We have come to think that being Frugal is the domain of little old ladies who have led a hard life and have simply gotten used to making a dollar go a very long way. However in today’s challenging economic environment, being Frugal is the answer to financial uncertainty and instability. It is not uncommon to be running a strong business today and be forced to close your doors tomorrow. Likewise even those in a good job can have no certainty that their current level of income will remain for the duration of their working career. Being able to budget and spend wisely is a skill that is held by few.
Setting Financial Goals
It is unfortunate that most people only think about saving money and defining financial goals when money is scarce. In reality everyone should think about where they would like to be in financially, 10, 20 and 30 years from today and set in place a plan to help get you there. One of the best strategies is to live frugally, waste nothing and stop accumulating things you do no need simply because that is what your friends are doing.
Aged pension will become a thing of the past by the time those in their 20s today come to consider retirement. Anyone who does not consider this in their 20s will come to their 70s with little savings and inability to ever retire. Therefore saving and investment for the future should be a part of everyone’s financial goals.
If you spend your money on living a “cool” lifestyle when you are young, you are guaranteed a miserable existence when you reach old age.
How many shoes do you really need?
You are probably thinking…”I only buy things on sale” – but how many shoes, bags or jeans does one person need? The marketing machine designed to push us into spending everything we have has done an excellent job convincing many that it is a criminal offence to wear last year’s shoes or jeans – this is a strategy to keep you spending today but who is going to take care of your tomorrow?
Money wasted is an opportunity lost
Even $50 a week spent on an outing or on coffee can help you hold an investment that will appreciate over time. If you put same money away into any appreciating asset you will find that when others are worried about their future – yours is set. If your income has doubled over time, it does not mean that you now have twice as much money to blow on lifestyle and entertainment. There is no need to spend much more than you did before – invest to help you achieve financial stability first.
Develop a budget and stick to it
It is difficult to achieve financial goals without setting a budget. A budget should be a realistic estimate of your day-to-day living expenses as well as the irregular commitments to insurance, car registration, mortgages, credit cards etc. Review your spending with respect to the budget regularly to ensure that you are on track to achieving your goals.