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Tips for Frugal Living and How it Can Change Your Life

When you think of living frugally, what comes to mind? Do you imagine living off an endless diet of rice and beans and never having fun again? The good news is that frugal living can come in many different forms and can suit most types of lifestyles. More important, living well below your means can be life changing.


Your first question might be why you should live frugally. Maybe you see people splashing out on expensive vacations or possessions on social media. The truth is that those people are probably in debt. Most millionaires live frugally; it's how they become millionaires in the first place. Living frugally can help you stop wasting money on things that you don't care about and can free you up to spend on the things that matter to you.

Paying off Debt

Thanks to interest, debt can be expensive, so your first step should be making an effort to pay it down. Perhaps surprisingly, one of the best ways to get rid of debt might be to take on more debt. If that sounds counterintuitive, take a look at the difference in interest rates between credit cards and personal loans. If you take out a personal loan, you can use the money to pay off the credit card and then pay the loan off, taking advantage of the lower interest rates. Keep in mind as well that while going into further debt is not ideal, a personal loan is generally always a better option than credit cards.

Setting Your Goals

The next step is to set your goals. What do you want out of life? Do you want to start your own business? Do you want to work half the year and travel or sail or scuba dive or just spend time with family the other half? Do you want to buy a home? Identify your goals and figure out how much you need to save up in order to reach those goals. Be specific. If you were looking to improve your fitness you would start by creating an exercise routine for yourself. Make sure your financial goals have frugality and building wealth at the forefront.

The Freedom of Budgeting

Once you know what your goals are, you can make a budget. Far from being a restrictive tool, a budget is freeing. When you have one, you will know exactly what you can spend on various categories that you designate. The best way to create an accurate budget is to track your spending for a few months. With this information, you can start looking at where you can cut spending in order to start making progress toward the life goals you have identified.

Money and Freedom

At the root of frugal living is understanding that money is not just money; it represents time that you spend working instead of doing other things that you prefer to do. Essentially, it is units of your life that you trade for material and other possessions. When you revise your understanding of money in this way and began to think of the things that you spend it on as time taken out from the rest of your life, you can better understand the importance of frugal living.

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