I thought it would be fun to make an essential list of 10 frugal “laws” that could completely transform someone from Typical American Spender to debt-free saver. Since saving money longterm requires not only a change in habit, but a change in perspective, I tried to include all the different angles involved. So, here they are, my 10 laws of frugal living:
- Never pay someone to do something you can do yourself. This might sound obvious, but putting this one law into action would result in a massive spending overhaul for most people. Most people who can’t save money and who carry debt (and yes, student loans count) don’t spend money on fancy cars and insane shopping sprees, they spend it on little objects and services. Paying another human to groom your fingernails, make your food, make your coffee, mow your lawn, do your laundry, do your taxes, clean your house, etc. is in direct opposition to frugal living, saving money, and paying off debt. Practice doing things yourself! Soon it will be second nature!
- Always have a budget. Unless you are successfully retired, independently wealthy to the point that money is no object, or already saving a huge percentage of your income (I’m talking 50%+) without budgeting…you need a budget. Period. If you can’t manage a small income you won’t be able to manage a large income either. There are plenty of decent earners out there who make $80k a year and have very little to show for it, because they don’t have budgets.
- Don’t replace things until they are no longer usable. Simple enough, right? Not for most people! Wear your clothing until there are holes or stains, not until they go out of fashion or you stop liking them. Wear your shoes until the soles are worn through. Use your electronics until they literally cannot perform anymore. When something breaks, try to fix it. Don’t know how to fix things? Learn! Youtube is amazing, I successfully mended an expensive comforter that my cat tore by watching a tutorial. Replacing it would have cost around $100, but now it will last for several more years, and that $100 will just keep compounding instead of depreciating as a consumer good.
- Always shop around, do your research, and avoid paying full price. If the average New Yorker looked at my life they would be shocked to find out how little my household lives on, because we have a nice apartment in a nice neighborhood, we eat great food, we have high quality furniture and decor, a nice mounted tv, a great yard (yup! in nyc!) we go out and do things, we host friends, we’re even planning a vacation! One big difference between our household and the average American household is that we take the time to do our homework before handing over our cash. We hunt down deals, read reviews, and sometimes postpone gratification by a couple of weeks (or months) because of a sale.
- Value your money as much as you value your time. It takes you a certain amount of your living hours to earn your money, so when you overpay for something, “indulge” in something, or buy instead of make, you’re selling off that time! Unless you are already retired, you are trading your time for money, and then you’re trading your money for objects and services. The less often you trade your money for things, the more you can grow that money, and buy back that time in the form of working only part-time, or retiring earlier, or experiencing more.
- Develop skills and hobbies that align with your financial goals. The idea here is to cultivate hobbies that make, save, or at the very least don’t cost you money! Build furniture, craft decor and gifts, learn how to mend and sew things (if you can sew curtains and do upholstery you can save a serious amount of money), cook and bake, refinish used items, build your own computer, hike, play sports, garden, or even take on some part time work just for fun! Teach a class in something you enjoy once a week, volunteer doing something you’ve always wanted to learn, or start a part-time business from home. I hear some people even enjoy blogging.
- Eliminate unplanned purchases, don’t browse, avoid stores as much as possible. During the average week, the fella and I spend money on these things: his rides on the metro (which are charged pre-tax thanks to his company, I work from home), food from the grocery store, and food from the produce store. That’s literally it. We don’t make random little purchases. I don’t browse in stores, in fact, I don’t even enter a store unless I have a specific purpose. When our habits change, our approach changes. For example, the fella started buying gum at convenience stores, and it was adding up to a stupid little $15 a month. So, we found a place for him to buy the exact same gum online, for about 1/10 of the cost. The random spending is gone, because it’s regulated, and there’s no need to stop in the shop and be tempted every couple of days.
- Find non-spendy ways to have fun with (and without) friends. I try to limit spendy outings (where the main event involves spending money for something short lived) to twice a month, but I supplement that with other social things that aren’t so costly. Entertaining at home is always cheaper than going out (plus you get leftovers). Attending free and cheap events, and eating before you meet up with friends is another great strategy. Sometimes your friends will want to meet up for a movie, then go to happy hour, then go to dinner, then go out for drinks after that. Well, a movie isn’t social so skip that, you don’t really need happy hour if you’re going to drinks later, just meet up for dinner and drinks! No one ever minds, you still get to go out, and you’ve instantly cut about half the cost.
- Unlearn what you thought you knew about debt, and accept the brutal truth! People tend to think that if they can purchase something and still make all of their necessary payments (rent, utilities, food, loans, etc.) that they can afford the thing. This is simply not true. The average credit card debt in the US is $15k and the average student loan debt is $23k, that’s a lot! This might sound extreme at first, but it isn’t, it’s reality: If you have debt, you should not be splurging on anything. Taking vacations, buying luxury items, and spending more than you have to on life essentials is absolutely insane when you are still in debt, because you are literally spending money you don’t have, and then turning around and paying more interest than you have to on borrowed money that you already spent. People think interest is a set amount, IT IS NOT. The longer you take to pay, the more you end up paying. The psychological normalization of carrying debt is more damaging than any financial policy could ever hope to be, and the general public’s misunderstanding of how interest works is even worse. Educate yourself!
- Be grateful for what you have and avoid comparisons. It is absolutely the norm to spend like crazy even if your total debt outweighs your total net worth, but when you look at the financial averages for American households, you really don’t want to fall into the norm! Don’t compare what you’re doing to what anyone else is doing. If you decide to embrace the money-saving lifestyle that will rocket you towards financial independence, freedom, and more free time, you will naturally be in the minority. You will be living a slightly different lifestyle than many of your friends and co-workers, and that’s ok! You might live in different neighborhoods or different types of dwellings, you might not vacation with the same frequency or luxury level, you might opt out of a few expensive outings and engage in some unique hobbies, you might be the only one bringing your lunch (and breakfast, and coffee) to work, you might not shop as much or have as many external symbols of wealth, but it’s all about your goals, not theirs. Stay focused on what you’re doing!
There you have it! 10 magical laws that can transform any average spender into a prodigious saver. Who’s ready to give it a try?