I was asked recently on my YT channel how can you become frugal, stop overspending and actually save money. So I gave it some thought and reflected on my past circumstances. Thanks to the internet there is a ton of good information out there now so my first suggestion would be to identify why you want or need to become frugal. What is your goal?
Becoming frugal due to an unforeseen event is an entirely different scenario so the following advice applies to being in a position of choice, although it's still a good habit to develop. You may want to save money to pay off debt (mortgage/car repayments/medical bills/student loans etc) or save for a special event (wedding/holiday) or like me, save for early retirement.
So, this is what I did and what worked for me. I shared examples in the vlog.
1. Make a list of your monthly fixed costs. Some might be annual or one off but still make a note of these (you can either keep an annual list or divide it by 12 to give you a monthly average.) This should include housing costs (mortgage or rent), car repayments, loan repayments, energy, phone, internet, car tax, insurances, subscriptions and so on. Basically anything that would result in legal action if you didn't pay!
2.. Once you know your your monthly fixed costs, subtract that from your monthly income. That's how much you have left to spend on food, clothes, entertainment/socialising, travel, pets etc
3. For the month of January write down every single penny you spend either in a book, a spreadsheet or a note app on your phone.
If your circumstances mean you have no choice in becoming more frugal, this can still work as it shows where the money is being spent.
If you are consciously trying to become more frugal, you don't need to go cold turkey. Scientific evidence has shown that changing a habit takes time and you're more successful if you observe the changes slowly.
As I've said, this is what works for me.
In part 2, using my examples I'll go over identifying where the money is leaking!
That's roughly how I do it. I like to know how it will look at the end of each month so I take everything out at the start of the month (on Excel, t hat is) and update every time I spend so at any time I know that if I spent no more, that's what the end of month balance would look like. xx
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