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budgeting

Living Frugally

By Money / FinancesNo Comments

After the Christmas period many of us feel the financial pinch. There are two ways essentially in finance to deal with this:
1. increase your income or 2. reduce your expenditure. I’m voting for the latter by attempting to live more frugally. To live frugally means:

Frugal Definition
adjective
not wasteful; not spending freely or unnecessarily; thrifty; economical
not costly or luxurious; inexpensive or meager a frugal meal
(From http://www.yourdictionary.com/frugally, Last accessed: 05 January 10)

So with this in mind here are my top tips for living frugally:

Setting a monthly budget
Set a monthly budget carefully and realistically. Consider the following:

  • Consider the amount you earn after tax and budget to that amount. If your expense is bigger than your income you need to look at what your paying out and what to cut back on.
  • Consider the real cost of things (e.g. don’t put a £30 for your mobile bill if it’s more than likely going to cost you £50)
  • Consider when writing it any one-off expenses during the month (such as people’s Birthdays, Car Insurance, etc.).
  • Consider the occasional 5 week month and adjust your budget accordingly
  • Ensure you have some “free cash” for leisure purposes.
  • Now you’ve got a budget, stick to it.

    An Emergency Fund
    Start an emergency fund in a separate account if possible. Saving a set amount a month will mean if you have an unexpected expense it doesn’t mess up your monthly budget and lead you in to getting in to debt (or more debt).

    Plan to Reduce Debts
    Most people have debts these days, however you need to keep them manageable. You need a plan to reduce your debt, ideally making more than the minimum payments each month. Budget your debt payments in to your monthly budget.

    Shop around for Insurance
    Whether it’s car insurance, buildings insurance, home contents insurance, etc shop around. Use the price comparison websites like Go Compare, Money Supermarket, Compare the Market, etc. Don’t automatically go with your previous provider as there may cheaper alternatives giving you the cover you need.

    Shop around for High Priced Purchase Items
    So you need to buy something big eh? Perhaps it’s a new TV or a Bluray Player. What ever it is again shop around. Consider Amazon and Play.com. Look at Froogle to compare prices from different retailers like you can for insurances.

    Negotiate a deal on your Bills
    Companies are going to hate me for writing this, but did you know you can often blag a discount on your bills when your coming to an end of a contract with a provider?

    For example when your mobile phone contract is coming to an end, ring up your current provider. Say that you’ve been offered a better deal else were and ask could they offer you a similar deal? You’ll be surprised the amount of times they will come back to you and offer you some sort of discount on your bills if you renew your contract with them. This is because they don’t want to loose your custom. So make it work for you. Negotiate with them (or in my terminology blag em) to get the best deal for you.

    Stop & Think
    If your an impulsive shopper like me stop and think. Ask yourself Do I really need this item? If you can’t justify a good reason don’t buy it. Think about what impact buying this item will have on your monthly budget, will it still make your budget workable? This is particularly important to remember in Supermarkets. They often have 3 for 2 offers on to get you to spend more and bulk buy. Again you need to stop and think.

    In my case I love clothes shopping. Were it can’t be justified (i.e. clothes needed for work or a special occasion) and it isn’t budgeted for I must NOT buy.

    Keeping in Touch
    We all like to keep in touch with our friends and family. However long phone calls or text conversations can be pricey at the end of the month when the bill arrives. So at every opportunity keep in touch for free via email or Facebook.

    Leisure activities, don’t have to cost…
    …an arm and a leg. There are loads of things you can do for free or at a smaller cost. For example you can go walking which is essentially free. Or rather than going on a night out and spending a fortune in pubs and clubs consider a home party which will lower the costs. You simply need to be creative here.

    I hope my advice has been useful (just little tips I’ve picked up along the way), now all I have to do is stick to my monthly budget.

    Write soon,

    Antony

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