Personal Finance Edition 1.2 - Live Frugal

A series of posts relating to personal finance. This is the second post which covers the topic of living frugal in the quest to improve your finances.

Live frugal

Let me tell you a secret, in my experience most people who live a frugal life get looked down on because they do not wear designer clothes, they buy generic food products or drive an old car. Well those people have mountains of money (some not all) in the bank and very little or no debt.

How to live frugal?

Here are some tips that will help:

  1. Maximize every rand:
    • Most people have habits that are very expensive. Let’s look at the example of someone that buys coffee 6 times a day. You can change this habit by buying coffee only twice a day and making the rest yourself. The saving per annum will be a significant number.
    • by buying generic food products
    • Instead of going out 3 times a month for dinner have everyone at home design and make their own meal for example, this is fun and will save you some rands.
    • #HabitsMustFall

You don’t believe me? Let’s have a look at an exercise you can apply from today (I encourage you to do this now):

I have picked most peoples drug of choice but you can pick any habit and I am confident the final number will shock you.

1. Cost of coffee

R 20

2.No. of cups

6 per day

3.Amount spent (1 x 2)

R 120 per day

4.No of working days

249

5.Total Spent per year (3 x 4)

R 29 880

 

R 29 880 on coffee is a significant amount, imagine using this money to pay off some of your debt.

The one thing that I have found has worked for me is an exercise called the 10 second rule. This rule says:

Before paying for anything stop and think for 10 seconds if you really need the item.

The rule only works if you are honest with yourself which I know most of you reading this are