5 Frugal Living Tips for Tightening Your Budget

Do you ever wonder, “Where does all my money go?” Are you guilty of pointless convenience spending? Do you envy frugal living bloggers or coupon cutters?

We live in a society of conveniences that can provide the extra time that American families desperately crave. But convenience always comes with a cost. 

Hopefully, you will see room for adjustment and save a few bucks for something far better, like the vacation you think you can’t afford—or retirement. Let’s break down some of the biggest offenders.

1. Paying in Credit at the Gas Station

A big portion of your income goes to fuel your car. Trips to the gas station can eat up significant earnings. I am a huge believer in paying cash for gas. In New York, you will pay 6 to 10 cents more per gallon to swipe your card at the pump. That can add up to fees of $4 to $10 per month if you pay your credit card in full at the end of each period—plus added interest if you don’t. Does it take that much more energy to walk into the store to pay in cash?

If you never seem to have cash available, make a plan to save these few bucks. When you receive your next pay, immediately carve out the gas money you will need until the following pay period. Put that cash into an envelope marked “gas” and use the money only for gas.

2. Paying Too Much in Fees at the ATM

You have to use the bank. But where and how you access your funds can cost you over time.  

Do you always use your own bank for cash withdrawals? Not doing so can drain significant funds from your account. Using a domestic ATM outside your bank’s network will cost you, and in some cases twice: a fee for the out-of-network ATM operator, which may range from $1 to $10; and a fee deducted by your own bank for withdrawing at a non-affiliated ATM, which may range from $1 to $5. Do you realize taking $20 out of your own bank account could cost you as much as $15? Throwing away money for this convenience is inexcusable.

If your bank is not located close to your home or office, change banks. While you are doing so, ask questions about these and other potential hidden costs. Subject to deposit minimums, there are traditional banks, online-only banks, and brokerage firms that will reimburse ATM fees.

3. Buying Groceries Without a Plan

When I work with people who do not understand where their money goes, the first place to look is often at food costs. For many, food spending is disproportionate due to eating meals out and bringing in pre-prepared meals. While I am happy if you are purchasing food at the grocery store, you have to be mindful that the grocery store is a hotbed of temptation fueled by creative marketing strategies (see this helpful guide on product placement in grocery stores).

Go in armed. That means be prepared with a list. Take time to look at the weekly sales circular for your store, see what is on sale, and preplan the week’s meals accordingly. To the extent possible, avoid the convenience of purchasing pre-packed meals, as well. Set a spending limit that you intend to honor. Organize your list (by aisle, if possible) for only the items necessary, and stick to the list.

Once at the market, look at the “per item cost” of what you are buying. Don’t be too shy to whip out your calculator and check if the larger size is the better bargain. Likewise, don’t buy the bigger package just because it is a better deal, unless you are certain to use the product before its expiration. Having a lot of toilet paper may be fine, but having a lot of fruit with a short shelf life is not.

4. Participating in Flash Clothing Sales

Have you ever determined which emails to open based on the subject of the message? Today these were just a few of the subject line invitations in my email box:

“We’ve Missed You!”

“A Special offer, just for you – 20% off your order”

“Exclusive! 50% Off at [store name]”

My client, Camilla, decided she had to get a hold of her spending on clothing. When we began to frame out a monthly budget earlier in the year, looking at her household expenses and debt, Camilla did not want to budget any money allocated to a clothing budget. She said she had a closet full of clothing and enough shoes.

That sounded a bit unrealistic to me, and after discussing that she was required to wear professional attire for work, and that clothing would become soiled and shoe heels would break, Camilla was inclined to actually budget a set amount for her clothing allowance. 

Yet, when I met with Camilla again, she had actually spent $350 on clothing in June, largely in part because of an email message similar to the ones above. Camilla said her fear of missing out took over her otherwise budget-conscientious mind. 

How do you determine how much you spend on your wardrobe? Do you have a budget? Or do the vendors decide when you will shop and how much you will spend? I am all in favor of a sale, but restraint matters.

5. Not Factoring All Living Costs When Taking on a Mortgage

Buying a home is not just about the cost of the mortgage. This is one the most substantial budgeting tips to save money and avoid debt.

It kills me when people learn a lender has pre-approved them for a mortgage based on a high percentage of their current gross income, and they innocently believe it. Once the would-be homeowner hears the number they can access, that’s the ballgame. But it’s not reflective of what you can actually afford.

Listen up: The bank does not know or care about your living expenses. The bank has made a calculated decision to lend you as much as possible to collect fees and to continue to collect interest on the money it is lending you. 

Have you thought of the other expenses that will come with this new home that may not be in your current budget? Will your transportation needs and costs change? Are you prepared to replace major appliances? Are you planning to fill this new home with children? Refrigerators, stoves, and working toilets are necessities. Dishwashers, washing machines, and dryers are “wants,” but most homeowners have them, and they break down. And, usually not on the same day as your annual bonus comes in, if you’re lucky enough to get one.

Add in the monthly essentials of electricity, internet, heating fuel, safety, lawn maintenance, pest control, and, let’s not forget, neverending taxes and insurance. Your monthly nut may be a lot more than you understood it would be. Save money by factoring in the cost of living rather than just the cost of the house.

A Final Note on General Budgeting Tips

Set a budget for every pay period of the exact amount you will use for the “necessary” and the “fun” things in life. Budget for exceptions and emergencies, as well. Be realistic about what the “fun” things include … lattes, trendy clothing, live performances, and dinners out. You can accomplish this by allocating funds. When your pay comes in, take that budgeted amount out and label it “fun $.” Use only that money for “fun.” When the money runs out, so do you!

Do not resort to your credit card for things you can’t afford. If you don’t have the money today, and your salary is not going to increase next week, you will not have that money next week. Do not spend your future money. 

Follow these budgeting tips, and frugal living will become an attainable reality rather than a distant dream.

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This is an updated version of an article from 2020. © 2023. DailyDACTM, LLC d/b/a/ Financial PoiseTM. This article is subject to the disclaimers found here.