What do you think of words like “thrift” and “frugal”? Those words evoke thoughts of, perhaps, deprivation and poverty. Some people presume cutting down on your spending is equivalent to searching dumpsters for finding one’s meal. It is no doubt why so many of us prefer a life of overwhelming debt to a frugal one.
Let me make things very clear.
It is not a shame to spend less than you earn. Living below our means – ‘being frugal’ as it is called as – is a very good way to go about your finances. When you do that, i.e. spend lesser money than earnings, odds are high that the nest egg you are trying to build gets larger as time passes by. Moreover, not depending on credit to get through life, one day after another, is also a very good aspect about spending less money.
How does one move from the danger zone of ‘overspending’ to the safe zone of ‘spending under control’ or ‘spending less’- all without compromising on your lifestyle.
1. Put together a list of items, and sort them based on priority. See how important each item is to you, and make sure you shell out money on things that matter to you, and disregard items that do not matter a lot.
2. Assess your present lifestyle. How often do you eat out? Do you have a habit of going to movie theatres every weekend? Is television and new gadgets the only source of entertainment for you? What are you into- ostentatious jewellery or a fancy car? Maybe it’s dresses, and cool presents for those you are in love with.
3. Most of our lists are least likely to be similar. It is not a priority for me to eat out in food joints and restaurants where the food generally is of inferior quality but expensive. Taking out small business loans to raise working capital is of high importance for some entrepreneurs and not so for many others. However, there are people I know for whom both these things are high priority. So, it depends.
4. It is not bad to say no to spending a great deal of money on things you like. That said, determine for yourself what your budget is, and how you would like to spend your money.
5. Not using the available resources is after all no way related to leading a poor man’s life. It’s not just showing courage and shrewdness to not spend money on all the things that you get to eyeball; It’s more about leading a very special life on a pretty average income.