One Month at a Time - Smart Habits for Frugal Lifestyles
We’ll share a secret with you about financial security: It doesn’t matter how much money you make, it’s about the decisions you make. Living a frugal lifestyle of financial independence doesn’t need to be difficult. It’s all about small steps.
Start with This Month
Forget the future - managing your finances begins with what’s happening right now.
What are your expenses? When do you get paid? Forget your mortgage, car debts, and student loan payments and just look at how much money is coming in versus how much is going out each month. This knowledge is essential if you want to build good habits that support a frugal lifestyle. You need to know where your money is going.
Pay Yourself First
Chances are, the financial situation you calculated in step one isn’t as strong as you’d like it to be. That’s okay! Like we said, being frugal is all about making deliberate, conscious choices to slowly build up capital over time.
Your next step is to build an emergency “rainy day” fund to prepare for unexpected costs, such as a medical emergency or car repair. Take a small portion (no more than 5 to 10 percent) of each paycheck you receive, and before you do anything else, put that amount into a savings account. Do this every paycheck, every month.
Cut the Fat
If you’re like most Americans, you have some debts to pay down. And while debt resolution is a lengthy process, it begins with the choices you make each month. Look at your outgoing expenses. Are you spending a lot on restaurants? Recreation? Daily coffee? Small costs add up and prevent you from having the financial freedom to pay down your more significant debts.
Financial solvency is within reach, as long as you take small steps each month in the right direction:
- Always calculate your income and expenses
- Save small amounts each month in an emergency fund
- Reduce unnecessary spending
With these three tips backing you up, you’ll have a great start for reaching financial independence.