Frugal living. Some love it, some hate it, but frugal living can help you achieve your
financial goals such as buying your own home, paying off your debts, traveling or retiring
earlier. To help you achieve your financial goals, I have 5 frugal tips for you today
that can save you a ton of money if you implement them. We'll focus on the tips that really
have a big impact and ignore the small ones, because I don't need to tell you that you
should check your subscriptions. With one tip I bring you today, you can almost reach
your financial goals on autopilot without giving it much thought so be sure to stay
tuned so you don't miss this one. But before we dive into the topic : Hello
and welcome back to our channel ! And if you are new here : We are the finance nerds and
on this channel we are helping hardworking people like you to get more out of your hard
earned money by showing you how to use your money in the most effective way. Remember
to give this video a thumbs up at the end, if you got value out of it and now let’s
start ! Why implement Frugal Living and Frugal Living
Tips into one's life at all ? You don't have to change your whole life to a frugal lifestyle
and you don't have to become a frugal person. However, when it comes to achieving your financial
goals and you are normally employed, the frugal lifestyle brings with it several principles
that can really help you save a lot of money and with this saved money, you can make your
goals possible. And even if you save $10 a day with these tips and small changes, you
can save $3650 a year. So why not give it a chance? People who live frugally often meet
at least one of these criteria and maybe there is something for you to try or you find that
you are already living a few principles of frugal living:
1. minimalism. A frugal person does not live beyond his means.
2. simplicity. Frugal life also means to remove the complexity in life and to live with the
simple things in life. 3. environmental friendliness, many ideas
in frugal life have an environmental friendly thought like recycling or DIY.
4. your money becomes important. This means you think carefully about what you spend your
money on and also give your money more meaning.
If you recognize yourself in any of these points, feel free to write to me in the comments,
which of them you have already used in your life and how !
Automate your investments and savings Automating your investments and savings can
make a big difference in your finances and you can build a fortune without having to
think about it. To get started, you need to figure out how much you can save and invest
each month, and of course, what you're doing it for. Is it for a new car or so you can
retire earlier? Determine what you need to do with the money and also define how much
you need. After that is done, I recommend you to create
a separate savings and investment account. There are several providers for this or you
can do this directly at your bank. Make sure before you create a separate savings account
with providers such as Mint that you check that your bank does not take excessive fees
for the transfer. For your investment account, many providers such as Acorns are suitable.
We have linked our provider in the video description. With the investment account you have to decide
in advance which financial products you want to invest in. My recommendation is to choose
an ETF or a fund, because they are already differentiated and are well suited for automated
payments. Now you automate your deposits on the savings
account and the investment account with fixed monthly transfers. I have already made a few
videos about how you should allocate your money. Just watch the video in the upper right
corner. To continue, first take the amount you figured out at the beginning that you
can save and invest and split it 50/50. How big this sum is at the beginning doesn't matter.
Especially with the investment account you use the compound interest effect, which makes
your investment bigger and bigger with time !
Pay down your debt The debts you have built up over time prevent
you from really saving and investing money, so your priority should be to pay off your
debts and to do so in a systematic way that allows you to measure exactly when you have
paid off your debts. The advantage is that if you really define exactly how you want
to pay off your debts, you can still save and invest money on the side, even if it is
only a small amount. First of all, of course, you need to figure out how much you are currently
paying each month to pay off your debt. If you have loans with several banks it makes
sense to refinance your loans to get a better interest rate. Now we use a budget rule, the
50-30-20 rule, to define your monthly expenses and to give a clear meaning to your income.
The rule usually states that 50% of your monthly salary is used for your needs, 30% for your
wants and 20% for debt payment and saving. If you really have debts and want to save
and invest money on the side, then you should divide your salary according to 50% needs,
20% wants and 30% debt payment and saving. You then use the 30% for 15% debt payment,
7.5% saving and 7.5% investing. Note, however, that these are only guidelines
and you have to adjust them to your individual needs.
Make a meal plan Most of our income each month goes to rent,
food and drink. It's unlikely that you'll be able to lower your rent in a hurry, so
we'll focus on what we can control and change right now, namely your food budget. Just with
this tip alone you can save 10-20$ a day and think back to the example from before, where
10$ a day is already 3650$ a year ! Plan your food for 7 days in advance and also watch
out for offers in the supermarkets near you and choose your meals accordingly. In addition,
it is recommended to create a budget for your food and drinks, as you do for your complete
finances. This way you won't run around the supermarket without a plan and spend money
on things that are overpriced. I have also included a calculator in the video description,
with which you can calculate your food and beverage costs for the week and a month.
Don’t Buy/rent more home than you need Following on from the last point about reducing
your food and drink costs, I'd like to talk briefly about how you can reduce the housing
costs that I mentioned, which take up most of our income. And that's actually pretty
simple, by being honest with yourself and asking yourself if you really need that much
space? Does it have to be a 4 room apartment even though you live alone ? I know, many
will not feel addressed by this tip, because rent is currently very high, especially in
Western and European countries. But it is also about buying a house, at the latest people
start to want to have more than they need and since currently the interest rates are
very low, the hurdle is also very low. Be honest with yourself on this point and ask
yourself if you can save money here.
Buy used whenever possible This tip is so simple and easy that everyone
simply overlooks it or quickly forgets it. We could often save $100-300 a month just
by using this tip and we still don't do it. We can buy used stuff when we buy decorations
for our home, with books, with tools, with electronics actually everywhere. It's worth
at least comparing prices, because let's face it, most used items don't equal bad or worn
out. Especially if you study, for example, how many books do you need that you might
only read once? How much money could you save if you don't buy the decoration for your new
apartment, but just look if someone sells something similar in your area? For example,
Amazon also shows you when you're on an item what it costs and what condition it's in.
Think in the future, if you want to buy something, whether there is this article used and save
a lot of money. If you enjoyed the video and now want to know
more about how to take control of your finances, click on the video to the right or check out
the video description. There you will find more videos and resources to help you have
more money at the end of the month.
And remember to hit the like button if you are willing to take control of your finances.
We hope to see you in the next video.