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It pays to be frugal

By Priya Raman on 15 January 2010 | Topics - Personal Finance

In the current economic recession everyone of us is looking for ways to reduce unnecessary spending. Back during the glory days, we got addicted to the habit of spending without flinching for a moment. Now hopefully with the lessons learned from the downturn, the fact that materialism works great for the country’s economy – but not for our our economy has registered well.

The word Frugality long a fancy name for cheap – has become fashionable now. Frugality to me does not necessarily mean or need to be dollar store shopping. It can be smart, easy and achievable – but it is a lifestyle change. It is the way our parents and their parents lived to put us through to a better quality life. I would like to explore some strategies to achieve that in our times.

So where does one start?

The first place to start is by taking stock of your expenses. Look through your bills for the previous 3-6 months and identify where your money goes. If you pay your bills with credit cards – most of these have tools which show a chart explaining your spending patterns. Budgeting is a painful task but trust me it pays off.

Here are some simple ways to cut expenses without feeling a pinch.

  • Keep what you need: A lot of people subscribe to cable and satellite bundles with a lot of channels. Really, how many of these channels do you regularly watch? Check if you can move to a lower bundle or go without the cable/satellite for a few weeks. I thought I could not live without cable and my HGTV, but since we shut off cable almost 4 years ago, I seem to have taken it in stride easily.  As a blessing in disguise, I have been spending that time watching the great programming on PBS – lots of educational information. And for the programs that I never had time but was missing, I continue to watch them on Hulu.
  • Use what you have: In this age when cellphones have become an extension of our lives, most of you might be realizing that the land line is being under utilized. We did away with our land line. Not completely. We actually moved to a bare bones plan which is just to receive in-coming calls and for DSL (if that is your broadband connection). Check out the if a bundle – internet access, phone and TV makes it cheaper. Most cell phone plans have enough minutes that you can actually live without a land line. Additionally, see if you can get a Google Voice for FREE local and long distance calling. In addition to dialing on the web, you can also use their blackberry and other mobile apps to call.
  • Plan ahead: One of the simplest ways to reduce expenses is in your grocery shopping. Planning meals ahead of time helps you figure out the ingredients needed. Armed with the ingredients list, you can cut your shopping trips – saving some time and gas. Alternatively, you can combine this with the grocery store coupons weekly. You can find a lot of coupon strategies on the internet by moms who have mastered that art. I have experienced an added bonus from planning meals ahead – when I put the meal plan where it is visible, whoever gets home first starts preparing – the “menu” is available and the ingredients are all ready in the pantry or refrigerator.
  • Buy Bulk: Buying in bulk saves money. Warehouse clubs (Costco, Sam’s Club, BJ’s) offer almost everything in bulk, including produce. If somethings in bulk are beyond your consumption levels (10lbs of potatoes anyone) then find a friend who might be interested in co-buying with you. I have a couple of Costco buddies with whom I split vegetables, cheese and even the twin packs of Jelly that come is larger quantity that we can consume by ourselves. The additional benefit is helps me reduce my trips to Costco as we take turns. Not to mention the contribution to the eco-friendliness there. Bulk means reduced packaging, less wastage and also fewer trips to the store – less gas usage.
  • Buy un-seasonally: I thought it was just me that did this but upon talking to some friends of mine, it seems like they have made it an art. Buying clothes toward the end of the season or after, can save money, especially if you have growing children. Shop for basics T-Shirts toward the end of the summer season. These will be on end-of-season sale. The seasons vary in different places – so remember to check your local stores. What you do is buy some clothes one size bigger so that you are not running to the store in the middle of the summer looking for the correct size and pay full price. Just as retailers plan seasonal sales strategy, you are countering it with a post-season strategy.
  • Make hay when the Sun shines: How many of you weather the day-after Thanksgiving shopping frenzy ? But it is a great time for deals – if you plan properly. I have a friend who stocks up on toys, craft kits, games etc. available on sale for birthday gifts for the upcoming year. She so is well-organized that she rarely has to do the last minute run for anything. She also buys clothes etc. at the end of the season. We all call her the deal-queen. But her secret to these amazing deals is timing and planning.
  • Apply the strategy elsewhere: Clothes aren’t the only things to buy at the end of the season. You can apply the same strategy for your big buys. Home Improvements done at right time saves a lot of money. For instance, buying a new furnace in spring or summer can save you money in not just the equipment but also the installation costs. Similarly you can save on fans at the end of summer or in the fall. We saved on the cost of painting our house during November. Not only did we save money – but the painting contractor was available easily when we needed – we did not have to wait for him.
  • Stick to the list: Have you noticed that shops keep moving things around a lot. It is not just for some logistical issue or for want of space that they do that. I might be preaching to the choir here. But the goal behind doing this switcheroo is to get you to spend more time in the shop looking for things you need and along the way hopefully get you to indulge in impulse buys. To counter this, always go shopping with a list in hand. Here is something that has worked for us. We maintain an ongoing list of things we need and put a store name next to it. I jot down anything I remember that need to buy, including gifts for birthdays parties, craft supplies or household supplies. This is the master list we stick to.
  • Check thy utility: Another way to cut on your expenses is to check your utility usage. If you pay attention to your energy usage you will find lots of ways to reduce wastage there as I alluded to in my $40 utility bill post.
  • Make your Tax work for you: One of the great things about this country is that majority of the tax dollars we pay get used to some really great things for the community – Parks, Libraries, City Hall, Fire station etc. I think most of us pay taxes and forget that we can take advantage of those benefits afforded to us. Using the local library is a great alternative to buying books, DVDs and CDs. In addition to saving money it also helps reduce the clutter in your house if you were to buy them. If you end up saving a lot of money, go ahead and consider donating some to your neighborhood library – it helps a lot of others that can also benefit.
  • Check the Plastic: Despite the de-leveraging of the American economy and citizens, we still cannot forgo our plastic. But some careful decisions while choosing the right credit card can save you a lot of money.  Costco Amex card for example gives back enough money to pay for your membership and then some. Every gas purchase puts some money back in your pocket.
  • Make Costco pay for the membership: I am a big fan of Costco. Besides the wholesale purchases at better-than-anywhere prices, they also have a lot of other services that are available to you as a member. Insurance (Home and Automobile), Travel Services, Vacation packages, Payroll services, Stamps, Check Printing and lot more. Make sure you evaluate them before you go elsewhere. You membership fees affords you all these and from experience – all of the aforementioned services have been great for us.
  • Share the ride: Carpooling with your children’s friends for school and other activities can save you money and some time. This holds true for baby-sitting also. Trading baby-sitting duties with your friends can save you money and give you that peace of mind when you are enjoying some much needed down time.

I will keep this list running and would welcome any suggestions you think are apt as additions to this list.

About the Author Priya is a working mom of two. Besides her steady load of work at home taking care of her kids, she finds time to work for her husband's company, help her childrens' school and conduct summer camps. She created the site Little Respite to share some of her ideas/thoughts with other fellow parents, friends.