Greetings, this is a new column regarding frugality. Unfortunately, the word “frugality” isn’t terribly fun to say, and it has some negative connotations attached to it. For example, “generosity” is listed as an antonym for frugality. That fact makes me weep, because I see my frugality as enabling my generosity. (By not eating out every day, I save money, which I can use to take a friend out to eat later.)
Frugality has recently surged in popularity, particularly in response to the global housing/ market crash in 2008. People wanted to protect themselves from future crashes, and saw that an escape plan was actually quite simple: Cut unnecessary expenses, save as much as possible, and (eventually) rely on those savings instead of the whims of the market. [Note: You’re already on your way— you’re reading a free newspaper.]
Today, there exists a vast internet community of the frugal-minded, including minimalists, debt-free believers, freegans, do-it-yourselfers (DIY-ers), and the financially independent/ early retirement crowd. (For the record, I think of myself as a frugalitarian, because I can’t resist a good pun.)
There are some basic (but exceptionally powerful) concepts in the frugal community.
Rule number one is a simple equation: Spend less than you earn. It’s a simple idea, but there are a few sub-steps to fulfill it. First, you have to know how much you earn. That’s pretty easy if you have a steady job or are paid salary—look at your paycheck. The second half of the equation is to know how much you spend. You’ve probably heard that referred to as “a budget.”
When I was a single college student, it was easy to keep a running total of my expenses
in my head, because I simply didn’t have that many expenses—rent, food, cleaning supplies, toiletries. (It helped that I was already frugal.) Given my meager student income, it was easy to compare my money in vs. my money out.
Getting married forced me to adapt my system—no longer could I simply keep a mental running total. It took us a few months to work out our communication on that matter, but now we enjoy having monthly budgeting sessions. Each month, we predict and allocate a certain amount of spending into one of a few categories (e.g. $100 for gas.) Then, as the month goes on, we enter each day’s receipts into their category, totaling them until the end of the month. Then, at next month’s budget meeting, we see how accurate our prediction was (“Yay, only $92 in gas!” or “Close. $110 for gas.) and then update the prediction for the next month.
You might scoff and call us boring, but the results speak for themselves: We paid off about $40,000 in student loans in just two years, bought and paid for a fairly new vehicle, and go out to eat a few times a month. And now, that money we were putting toward debt is in our retirement accounts, earning money for us to use in the future.
Written by Trip Hazard