The 5 Frugal Living Tips That Have the Biggest Impact (+ Tips To Avoid)
Trying to make the most of frugal living tips that? You are in the right place. Below we break it down in plain English, with practical tips you can actually use.
Key Takeaways
- Share This content is for educational purposes only and does not constitute financial advice, advisory, or brokerage services.
- We may earn compensation from some links on this page.
- Don’t expect your typical list of frugal living tips here. Why not?
Don’t expect your typical list of frugal living tips here.
Why not?
Frugal living isn’t just about saving money.
Tips like cooking in bulk, using coupons and taking a staycation can help trim your day-to-day expenses, but this advice misses the mark because it doesn’t take into account the true purpose of frugal living: getting more of what you want out of life.
In this article, we’ll talk about why that means thinking about much more than pinching pennies.
With that foundation in place, we’ll get into the core habits and tips for living a frugal life.
Let’s dive in…
Table of Contents
ToggleWhat Is Frugal Living?
Frugal living is managing your money based on your values and priorities. Done right, you’ll spend your money on what’s key and minimize what’s not.
What does this look like in practice?
It means:
- Prioritizing the goals and expenses that are most key to you.
- Allocating resources, such as time and money, to these goals and expenses.
- Being OK with the fact that money may not be left to satisfy other goals and wants.
This can be difficult. But if you want to manage your money effectively, it’s one of the most key things you can do.
Deep Dive: Want to learn more about how to live frugally? Check out our guide to the difference between frugal and affordable, which digs into the three key concepts of frugality.
5 Habits of (Happily) Frugal People
When people think of frugal living tips, they think of stuff like this:
The fact is, there are a lot of things you can do to save money. And most people can benefit from cutting waste out of their budget.
But if buying a home is key to you , your number one priority, perhaps , then advice like “rent, don’t own” doesn’t exactly make you want to live a frugal life.
And while I love a good loyalty program and cash-back app, these tips are about saving money, not living a life of intention.
Frugal living is all about prioritization. It’s about living affordable but good. It’s about getting that maximum value from every dollar you spend.
So in the list below, we’ll focus on tips that show you how to do exactly that.
#1. Create a Values-Based Budget
The book Your Money or Your Life became a cult classic soon after it was published in 1992. Today, it’s widely regarded as one of the best personal finance books of all time.
While you’ll want to read it, the core practice of the book , which aims to help you get the most out of every dollar you spend , is an exercise called “Three Questions That Will Transform Your Life.”
The process starts by calculating your life energy.
This number represents your real hourly wage. With this number, you’re able to determine the opportunity cost of your most key asset: time.
For example, let’s say your real hourly wage is $36.64 per hour.
Knowing that allows you to determine how much every purchase costs in time.
But that’s not all there is to the exercise. The next step is that each and every month, you’ll review every expense while asking the following three questions:
- Did you receive fulfillment, satisfaction and value in proportion to the life energy spent?
- Is the expenditure of life energy in alignment with your values and life purpose?
- How might this expenditure change if you didn’t have to work for a living?
According to the book’s co-author Vicki Robin:
“These questions will clarify and integrate your earning, your spending, your values, your purpose, your sense of fulfillment and your integrity.“
Pro Tip: To save time, use a good budgeting app. We recommend Rocket Money, which pulls in all your financial transactions from your various accounts and lets you see them in one place. Learn how it works in our Rocket Money review.
#2. Pay Your Priorities First
Once you understand what’s key to you, you want to make it as likely as possible that your spending matches your priorities.
Sounds simple, right?
Let’s say that by analyzing your past expenses, you’ve found that you get a lot of value from traveling but very little value from ordering takeout food.
Given that, you’ll just stop ordering takeout and start setting aside that money for travel, right?
While you’re at it, why not exercise, start a garden, read for an hour a day, learn a new language and limit yourself to one Netflix show a night.
Here’s the fact: changing anything is hard. It goes against human nature.
We’re bad at prioritizing what’s best for us in the long run over what feels good right now. So, we typically do what feels right in the short term. And that’s not always in line with our goals.
The most powerful strategy to make sure your actions match your values is through automation.
A 401(K) automatic contribution is a prime example here.
The key is that it happens automatically. You don’t have to go into your account every paycheck and decide whether you’d like to set aside money. You set it up once and then forget it.
The same concept can be applied to any priority or goal you may have.
If travel is key to you, set up an automatic transfer from your checking account to a savings account earmarked for travel.
Pro Tip: Research shows that naming your goal something exciting , e.g., “Our Dream Hawaii Trip” , increases your ability to save towards the goal.
For smaller goals, such as hosting friends for dinner, you can use the cash envelope method, where you set aside cash in an envelope at the start of the month. Then, you can spend that money guilt-free throughout the month.
This practice is known as reverse budgeting and is one of the most powerful ways to control you’re spending.
Final Thoughts
Before you check out, double-check frugal living tips that against current offers and any coupons you can stack. Small habits like this add up to real savings over a year.
Originally published at thewaystowealth.com.
R.J. Weiss
Our editorial team researches and verifies every money-saving guide before publishing. Editorial policy · About us
