Budgeting

How to Live Simply and Cheaply: A Complete Guide

As the average person becomes more and more environmentally conscious and open to the benefits of a frugal lifestyle, minimal lifestyles are being pursued by individuals and families. The idea itself can seem great but getting started may not be the easiest task—especially if you were never mindful about your lifestyle and spending habits before.

The good news is that we have a comprehensive guide to show how to live simply and cheaply! Keep reading for everything you need to know about changing your lifestyle to stop overspending and live simply. 

Step 1: Get a Good Idea of Your Income and Expenses

When trying to live simply, you should first figure out how much take-home pay you have coming in. If you share household expenses with another person, you can include their income. 

After you know how much money you have, you can then turn your attention to the expenses each month or week. With online banking apps, tracking how much you spend and on what is easier than ever. If you don’t have an online record, gather receipts and bills, or start tracking right away. It will be helpful to categorize your spending into different groups. Here is an example of how you can break down various expenses: 

  • Essentials — costs like housing, transportation, food, utilities, debt payments, insurance, etc., are all necessary expenses. You may have the least amount of wiggle room here when trying to cut down on costs and start saving money. 
  • Recreational Expenses — expenses like going out to eat, traveling, and shopping are all examples of recreational costs. This is one of the categories that will have the most room to make adjustments and find alternatives.
  • Savings — any long-term or short-term savings goal are another category to keep in mind when organizing your expenses. 

From here, you can figure out general areas and specific costs to cut down on or completely cut out. Even with essentials, you may find alternatives to help you save money. Remember that to truly live simply and cheaply, you will have to approach it as a new lifestyle— that means making some changes that may not be easy! 

Step 2: Creating a New Plan For Your Money and Using Frugal Living Tips

Once you have an idea of how much money you have, your current lifestyle, and the categories you are willing to cut down on, you can come up with a concrete plan for living simply. One option to organize your finances is through a budgeting system. 

Budgets can be a digital program (an app or software), a template for excel, or created with pen and paper. There are also various strategies you can use tailored to specific goals. For example, you can create an annual budgeting plan, a monthly plan, or weekly plan and you can set goals based on spending limits or percentages. 

With a new budget or plan in place, you can start seeing all the unnecessary expenses you may have been paying for before. Not too sure about the different ways you can save money? Below are a few frugal living tips:

Downsizing Your Home To Save Money and Live a Simple Life

For most people, housing will cost them more money than anything else. 

And so, one of your most extensive ways to save money can be done through downsizing. If your apartment, home, or condo has more space than you need, consider making that significant change of moving. Especially if you really want to take on that minimalist lifestyle. 

Even if you make six figures, moving to a more affordable space can be a proactive way of starting a long-term commitment to living a simple life. 

Being Mindful About Your Utilities

Electricity, hot water, and gas are just some of the utilities you might be paying for. The good news is that saving on utilities can be as simple as shorter showers, turning off lights in rooms (when not occupied), and using energy-efficient appliances/products.

Using Various Strategies To Cut Down on Groceries and Food Costs

What you eat and how you eat will be a massive factor in how much money you spend overall and on your grocery bill. You can use all kinds of methods to save money on food costs while also cutting down on food waste! Here are money-saving tips that almost everyone can incorporate with the food they eat: 

  • Eat less meat to save extra money. 
  • Coupons for your grocery bill through retailers, manufacturers, and coupon apps. 
  • Meal plan based on sale items.
  • Getting used to new food tastes that can come with living cheaply. 
  • Grocery shopping and cooking your own food.
  • Growing your own food to live frugally.
  • Avoiding markup stores to save on your grocery bills.
  • Planning with a grocery list to save as much money as possible.
  • Keeping a grocery budget and sticking to it.
  • Portion control to make the most out of every meal.

Reevaluating How You Travel Every Day

This is one of those costs that you may not think of as spending money or an option you can cut down on, but chances are you can! 

The way you get to and from work, school, or other stops from your daily commute may be the most convenient option. Still, alternatives may be cheaper depending on where you live and what you have access to. 

It may be a good time to reevaluate how you commute and switch to the most cost-effective option when trying to live simply. Public transportation, carpooling, walking, and biking are all options to look into.

Refinancing Your Debts To Save On Interest

Dealing with various high-interest debts like credit cards or loans? Think about loan refinancing. The way this works is that you can take out a new loan to pay for your existing debts. Ideally, you would want to get a better interest rate to make repayment cheaper and lower overall debt repayment costs. Even if you have bad credit, there are loan options available for subprime credit. Look into them and other personal loan options to see whether refinancing will be worthwhile. 

Double-check Your Insurance Plans

Insurance is another place where you may be able to save money. Assess other plans and options with your car insurance, home insurance, life insurance, and more to find optimal coverage for the best price. More money on insurance doesn’t necessarily mean the best coverage! 

Cancel Those Annual and Monthly Subscriptions

Subscription services can mean you spend money without even thinking about it! And so, whether it is a gym membership, movies/shows, delivery services, a phone bill, internet service, or more, canceling or finding the cheapest ways to have these services can help cut down on monthly bills. In a few months, you will likely see a considerable change in how much you pay for subscriptions. 

Getting Creative With What You Do for Fun

Hobbies or interests may be making a large hole in your wallet. Instead of spending money on things like concerts, dining out, going to the movies, find free and cheaper alternatives. Whether that means using resources in your city (free museum, attraction days, etc.) or getting creative at home. All these routes can help you have fun while spending less money. 

Getting Rid of Your Stuff and Decluttering

Living on very little money can be challenging for many people when surrounded by unnecessary things that require maintenance. When making that switch to simple living, think about all the things you can sell or get rid of. Not only can this process help you earn some extra cash, but it can be the perfect jumping point to changing your lifestyle. For example, if you have multiple cars, think about switching to one car—you won’t have to worry about spending money to use it or maintain it. 

Reevaluating Your Spending Habits To Adjust for Living Frugally

Your financial habits will determine whether you will use money-saving tips successfully. And so, really think about spending habits, triggers, and your personal challenges to change the way you think about wants vs. needs to live cheaply to save more money. 

Step 3: Adjustments To Live Simply and Cheaply and Save More Money

Frugal living can be challenging, even with the proper guidance and frugal living tips. And so, it is crucial to have the mindset of really wanting to embrace frugal living and the hard work that can come, especially at the beginning of the process. And so, be patient with yourself and your family members who are adjusting to a new lifestyle. 

Let’s say you choose to live cheap and find that living cheaply is not the right option for your household. That is totally okay! You can always incorporate helpful tools you learned while transitioning back into your old lifestyle.

Step 4: Setting Goals for Frugal Living and Getting the Most From Living Simply 

If you commit yourself to living simply, the last step is to set realistic money goals for yourself and your household. Plans can not only help motivate you to stay on track, but they can help you get the most return from your minimal lifestyle (in a few different ways). Creating a solid savings fund, getting rid of debt asap, paying off a home or car, and investing are just a few financial goals you can set. While others may opt-in for more lifestyle-specific purposes like reducing their carbon footprint or living a more natural lifestyle. 

Remember that simple living is not the same as living like you are totally broke or avoiding paying for necessary expenses! Living cheap can be comfortable and should be rewarding!