This guide to living cheap is aimed at giving you a quick start to becoming frugal. It boils down to showing you how to monitor your income and expenses and then acting on this information.
Let’s begin with your income. Most people can easily list their income per month. Listing expenditures is a bit more complicated.
The key to cheap living is to minimize each category of your expenses without degrading your quality of life. So you need to know what you are spending in each category on a monthly basis.
You can probably list the amounts you are spending per month in the “fixed” expense categories, such as rent, car payment, and maybe food. And you may be able to estimate the rest. But if you actually write down every amount you spend for at least a month, it will be more accurate and give you better data.
The main categories that I use for living expenses are: food, housing, clothing, transportation, healthcare, entertainment, and savings. You can make a list that has additional categories to suite your particular expenses and your interest in details.
To do this recording of your expenditures simply take a notebook or sheets of paper and record everything you spend for several months. You can also, use a computer and spreadsheet or an accounting program to help do this.
This may not be as difficult as it sounds. If you buy most everything with a credit card or cards, you already have access to credit card statements. All you have to do is put these expenses into the 7 categories listed above. You may also have cash payments that should be recorded and added to the card statement info.
Whatever way you generate the expense data, you can take the monthly info that you generate and do a monthly average by category. So then you will know what you are currently spending by category.
This will help you work on reducing your expenses in each category by eliminating un-needed and unnecessary amounts. Practical ideas for reducing expenses are listed in our Frugal Living Ideas section.
Strategies to increase your income without working more hours should also be a part of your cheap living plan. If you are already earning a salary you can perhaps ask for a raise, perhaps upgrade yourself to a better-paying position with the same company, perhaps change employers to increase your income, and perhaps get more education in the longer term.
This this guide to cheap living is not to suggest that you should live in poverty. It is to help you avoid waste and to focus on starting a business at home. You want to be able to afford a better, fuller life. We’d like you to get a start right here.
The next step after this guide to living cheap is Frugal Living Ideas, where you can find profitable details about the expense categories of your life.