Budgeting Made Easy

Frugal Living | How to Live on a Budget and Save Money

  • In the United States and Europe, the cost of living has risen exponentially over the past 20-years
  • Consumer price indexes consistently show a disparity between net annual wage increases and actual living costs
  • Because wages can’t keep up with cost of living increases, frugal living for many Americans and Europeans is becoming an essential part of daily life

Living on a Budget – The Essential Frugal Living Guide

Learning how to budget is essential in 2018. According to the United States Bureau of Labor Statistics, commensurable goods priced at $20 in 1998, would today cost at least $31. In the U.S. and Europe, consumer prices have, therefore, risen by over 50% in just 20-years.

For the most part, annual increases in everyday living costs are a normal part of life. However, very few people earn 50% more than they did 20-years ago. In fact, in many parts of America, basic minimum wages are comparable to what they were in the 1970’s.

The Frugal Living Answer to Rising Living Costs

Frugal living is the most effective way to combat high living costs. Of course, the term ‘frugal living’ has less than luxurious connotations. However, learning how to start living on a budget can be very rewarding.

Frugal Living & Housing – Is it Time to Downsize?

Rising rent and mortgage costs are the ultimate budget killer.

In cities like San Francisco, rents equate to more than the annual salary of the average Silicon Valley worker. This being the case, if you find it impossible to save due to high rent, it might be time to consider moving and/or completely relocating.

Relocation & Downsizing Tips for Renters

When learning how to budget, you need to ask yourself whether your current rent payments are sustainable.

Renting is always more expensive than buying. However, saving to buy a property is often impossible for renters. – Especially in cases where rent takes up half to two-thirds of a renters net salary. In this case, long-term renters would be wise to embrace frugal living by downsizing and/or relocating.

  • If possible, look for affordable rents outside of inner-city areas but still within commuting distance to places of employment
  • Where work skills are transferable, consider relocating to cities and States where rents are more affordable
  • When moving or relocating, look for new accommodation in winter months when rental costs are cheaper
  • If single, look at sharing rental expenses by partnering up with a roommate
  • If possible, consider moving back in with parents or other family members. This way, it can be easier to save up a lump sum to use as a deposit on your own home

Alternatively, when relocating isn’t possible, renters can attempt to negotiate lower rental rates with existing landlords. One way to do this is to offer to pay rent upfront for an extended leasing period.

Frugal Living Tips for Homeowners

If you already own your home, frugal living can become more complicated. It is often not possible to renegotiate monthly mortgage payments. Also, moving and relocating might not be an option. The good news, though, is that living costs can be reduced in a variety of other ways.

  • If you have a variable rate mortgage, consider refinancing and opting for a fixed rate. This could free up equity and will leave you with a fixed amount which needs to be repaid each month. (As opposed to more difficult to budget for variable repayments)
  • Even if you don’t need to refinance, talk to your bank about refinancing anyway. To keep your custom, they may offer more preferable home loan terms as an incentive
  • Consider letting out a part of your property or using apps like Airbnb to raise rental income
  • If possible, consider renting out all of your home before moving into a rental property

The buy to let market is booming. However, some people don’t buy second homes to put on the rental market. Instead, some savvy homeowners rent out their primary residence before renting for themselves elsewhere. Where affordable rents can be taken advantage of, homeowners then benefit by having someone else take care of their mortgage for them.

How to Budget for Groceries & Everyday Essentials

After rent and mortgage costs, food, clothing, and entertainment accounts for most households monthly expenditure. In this respect, learning how to live on a budget with a family can be particularly challenging. However, frugal living is still possible.

One way to save on grocery costs is to stop buying luxury and ready-made food items. By and large, raw meat, fruit, and vegetable prices are significantly lower than those of pre-prepared food items. Also, preparing meals from scratch is much healthier.

  • To save on grocery costs, always plan meals and shop for specific ingredients accordingly
  • When grocery shopping, ban pre-prepared snacks and luxury items like chips and confectionery from shopping carts
  • As a rule, family members can save considerably on food costs, simply by preparing packed lunches ready for school and work

When shopping for groceries and household items, families and individuals should also be wary of special offers. A buy-one-get-one-free promotion might appear to help people save. In reality, though, special offers are only placed on items which people don’t need to purchase in the first place.

Experience Frugal Living by Shopping Online

Living on a budget is about saving every spare penny. Moreover, contrary to what you might think, shopping online for groceries, clothing, and other essentials, is a fantastic way to do just this.

  • Shopping online helps people guard against making impulse purchases
  • Getting groceries and other essentials delivered, helps cut fuel and associated transport costs
  • Clothing and home essentials can often be bought much cheaper online than they can be via real-world retailers
  • Some grocery stores and retailers offer incentives to new online shoppers in the form of gift cards and coupons

Frugal Living & Family Entertainment

When we think of entertainment, we think of going to the movies, watching Netflix, or eating out for the evening. Sadly, all of the activities mentioned above cost money. Did you know, though, that learning to live more frugally can help take your family entertainment up a notch?

Living on a budget can be easy if you are willing to give up your cable or TV subscription. However, frugal living doesn’t have to limit your entertainment choices. Instead, it can be an excellent idea for families especially, to cut entertainment costs by socializing more.

  • For individuals and families with their own transport, day and weekend trips to new places can be much more rewarding than playing video games
  • Enrolling children in after-school clubs can help parents save while also giving children time to socialize and engage in physical activity
  • Adults can also join in night classes and social groups to compensate for the loss of electronic media and occasional nights out

Taking Frugal Living to the Next Level

Learning how to live on a budget with a family (or as an individual) is something anyone can do. However, there are some who take learning  how to live on a budget to another level entirely.

As of 2018, there are thousands of people in America and Europe who live frugally by living in RV’s. In like regard, many people now attempt to set up their own homesteads and become partially self-sufficient.

Of course, homesteading and living in an RV isn’t for everyone. However, alternative living doesn’t have to mean forsaking any and all home comforts.

  • In the United States and Europe, communal living projects exist where families live in communities which pool a percentage of their resources and income to cover essential living costs
  • Alternative forms of accommodation like residential trailer parks can offer individuals and families affordable rental opportunities
  • For those with the skills, freelance work online can allow families and individuals to live as digital nomads

In mind of alternative living, it is also the case that individuals and families can benefit from cheap rent by becoming property caretakers. In such cases, property owners lease empty and foreclosed on buildings cheaply, to prevent squatters and vandals taking up residence.

Living on a Budget Isn’t for Everyone

People who live on a strict budget are often saving to buy their first home. However, it is important to note that strict frugal living isn’t for everyone.

Living frugally is especially hard for inner-city socialites and people with extremely high outgoings. In this case, if you love to shop or are in debt, living frugally to save money might not be your best option. Instead, it might be more worthwhile for you to look for a second job, while making small cutbacks wherever possible.