Amazon has a list of Leadership Principles that sculpt a culture at the company. One of these 12 Leadership Principles is frugality. The name of the game is earn more, spend less. Living below your means is a crucial part of gaining the financial independence we are hoping for. Millionaires become millionaires (and stay millionaires) by being frugal.
CEO of Berkshire Hathaway Warren Buffett has a net worth of over $80 billion, and reportedly will not spend more than $3.17 on breakfast. He also still lives in his modest home he bought in 1958 for $31,500. CEO of Facebook Mark Zuckerberg drives a modest $30,000 black Acura TSX.
Once you can get past the “but what will my friends think” and start shifting your energy towards what works for you financially, the process of living below your means will come easier. Societal norms have made it tough to say “no”. In high school, everyone I knew was spending $300+ on a prom dress like it was nothing. Post college, a lot of people from my high school moved to New York City for work, and it was just accepted you had to pay $1500+ in rent for a decent place. These normalized price tags have made it difficult for young people just starting their financial journeys.
Growing up in a frugal household, I was constantly given tips and tricks on little things you can save money on. I recently moved to a new city across the country, which was a large financial undertaking, so I am taking some extra steps to save more money in 2019.
Paper towels – Decent paper towels can run you from $2-$4 a roll. Doesn’t sound like a lot, but if your household goes through two rolls a week, that can add up to $400 a year! I use these reusable kitchen cloths from Trader Joe’s made of viscose which absorbs 10x its weight. Similar paper towels can be found on Amazon and most retail stores. Rinse and wring out after each use, pop these in the washing machine, and reuse. Bonus points for being good for the environment.
Expensive gas – in my neighborhood, there’s a gas station selling gas for $2.45 today, and over the highway a half a mile, another gas station selling it for $2.21. If my tank holds 16 gallons, that’s almost $4 in savings each time I fill up, which for someone who fills up twice a month, can be $100 in savings per year. Some gas stations have discount cards and offer discounts for using cash, so be on the lookout all kinds of gas deals.
ATM fees – this is a no brainer! Each time you use an ATM outside of your bank, the ATM will charge you $2.50 – $5 (I’ve seen some ATMs charging up to $10), and then your bank will charge you a non-XXX bank ATM fee for an addition $2.50 – $5. $10 charge for taking out $20!
Food you will end up throwing out – Every once in a while I pretend to be #fitfam and buy celery. I eat a few stalks and end up throwing out the rest when it goes bad. Grocery shopping for one can be difficult, so I tend to buy produce frozen that I know I will not be able to eat before it expires. Your freezer is designed to be packed to its capacity, so freeze leftovers, freeze when you are going away for a few days, and freeze expensive items such as meat and berries. Here are my favorite freezer meal tips from The Kitchn.
Fast food – It’s horrible for you, and honestly not that cheap. Just ditch it.
Coffee – This was a hard pill for me to swallow. My iced coffee from Dunkin was $3 a day during the work week, so $15 a week. $780 a year. Ugh, I guess I’ll cut back and make my own and splurge on Dunkin when I’m having a rough day.
Bottled water – Again, I’m going to sound like a hippie here, but it’s 2018 and people are still PAYING for water in PLASTIC water bottles?!?!! Get yourself a nice reusable stainless steel water bottle or a BPA free water bottle and you’ll be surprised how much more water you drink and how much money you save.
Prepared food – Zoodles from my grocery store are $4.99 for a serving, whereas a serving of a whole zucchini is around $1. Lean Cuisine, Smart Choice, Amy’s prepared freezer foods, and others are filled with sodium and not nearly enough nutrients your body needs. These foods will burn a hole in your pocket and leave you feeling groggy and unsatisfied. Stick to whole foods, such as eggs, fish, vegetables, fruits, legumes, and beans and you’ll start to see a huge savings.
Haircuts – for ladies, this may be difficult. I’ve found that there is not much of a difference between a $100 haircut and a $50 haircut. Anywhere you can trim the fat from your haircut expenses is a win. In my old neighborhood, I had a really good hairdresser at Super Cuts. I went once, and he wasn’t there, and my hair still turned out fine.
One time, I was staying at an Airbnb in New Jersey and the host told me she used to be a hairdresser, so obviously I asked her to cut my hair. My friends and family were a little horrified, but I got my haircut for free that month.
Cheap clothes – $10 here, $20 there, and soon you have a closet full of trendy clothes that will be out of style or fallen apart in a year. It’s much more financially responsible to buy clothes that will last and fits well.
Stores like Forever 21 and H&M have been under-performing because millennials are realizing the sensibility of owning fewer items with better quality. I will splurge on shoes and coats for something that is comfortable and will keep me warm. Then I will hit up thrift stores for sweaters and t-shirts as a cheap option to give new life to my wardrobe.