How To Be Frugal: 10 Tips To Spend Less

To be frugal is to be realistic in your spending so as to live within your means and stay out of debt — both good things.

But being frugal is not easy these days. We are bombarded with advertising and marketing that encourages us to find happiness by opening our wallets. So, having a realistic knowledge of our resources and still being able to enjoy life can be a challenge. But it can be done, and frugality is the key.                           

Why Bother Being Frugal?

We make dozens of financial decisions a day, and each one should involve two questions: Is this purchase necessary? And can I get the same value by spending less? For example, if you choose to take a $5 subway ride to get to work instead of a $25 cab ride, you’ve accomplished the same goal and spent $20 less. Frugality in a nutshell.

To take this story even further, say you notice that the lottery prize is getting huge and you’re tempted to spend the extra $20 on lottery tickets. By deciding against that purchase, you’ve ensured that that extra cash can go toward groceries for the week. With those groceries, you can make bag lunches for all 5 days of the workweek instead of going out for a $15 lunch every day. Now the $20 original savings has turned into $75 net savings.

And finally, that extra $75 you didn’t spend can add to a surplus of cash you are saving for a larger, more significant purchase, such as a trip you’ve always wanted to take, or even a down payment on a house. When embracing a frugal lifestyle becomes a mindset you bring to every transaction, large and small, you will begin to see real results in your quality of life.

Cheap Vs. Frugal: What’s The Difference?

The lines of distinction between a frugal person and one who’s cheap are a little blurry, but in short the frugal person is resourceful and creative, while someone who is cheap may value convenience and speed over everything else.

A cheap person, for example, may spend $10 on a fast-food lunch, while a frugal person will spend $8 on a loaf of whole-grain bread and two cans of tuna, add a few simple ingredients from their refrigerator, and have healthful tuna salad sandwiches for a whole week of lunches. In another example, a cheap person might purchase three poorly made sweaters in a discount store, while the frugal person spends less money on one high-quality, more durable sweater from an online retailer when it goes on sale.

In both cases, the cheap person settles for a quick-fix, low-quality purchase out of convenience. Also in each, the frugal person shows an eye for quality, the patience to wait for good pricing and the industriousness of knowing how to stretch a dollar. The frugal person’s approach shows strategy and thoughtfulness, while the cheap person is only interested in a quick resolution.

10 Frugal Living Tips

To be frugal is not just a one-time decision. It’s an attitude and a way of life. Frugality is a trait that can touch upon all facets of your life. Here are some of the ways to embrace a frugal lifestyle.

1. Make A Budget

Before anything, the frugal person will create a budget. Since many of your known expenses, such as rent/mortgage payment, utility bills, car payment, credit card payments, etc. arrive on a monthly basis, it’s easiest to break down your budget into monthly increments.  

Determine first your monthly income by dividing your annual net income (after taxes) and dividing by 12. Next, add up all those regular monthly expenses. These are not always the same — your gas bill may be much higher in winter months for heating, for example, so add up your yearly gas bills and divide again by 12 for an average.

The difference between your income and your monthly expenses is essentially what you have left over for living, for things like food, apparel, fuel for your car, entertainment, travel, etc. And finally, perhaps most importantly, there should be leftover cash each month for savings. Savings are essential for short-term unknown expenses (there are always unknown expenses) as well as long-term financial goals like buying a house, a college fund for children, and your own retirement.

2. Rein In Entertainment And Dining Out

There is perhaps no better way to reduce your daily spending than by making a commitment to preparing your own meals and dining at home. For the cost of one dinner out, which can easily cost $50 or more per person, you can, with clever grocery shopping and a well-constructed meal plan, pay for your entire weekly food budget. The internet is loaded with cooking videos and recipes that can help even a novice become a decent home cook. Home cooked meals can also be much healthier than restaurant food.

As for being frugal in your leisure activities and entertainment, there are lots of great things you can do that are free. Listen to free podcasts. Borrow books from your local library. Many public libraries also have extensive movie collections on DVD. Many people have “cut the cord” from cable television service and find it’s less expensive to put together an a la carte TV menu with free online and low-rate subscription streaming services. Your community may have weekly free concerts in the summer months, and nearby local or state parks can provide free recreation.

3. Save Money On Groceries And Home Goods

Food and home goods are a necessity for everyone, but you can save money by becoming a smarter shopper. Opt for the store brand when you can for a cheaper alternative to name brands. Try to buy and consume more vegetables than meat and seafood, which can be a lot more expensive. In summer your local farmer’s market will have lots of fresh, inexpensive vegetables and grains. It’s also a nice way to support local farmers.

If you have access to a local bulk consumer goods store like Costco or Sam’s Club, you can save a tremendous amount on most common home goods, such as meat, liquor, batteries, paper towels, condiments, diapers and seemingly everything else. Since these items sell in bulk, however, you’ll need pantry or other storage space at home to keep these items, sometimes for months.

4. Slash Money On Home Expenses

There are lots of solutions to combat rising home utility costs, though some may require upfront spending that gets paid back over time. While more expensive to purchase, LED light bulbs use about 25% of the energy of traditional bulbs, and they last 25 times longer. Low-flow showerheads cut down on water use, as does limiting how long and often your lawn irrigation system operates. You can also cut down winter heating bills by dialing down your thermostat and making more use of sweaters and blankets.  

5. Spend More Effectively On Self-Care

A person can keep themselves in peak physical fitness with just a pair of good running shoes and access to a local track or low-traffic roads. You can also put together a good, diverse home training regimen that requires little or no equipment, much less an expensive gym membership.

By far the two most important elements to maintaining good physical fitness — discipline and commitment — are free. If you do require some investment in equipment, such as weights or a stationary bike, check the online classifieds before buying something new. You can often find lightly used items at deep-discount prices from people who made the big investment but rarely used the equipment.

6. Find Ways To Cost-Cut On Necessities

In today’s world there are personal electronics devices and services that are now essential. It is very difficult to live and function without a cell phone, a PC or tablet, or high-speed home internet. What you can live without is the latest and best version of these things. If your phone is several generations older than the newest version available, but otherwise works fine, resist the temptation to upgrade. With a personal computer, the first thing to fail after several years is the battery. Rather than buying a new computer, consider saving hundreds by simply replacing the battery.

7. Make The Most Of Your Spending

If you’re willing to spend a little time every week clipping coupons, according to a report from U.S. News and World Report, you can “easily expect to save $20 to $50 on your routine grocery shopping.” Another way to make your shopping more efficient is to use a cash-back card that awards you dollars for using it.

You can also save by buying certain items, such as clothing or simple home appliances, for pennies on the dollar by shopping at thrift stores. The quality of today’s second-hand goods can be surprisingly high because most people who buy at regular retail donate perfectly good clothing, after just one or two seasons of wear, to thrift stores. In fact, there are many people who live on extremely tight budgets who buy most of their apparel in thrift stores. The same is true of children’s clothing. Children grow out of their new clothing so quickly that before it gets much wear it gets donated to a second-hand or thrift store. If you’re patient, you can find some great pieces by thrifting.

8. Reconsider Unneeded Spending

An unexpected drawback to the prosperous retail economy we live in is that spending money is so darn easy. We’re barraged each day with the lure of countless products that can be purchased instantly with the tap of a credit card. And by shopping online or using a service like Amazon, you don’t even need to leave the house — newly purchased items will be delivered to your doorstep, sometimes the same day.

As the cash economy — in which you physically hand over your hard-earned dollars for goods and services — rapidly disappears, spending seems more and more like an abstraction.

One way to force yourself to cut unnecessary spending is with a no-spend challenge, which cuts out everything but the bare necessities. The discipline of purchasing only what you absolutely need in such a challenge can more easily become a habit after the challenge is over.

9. Don't Go Overboard

When we spend money to acquire something we want, our brains release endorphins and dopamine. These pleasure-causing chemicals can be addictive in some people. Cutting spending completely for them might feel like withdrawal. The result can be a binge of spending when they finally return to a more normal spending pattern. Keeping an eye on one’s budget and maintaining a balanced approach to spending can prevent uncontrolled backlash spending.

10. Realize Why You Overspend

The human brain is hardwired to help us acquire the things we need, such as food, shelter and clothing, to ensure our survival. These things are much more abundant for us than they were for our ancestors 10,000 years ago, but our brains are pretty much the same. We both like to acquire things. Just as they had a good feeling when they snared a rabbit for dinner, we can get a rush by scoring a great deal on a pair of shoes.

There is even a pop psychology term for the good feelings generated by shopping — “retail therapy.” There is nothing wrong with treating yourself occasionally, of course, unless it leads you to overspend or prevents you from being able to sufficiently save for the future. If this continues to happen, consider consulting a financial advisor or credit counselor who may be able to help you create a more balanced budget.  

Living Frugal FAQs

How can I be completely frugal?

Unless you take a vow of poverty, there is no way to be completely frugal. With discipline and strategy, however, you can not only live well and within your means, you can also contribute aggressively to a savings plan that will set you up for the future.

Are frugal people happier?

In the sense that frugal people are financially disciplined, resourceful and steadily building savings for their future, being frugal with your money can be more fulfilling than living with constant money worries and avoidable debt.

Can I be frugal without being cheap?

Yes, because being frugal is really about you and how you manage your own spending. Being “cheap” typically regards how you handle money around others — whether you pick up your fair share of checks when dining out with friends, or how well you tip your servers. By all means, be generous with others.

In fact, here’s a scenario where you can be generous and frugal at the same time. Rather than taking a friend out to a restaurant and picking up the $200 tab, invite them to your house for a home-cooked meal that you can put together for a quarter of the price. It’s more personal, the food can be just as good if not better, and your friend will appreciate the effort more.

Can I live frugally on one income?

Yes, you can live frugally on one income because frugality is all about doing the best with what you have, no matter the income.

The Bottom Line: Saving Money Can Help You Reach Personal Finance Goals

If you’re doing it right, being frugal is a lifestyle and a virtue. No matter your income, if you have financial discipline, a realistic budget and a plan, you’ll find that you can live well in the moment while saving for future dreams such as owning a house or having a family. When you consider the creativity required to living a truly frugal lifestyle, it can really be considered an artform.

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