How to Live Cheaply

How to live cheaply, by spending as little money as possible in the short and long term. This article is designed to help anyone save money and limit expenses in their daily life.

Instructions

Difficulty: Easy

1. # Budget your money. Find out where it's going from and, more importantly, what it's going to. This can be a very surprising and enlightening exercise for many people.
2. # Look at your expenses and see where you spend the most money on a monthly basis. The top two or three items is where you need to do the most work.
   
   * If rent is your biggest expense, consider moving to a cheaper place. Consider getting a roommate to split the costs of living. Consider moving back in with your parents or guardians; offer services (e.g. looking after a relative) in exchange for paid rent and utilities.
   * If food is your biggest expense, begin by saving your receipts every time you go grocery shopping and looking at them to see where most of your money is going. Read How to Save Money on Food
   * If utilities are a large part of your monthly expenditures, consider ways to decrease them. If your heating bill is enormous, go to a hardware store and buy some window sealer to block cold air from entering through your windows. Invest in warm slippers and a comfy knit hat--it's a lot cheaper to keep you warm instead of the whole house. Turn off lights and appliances when you're not using them to save electricity. Also, if the area you live in is predominantly cold, put up evergreens on the north side of your house, close to the house. If it is predominantly hot, put up deciduous trees (the ones that lose leaves at the beginning of fall/winter) on the south side. Minimize your air conditioning. At night, open windows and run a heavy-duty fan all night to pull cool air through house; close up early in the morning and block sunniest windows with inexpensive foam art boards.
   * If a main expense is entertainment, think of cheaper ways to entertain yourself. Instead of going out, which usually costs more than you expected, have some friends over and rent a movie, play games, or just sit and have a good conversation. Limit your alcohol tabs, see if this makes a dent in your entertainment expenses. Buying a cheaper bottle of wine and enjoying it with friends at home can sometimes be as fun as hanging out at the local watering hole. Pick up your old guitar or violin and go find the local folk, jazz, or blues music jam scene. This is really fun and really cheap. There are people jamming everywhere, although it can take some detective work to find them.
   * If a big expense for you is a car, try living without it:
   
   o Sell your car (or don't own one to begin with). This can be difficult to do; especially if cars are a way of life for you. But it's not as terrible as you might think. Calculate how much selling your car would
3. # Develop a budget based on your above spending, with clear goals. You can do this by creating a spreadsheet or just by writing on a piece of paper. Define how much you expect to spend in each of your major categories in the next few months with goals where you can limit some activities to save for larger purchases. Don't forget to include a small portion for misc. items just in case.
4. # Track your expenses in line with your budget that you created and make sure not to go over budget. If you allow yourself to overspend a couple of times, your budget will be less helpful and you'll lose more money to things you don't need or could have found cheaper.

Tips & Warnings

• Generic Brands — Consider buying an alternative that may be cheaper or eliminating that item if it is not necessary.
• Bargain, Bargain, Bargain. It pays off.
• Make a realistic budget, one that you can meet without starving yourself or depriving yourself of necessary things.
• Learn to separate "needs" from "wants". Ask yourself if you really need this item...and if you're not sure, wait. If you catch yourself thinking, "But I deserve this!" be very wary — that's a tactic advertising agencies use. Don't be brainwashed into buying.
• Cut down on smoking. Buying cigarettes really adds up. Why pay someone to ruin your health? But that's easier said than done when you have an addiction. Why not buy tobacco and roll your own — much cheaper! Consider cutting alcohol too. Better yet, quit alcohol and smoking all together. It might be why you're in this mess in the first place.
• Even if you're earning a six-digit income, you still have a good incentive to live cheaply: spending less means saving more, and saving more means that you can easily Retire in Your 30's
• Include savings in your budget; that way, a portion of your earnings is already going to investments or a rainy day fund. Also try the monthly investment or savings plans offered by several employers that deduct money from your paychecks and send it to savings accounts or investments automatically.
• Avoid lemons: always consult Consumer Reports for unbiased ratings of hundreds of products, especially for big ticket items (new and used cars, appliances, computers...). Available free at your library, or with a subscription.
• Don't rent DVDs; borrow them from your library, as well as CDs & books. Some libraries lend tools, too! Many libraries allow you to request materials online; they'll e-mail you when the item arrives, and hold it under your name. However, make sure you return them on time! Often late fees for DVDs are very high. Always write due dates in your planner, and some libraries can give you email reminders if you sign up for them. You might also look at switchplanet.com to trade DVDs you own for ones you want. It's free, so all you pay is postage for the DVDs you mail out.
• Cancel your cable subscription.
• Hang laundry on a clothes line if the weather allows it. You'll save electricity (and/or gas) and your clothes and linens will smell better! You can also hang laundry indoors if you have the space.
• Use the barter system. Do you have a friend who can repair your car? Offer to do something for them in return (like paint their kitchen). Your time and talents are valuable assets.
• Free-cycle. Many communities have websites or other systems for offering/receiving household items, clothing, etc. at no cost. This is a win-win for everyone: you receive an item, someone else no longer has to deal with it, and it stays out of the landfill.
• Shop at thrift stores and resale shops - many of these support charities. To save even more money, look for specials such as "All coats 1/2 price on Tuesdays" or "Everything with a pink tag..." etc. Of course, if you're spending too much money on gasoline to get to these stores, the savings aren't worth it. The same goes for driving across town to save a few cents on a box of macaroni-and-cheese or day-old baked goods.
• Do it yourself. While many services require a professional in that field or a licensed contractor, there are many tasks that can be performed at no cost by you (or by your family members): lawn care, car washing and maintenance, etc. Exercise is the added bonus!
• Keep a coin can or piggy bank. Toss in loose change and when the bank is full, take it to the bank, and deposit the "free" money.
• Use a free credit card that gives you a percentage back for all purchases. Most important!!! PAY OFF THE BALANCE every month. You get 30 days grace period to pay off balances as well as the 1-3% back and an itemized list of expenditures each month.
• Don't let up on your budget. If someone wants you to go out and spend $50 doing it, ask yourself if you will regret spending the money.
• On the other hand, if you stick to your budget and allow for miscellaneous expenditures, you will have extra cash left over to spend on the random entertainment activities that come up or other things you want to buy.
• The easiest way to lose money is by nickels & dimes. Be wary of small, repetitive purchases (Starbucks, fast food, cell phone calls, cable bills...).
• Avoid the seduction of sales. "50% off" is only a bargain if you really needed the item. Remember: if you don't buy it, you get 100% off!
• Don't get discouraged. Remember that if you stick to your plan and try hard enough, you will be able to save up money, or at least spend significantly less than before.
• If you have children to care for, try not to deprive them of a childhood with cheap spending; just save a little money here and there if you feel it won't make a major difference.