Living a frugal lifestyle in the era of social media, where everyone flaunts what they have and where they’ve travelled to, can be quite challenging—but there’s nothing great about living paycheque to paycheque either.
If you aren’t conscious about your spending, you might end up accumulating credit card debt. It will only eat away at your limited earnings as well as the money you’ve set aside for emergencies. As a result, it can easily compromise your financial future.
Smart money management habits, on the other hand, have a wide array of advantages aside from financial security. If you’re paying your dues on time, you won’t have to lose sleep over your finances, nor would you won’t need to find another job to make ends meet.
Above all else, you can live the life you want without sacrificing your future. Now, the question is: how do you live more economically without depriving yourself of the things you enjoy the most?
Let’s find out practical money-saving habits for living in Australia.
Overcoming Social Pressure
One of the greatest obstacles you need to overcome when you’re attempting to live a frugal lifestyle is peer pressure. Friends might invite you to events that are out of your budget. Sometimes, you might find it hard to admit that you can’t afford it or you might just not want to miss an exciting night. Either way, you’ll end up spending money you don’t have.
The lifestyle can be isolating if you allow it, so how can you do it without losing your friends?
Informing friends and family of your financial journey might help them understand why you can’t go to fancy restaurants every week or why you can’t order another round of drinks. Truly good friends will understand and either agree to dine in restaurants that are within your budget or find alternative, more affordable ways to have fun. A little honesty might even relieve the pressure to conform.
What Does It Mean to Be Frugal?
Such a lifestyle doesn’t revolve around saving money. It’s more about managing your resources—namely time and money—wisely.
More importantly, it doesn’t mean depriving yourself of the things you love. You can still eat out, grab a drink or two with friends, or buy new clothes every now and then. The huge difference is that you’re more careful about spending so that you can eventually afford to live the life of your dreams.
Setting goals and monitoring your progress can make this less challenging. Whether it’s paying off your debts, preparing for your retirement, or funding your family vacation, smart money management can make you achieve all of those.
Here are some habits of people who embrace this lifestyle:
- Pay your credit card debt on time
- Weigh the costs and quality of purchases
- Buy groceries in bulk
- Plan your meals ahead of time
- Get the latest deals that offer great value
Frugal vs. Cheap: What is the Difference?
A fine line separates these practices. To clear up any misunderstandings, it’s important to distinguish both sides.
Frugal living is all about maximizing one’s resources. You consider the cost as well as the value of your purchases. When presented with two options, you select the option that delivers the most value, even if it costs more than the other.
Cheap living, on the other hand, means spending less and saving more money. People who follow such practices look mainly at the cost of things. For them, paying less is the goal. That means they won’t even entertain the idea of paying a premium price, regardless of the value that they will receive.
Simply put, a frugal person who is shopping for a mattress would choose one that offers durability and long-term comfort over a less expensive alternative with neither of these features. Someone who wants to live cheap would choose the latter.
The same practices will apply to their other needs. In terms of medical plans, a frugal person would choose the option that can give them more bang for their buck. Meanwhile, a person who exercises cheap living would opt out of basic necessities if they are expensive.
You’re living cheaply if you do the following practices:
- Buy the cheapest item
- Value the price over quality
- Can’t pass up discounts, promos, or sales
- Won’t upgrade household items
- Sacrifice basic necessities to save
Frugal vs. Thrifty: What Is the Difference?
People who practice these habits are similar in that they will look for other means to maximize their resources. On the other hand, the two lifestyles aren’t entirely the same.
Thrifty people are more hands-on when it comes to their resources. They love do-it-yourself, repurposing, and reupholstering practices to save money. They don’t mind spending their Saturdays scouring thrift stores for pre-loved items. They will even take on building projects or house renovations just to cut costs.
People who are thrifty value conscious spending as well. They will look for deals that offer them excellent value. The main difference is that thrifty people are willing to sacrifice their time to sew, build, or repair things around the house to cut costs.
You’re thrifty if you do the following:
- Mend your own clothes
- Make your own Halloween costumes
- Scour thrift stores
- Do repairs on your own
- Build your own furniture
How Can I Be Frugal?
Frugal living can have a myriad of perks not only for your financial situation but also for your mental health. Kick start your journey using these three tips.
Pay your high-interest debt
Saving for the rainy days can be quite challenging if you still have debts to pay. After all, personal loans and credit card bills come with high-interest rates, which take a chunk of your salary each month if you aren’t careful with your spending. Nevertheless, you ought to prioritise paying these debts over saving money as late or missing payments can lead to higher fees.
Take note that this rule only applies to high-interest debt. Student loans and other kinds of personal loans are excluded. You can choose to start paying these loans once you start living above your means.
Practice good spending habits
Frugal living means spending less than what you make. Aside from managing your debt, practice healthy spending habits and start by tracking your spending. Whether through an app or paper, make sure to take note of your bills and receipts from any purchases. Listing down your monthly salary, bills, and other expenses will let you determine if you’re spending more than you make.
At the same time, it helps you identify habits that you can correct. Do you shop online a lot? Can’t resist discounts and sales for products you don’t actually need? Are you spending a lot of money on restaurants? Knowing your spending habits will help you come up with a solid budget plan.
Save a portion of your salary
Once you’ve paid your high-interest debt and developed good spending habits, you can now build your savings. Set a personal goal for the month or the year and monitor your progress. Seeing your savings’ growth can keep you motivated and committed. It should also feel more rewarding when you’ve achieved your goal. Not only that, it should encourage you to set new goals for the future.
You can take your efforts to a whole new level by pursuing the latest savings accounts with the most competitive rates. By moving your money to a different bank with a more advantageous savings rate, you can earn money while you sleep.
How to Be Frugal with Food
Some people like to indulge in sumptuous meals in fancy restaurants, while others simply can’t cook, forcing them to eat out or order take out. Listed here are a few tips for saving money on food.
Learn how to cook your meals
Dining out can be expensive and can make a dent on your finances. If you cook your meals, you can save a lot of money in the long run. In addition, you can save any leftovers to make additional meals. Just keep them in the fridge and heat them up the next day.
Practice meal planning
If you don’t have a lot of time to prepare homemade meals, you can learn the art of meal planning. Every week, you can dedicate a few hours to planning your meals. Figure out what you want to eat in the coming five to seven days. Then, do the math. Buy everything you need in bulk so you can save a few bucks.
Do weekly meal prepping
Cook and pack your meals for the week every Sunday. This way, you can enjoy a healthy and sumptuous meal every weekday morning. Moreover, you won’t feel compelled to order take out if you’ve had a long day at work.
Money Management Apps You Need
Through apps, you can take smart money management seriously without feeling overwhelmed. We’ve come up with a list of exceptional finance apps to help you get started.
Available on Android and iOS, Pocketbook is a free budgeting app that connects to your banks and automatically organises spending into different categories like clothes, gas, and groceries. It also notifies you of upcoming bills. It even delivers actionable advice based on the latest data, allowing you to be smarter with your spending.
Spendee gives you greater control of your finances. Aside from your bank accounts, they allow you to manage your e-wallets and crypto-wallets in one place. The app helps you understand your financial habits, as well as the areas that may need improvement. With one tap, you can find out if you’re spending more than you make. Spendee is also available on Android and iOS.
Another financial app that you might like is Money Brilliant. It partners with a wide range of financial establishments in Australia, which should give you a complete view of your savings and expenses. It can even offer you great deals for your bills and financial products, and helps you manage your tax deductions.
Finance Websites and Blogs to Follow
There are plenty of resources online that can show you how to lead a frugal lifestyle. From money management tips to debt management advice, you can plan for your financial future with the help of these resources. Check out the following blogs to improve your finances: Frugal and Thriving, The Joyful Frugalista, The Thrifty Issue and Frugal Frolicker.
Run by the Australian Securities & Investments Commission, Money Smart has a wealth of information that fit a wide range of financial situations, whether you’re looking to manage your money or pay off your debt. It teaches you how to get out of debt, build a passive income, and plan for emergencies. It also has resources tailored for older people and natives.
Choice covers a wide array of financial topics, from general facts on the sectors to the nitty-gritty details of financial products. It can deliver fair reviews of banking, loan, and credit card products, and it makes you more aware of your rights as a consumer. Moreover, it offers different guides on relevant issues like the ongoing Bushfires.
To live frugally means to acquire the maximum value out of your money. There’s no need to sacrifice the things that bring joy to your life.
Protect your financial future by practising smart financial habits. Learn how to spend less, and save more. In order to do that effectively, you need to improve your financial literacy, leverage new technologies, and look for remarkable finance resources. Then, work on managing your finances, saving, and reducing your debt.