or looking at something we want on Amazon, abstract terms like financial security can feel like far-away ideas. Because of that, it’s important to clearly define your goals - why you’ve chosen to be frugal. That might be to secure your retirement, to better support your kids, to pay off debts, or to establish an emergency fund that can protect you from the next economic shock. The goal needs to be something that you want and that means something to you personally.
Not only can this help us to avoid overspending when we’re out in the world, but it also gives us the motivation to refocus if we slip up and break our budget one month or another.
Becoming frugal is a process that might require some experimentation, careful budgeting, and maybe even professional support from a financial adviser. You may need to cut spending in different areas of your life to see what you can or can’t do without and ultimately to define what “enough” means to you. Don’t simply try to squeeze your life into a one-off budget plan in hopes that it’ll somehow work. Instead, work on different ways to downsize your costs until you arrive at a lifestyle that’s sustainable for you.
Start by looking for hidden budget-breakers
The first and easiest costs to cut are those that don’t add quality to our lives. The typical household spends hundreds of dollars per month on internet, phone, and entertainment subscriptions that are never fully used. Downgrading or cancelling these to match your real needs can, by itself, save thousands of dollars over the course of a few years.
Similarly, we often spend hundreds of dollars per month on small transactions: buying coffee, lunch, or even just using a vending machine to grab a snack a few times a week. Of course, we don’t want to go totally without those small joys in our lives, but we can drastically cut the amount we spend on them every month by simply budgeting for them ahead of time.
If you’d like to learn more about how to get control of your finances and to achieve your financial goals - even in a difficult economic environment, we’re here to help.