You have decided it is time to become more frugal with your money, but don’t know where or how to start?
No need to panic! Below you will find 11 steps that get you started taking control of your money matters in ways you might have never thought possible.
Whether you need to make changes to your financial situation, because of a change of income or because you want to save some extra money, the steps below will get you not only started on your journey, but also excited and motivated to take control of your finances.
I know looking at your finances can be anxiety inducing. Where do you start? How much of a reality check will you get when you realize that more money is going out of your pocket than staying in? Can you ever feel in control of your money and your financial future?
Fear not! Step number one feels like a big one, but I guarantee it will get you on track to gaining control and maybe even having some fun saving your money.
So, step number 1: make a budget! List every income source and the total amount of income you receive each month. Then list all the fixed bills and varying expenses you have in a month. These will include rent/mortgage payments, hydro, internet, cell phone, any subscriptions you may have etc.
Subtract all of your monthly expenses from your monthly income and you will know how much money you have left over.
Now, do not panic, if the result is not what you want it to be. You are taking inventory of what is going on so that you can do any potential problem solving.
You can also grab a copy of our Budgeting Binder so you can start organizing your budget without expensive software or complicated apps!
2. Set Goals
After you have completed step number one it is time to figure out your goals and your motivation why you want to start living a little bit more frugally.
This is where the fun starts. You are actively taking control of your financial situation, figuring out what you want and then how to get there. It is exciting to have something to work and look forward to, it can give a rush of exhilaration.
So, what is your motivation? What is your goal?
Maybe you want to pay off that credit line faster. Maybe you are looking to invest in to a new laptop or special equipment for your hobby. Or maybe you really want to take that trip you have been dreaming about for years.
Find that one thing that gets you excited enough to cut expenses you really don’t need and put the money aside for what really matters to you.
3. Cut Useless Expenses
This leads me to step number three: cut useless expenses.
After having made my latest budget and identified my goal for living more frugally, I walked through my apartment looking at anything that could give me a hint of what useless spending to stop. I was so excited to start saving money.
For starters, I realized that every month I was paying a penalty for going over my data limit and it was time to switch not only plans but cell phone providers as well. Now I have more gigs available each month and I’m paying less for it.
Also, over the years I realized that cable TV just wasn’t worth the huge bill I got every month. It has been a staple in my childhood growing up, just like it might have been for you, but the programs were never to my liking and I was so tied to the TV schedule, it stressed me out.
I cancelled my cable subscription and noticed that most of the programs I could watch on the channel’s website a day later.
Also, there are other, more affordable options out there, like Netflix, Amazon Prime and YouTube, which doesn’t cost you anything.
The added bonus is that I am in charge of when to watch a show or a movie, which saves me a lot of precious time that I can use doing something more productive than flipping through channels.
4. Get Cashback
When shopping online it makes a great difference to look for cashback options. It is a simple and really efficient way to save some money. Not only do you get a certain percentage back in cash, depending on the site you are using, but you also save gas money or bus fare, a possible stop at your favourite coffee/tea place and other unforeseen shopping stops along the way.
One such cashback website is Rakuten, which is available in the US and in Canada.
They provide you with a list of stores they associate with and the corresponding percentage of cashback you can recieve, if you visit the website through them.
A few things I have noticed when using Rakuten are to make sure your adblock is turned off for all sites and to start with an empty shopping cart when going through them.
5. Use Coupons
Another little trick to save a bit of money and to never pay full price on online purchases is to add a coupon extension to your browser, such as Honey.
It will scan the internet for any available coupons and applies them to your purchases.You will be surprised how quickly those savings add up, plus it feels so good to find a deal and work towards your goal.
6. Make Savings a Fixed Expense
I much rather see the money pile up in my bank account than having to put it away out of reach and out of sight, because it feels comforting seeing a bigger amount in your chequing account.
But lo and behold, before you know it you have spent it on things you didn’t even need. Sometimes we need to trick ourselves. One of these tricks is treating monthly savings as a fixed expense.
You can set up an automatic transfer each month, or even each paycheck, to have a set amount moved to a savings account.
Let’s say you get paid every other Thursday, set up the automatic transfer to take place the very next day, Friday. So that when you check your finances on the weekend the money is long out of sight, safely tucked into your growing savings account.
Many years ago I started doing this myself and you would not believe the considerable little sum that accumulated by the end of the year.
7. Start Meal Planning
Just the other day I stopped by the grocery store to pick up one thing I needed for breakfast the next day. Before I knew what happened I walked out with an armful of items I really did not need.
That’s one of the downsides of going shopping without a concrete meal plan and shopping list. Yes, I knew I wanted that one breakfast item, but just to be sure I pick up everything else I needed for breakfast as well, because I had no idea what I still had left in my fridge.
It is best to pick a day during the week, one that fits well into your schedule and make a grocery list. Get excited about the upcoming week’s meals, write down the ingredients you need to pick up from the store and double check your pantry and fridge to make sure you don’t buy anything twice and have things expire before you can eat them.
It is a wonderful way to cut your grocery bill every week and every month. You also become a lot more creative with the leftover foods in your fridge and you realize that all the spoiled groceries that have been piling up on your fridge are basically just dollars you are throwing in the trash.
A word of caution and something I am notorious for doing: do not go grocery shopping when hungry. You end up buying a lot more unnecessary items than you think and rake up your grocery bill.
Stick to your grocery list as difficult as it may be and you will see the improvements it will make in your bank account.
You can even use $5 Meal Plan to do the bulk of the work for you. For $5 a month they’ll send you a meal plan and a grocery list to help organize your food budget!
8. Stop Before You Shop
Whether you are an emotional shopper or just get very excited about a deal you see in the store or online, stop before you buy it.
Ask yourself these questions: do I really need it? Do I have space for it in your apartment/house? Would I even use it enough to make the purchase worth it? Do I have the money for it?
Sleep on the decision. Walk away and take a breather.
It is so easy to get caught up in the shopping frenzy of flashy stores, loud music, friendly sales associates and the general energy of the shopping mall. And of course the temptation of online sales and the promise of free shipping, if you spend $50 or more are all so very tempting.
It becomes a practice of self control and one that could potentially save you a lot of money and buyer’s guilt.
I am a rather popular book hoarder to my friends and family. I love the bookstore and can’t get enough of them, even if it takes me years to read them.
And that was the problem. I had stacks of books piling up everywhere in my tiny little apartment. Money I spent that was now sitting, collecting dust. Plus, if the book wasn’t any good, I would just donate it. Noble cause, but also a waste of money.
Instead, I renewed my library card and the only thing I have to pay now when it comes to books are the late fees when I’m too lazy to return the book on time. Money and space saved.
9. Look for Deals
This step relates to my step number three: useless expenses.
It is unnecessary to spend more money for a service you could get elsewhere at a better price.
I used the example of my old cell phone service provider above, but this also applies to your internet service provider or any other necessary monthly services you need to pay for.
Do some research and find out if other providers have better deals. You may have been with one company for a long time and you may feel bad for leaving, but they don’t care about your money unless it ends up in their pockets.
It also never hurts to call your current provider, telling them about the deals you have seen other companies offer and ask, if they can match it. Sometimes they do.
10. Get Coffee or Tea To-Go
It has become a certain social staple to walk around with a particular coffee shop’s cup of joe, but think of the money you could save, if you brought you own coffee or tea from home.
It is remarkable the price they charge for one cup and most of us have all the ingredients we need to make ourselves a cup of our favourite brew right at home.
Also, think of how much waste you are eliminating by bringing your reusable cup with you on the go.
If you have run out of your favourite pick-me up and you won’t be home for some time, most coffee shops will give you a discount for bringing in your own travel mug.
Just give it a quick rinse and you have accomplished two things at once: saved yourself some money and cared for the environment.
11. Bring Your Lunch
This one obviously ties in with step number ten, but I thought it important to mention separately.
Bringing your own lunch to work will cut down on your weekly costs in ways you would have never imagined.
Think about it. Nowadays even a decent burger costs more than $5, add some fries and a drink, and you are looking at a lunch bill of $12 or more.
If we do the math, that is $12 x 5 days/week, which equals $60 every week for lunch. If you then add your late from your favourite coffee shop, this could easily add up to $100 every week spent on food you could have saved.
As an alternative, bring your leftovers from last night’s dinner or get creative making yourself delicious sandwiches. It will get you excited for lunch time and it will get you that much closer to achieving your financial goal.
If you follow all or some of the above steps, they are certainly going to get you on track to becoming a more frugal person, taking care of your financial situation.
Trust me. It will give you a sense of control over your money matters and make future financial decisions that much easier.
It is also fun making conscious decisions, finding deals and getting rid of unnecessary financial burden.