I take pride in my pursuit of a business degree. Trudging through hours of coursework relating to accounting principles, marketing strategy, economic theory, and other “businessy” topics, my perspective on personal finances has changed. When grocery shopping, I’ll think well, what’s the ROI, return on investment?
When walking to class, I’ll remember that assets equals liabilities plus owner’s equity. So perhaps one day I’ll run a corporation.
I find myself business minded now, which coupled with my love for travel, causes me to live frugally. Living on a budget doesn’t have to feel suffocating. Your bank account and credit card aren’t chained to a fence in prison.
Instead, it should feel empowering to live economically, because you have the ability to be picky about where you invest your hard earned cash. Here are four tips to live your best frugal life.
1. Grocery shop for what you really like.
I like oatmeal and peanut butter. I like eggs and bacon. And I love avocado toast but my grocery bills aren't extravagant at all. Instead, I can get by with spending fifty dollars for a week on groceries by just getting what I like. I don’t buy unnecessary items that end up sitting in my freezer for months nor do I buy colorful vegetables that end up rotting. Grocery shopping is cheaper than eating out for every meal, so if you just buy what you like to eat, the essentials, you save more money than you think.
2. Be aware of your “free cash flow.”
This is a term in accounting used to measure a company’s ability to earn a profit. Just subtract capital expenditures from cash earned from operations and there it is.
But I know, that’s complicated if you have never taken a class in accounting. In regards to you and your life, be aware of the amount of money coming in and the amount of money going out on a daily, weekly, or monthly basis. Payday might be on Friday but, your bank account isn't locked until then.
You aren’t limited to making payments only on Fridays. Be aware of what’s coming in every two weeks and the set payments that will be going out. Car payments, rent, utilities, gas, and groceries are non-negotiable. Daily expenditures like Starbucks actually do add up.
3. Know why you’re doing it.
During my study abroad trip in China, I diligently kept track of each kuai and yuan in order to see if I could afford the trip up north to Beijing. I ended up not being able to go, so I came back home and made new goals. I’m going to work hard, save money, and travel next summer in China.
The experience of traveling for two months abroad made me reconsider what I wanted for myself in the future. When I’m in the middle of a grueling shift with testy customers, I just keep my goals in mind. Every minute I’m a dime and a nickel closer to affording the next trip.
4. Save small.
I opened a savings account when I got my first paycheck. I began by putting thirty percent of my paycheck into the account.
But then I began playing a little game with myself.
If I stopped myself from committing an impulsive purchase, then I would transfer between three and five dollars into my savings account. Small amounts compiled together someday become big amounts. Sooner or later your nest egg will become a whole chicken coop.
Every time I drop a penny into the teacup on my desk I feel like Michelle Tanner shaking her piggy bank. Saving money is addictive and fun. It makes you proud when you know that you're doing something that will benefit yourself in the future.