9 Frugal Habits To Start This Year
01 - Meal Prep
According to the USDA, in the United States, food waste is estimated at between 30-40 percent of the food supply. This translates to approximately 133 billion pounds and $161 billion worth of food annually. And I know this includes all food wasted in both residential and retail, but can’t many agree that we often throw out food because we weren’t strategic about our grocery shopping?
We buy a loaf of bread thinking we will make sandwiches for work this week and when we get home, we realize that we actually have leftover curry we need to finish. So come the end of the week we end up throwing out the new loaf of bread.
A good strategy to mitigate this waste is meal prep. I’m proud to say I’ve been following this practice for over 10 years now. I meal-prep all my breakfast and lunch. A simple protein shake for breakfast and a simple chicken, brown rice, and broccoli for lunch.
Not only does it save money, but it also saves me a tremendous amount of time and is much healthier than what I would be eating out. It’s not like I don’t enjoy eating out at times. My wife and the kids love a good restaurant - but because it isn’t something we do every day when we do go out to eat, we actually enjoy it.
02 - Buy Quality
If you are money conscious, when it comes to purchasing items, you often think of how much money you can save in the short term. We look for the best deal or the cheapest option available. But if we did this with everything we bought, that would be a big mistake. Most often quality items are much better designed, last longer, and work better than their cheaper counterparts.
For example, segueing from my early example of meal prep, my breakfast is made up of a healthy protein shake. Frozen blueberries, oats, greens, and protein powder are all blended together. But in order to make this healthy shake you need a really good blender. Something not only with power but lasting quality to blend several hundred times a year without burning out.
When I first started blending, not knowing much about blenders I just grabbed whatever seemed most affordable at Target. However, these would burn out within just a few months because I was using them every day.
So after much research, I decided to invest in a real high-quality blender called Vitamix because all my super-fit buddies were raving about it. A Vitamix blender is not cheap. A good one can cost you close to $500, but what a difference. I’ve used it for close to 10 years now and I am still to this day amazed by its durability. The motor can pulverize anything and despite thousands of blends, it gives me no indication of giving up.
Being frugal doesn’t mean buying the cheapest. It means buying quality so you can save time and money in the long run.
03 - Track Your Spending
If you are trying to lose weight or get fit, one of the key metrics you need to measure is your calorie intake. You want to log in your food and portion out each mean. It’s hard to do and quite meticulous, but it's effective.
In the same way, if we want to get our finances in order and practice frugal habits in this new year, we want to apply the same meticulous strategy to our money. If we want to be more frugal, we need to be aware of our spending. Not just feel it. Don’t just guess this. When you can see all your spending in one place, you have real data you can act on.
I personally like using digital tools because all the aggregation is done for you. Mint or Personal Capital is a good starting place. But if you don’t feel comfortable linking all your accounts with these aggregators, feel free to use a simple spreadsheet or even paper. The key is to track your spending, not the specific tool.
Track your spending for at least a month and assess it with a critical eye. You might notice that areas you thought you had under control are actually out of control and the areas you thought you were doing horribly in are not that bad.
My wife and I often think about this with food. Because most of our physical transactions happen with food; at the grocery or restaurant, we have an innate feeling we are overspending on food. However, when we look at the actual data we notice that food most often isn’t our biggest culprit. Many times subscriptions we forgot about or the electricity bill we didn’t see are the biggest surprises.
If you want to dial in your frugal habits but aren’t sure where your money is going each month, start out by tracking your expenses.
04 - Cancel Subscription
Many businesses now operate on a subscription model. If you want to watch a movie, you need a Netflix subscription. If you want to listen to music, you need a Spotify subscription. If you want to exercise, you need a monthly gym membership. Forget the days when you pay once. Companies want that recurring revenue stream and they will ask for subscriptions whenever they can.
Most recently because my son really wanted to watch the World Cup, I ended up getting a premium Hulu Live TV subscription for $70 a month. As someone who doesn’t like paying for anything, this really hurt. But what would have hurt more was if I forgot to cancel the subscription after the World Cup ended.
As you are scrubbing your expenses, keep an eye out for recurring subscriptions or memberships you might have forgotten about. If you aren’t using it, don’t hesitate to cut it.
05 - Optimize Your Fashion
If you look at my closet, you’ll see I actually have multiple identical shirts. I normally go clothes shopping at most once a year. And if I or my wife see something on sale, we just grab several of them to last me for years.
Not only does this save me money, but it saves me a heck of a lot of time because I don’t need to spend brain space thinking about what I’m going to wear that day.
Steve Jobs was known for wearing the same outfit every day because it reduced decision fatigue. Similarly, I’d rather not only save money but save mental bandwidth for more important decision-making throughout the day.
And please don’t take this as you shouldn’t care about clothes if you love fashion. My wife is the complete opposite of me and I wholeheartedly support her love of fashion. It’s something she loves to prioritize in her spending.
For me, it just doesn’t give me that same level of spark, so I decided to wear the same outfit every day and save my money for things that I genuinely love spending money on, like books and hair perms.
Another tip to optimize your fashion without wearing the same thing every day is to practice the one-to-one rule. If you buy a new shirt, you have to get rid of one existing shirt. If you buy a new dress, you have to get rid of one existing dress. For most people, the pain of getting rid of an article of clothing is enough to stop many from buying a new one.
06 - Attempt Repairs Before Replacement
Spending money is easy. So when problems arise, most often we pay to fix it rather than trying to fix the problem itself.
Do the pants have a hole? Get a new one.
The sofa has a tear? Buy a new couch.
Is the knife dull? Time to go to Costco.
But if we take a pause and assess the problem for what it is, most often we can find the solution by repairing it ourselves or taking it to a repair shop.
Have a hole in your pants? If it's not too big how about getting it mended at the dry cleaners?
The sofa has a tear? How about using a repair kit instead of replacing it.
Is the knife dull? Have we thought about sharpening it?
And I admit I am the biggest culprit here. It requires a lot of energy to try to fix things myself or find someone to fix them for me. So a lot of times I resort to just going online and looking for a replacement. Yes, at times this is necessary when items are beyond repair.
However, let’s also get in the habit of asking the question next time something breaks - Can I repair this? Not only does this save money, but also the time that’s required to research and buy a new item.
07 - Don’t Buy Souvenirs
As easy as this sounds, this is a hard one. Who isn’t guilty of bringing home souvenirs from trips? I thought this was what I had to do whenever I visited new places. I mean why did they have so many cool refrigerator magnets at souvenir shops? It was there so I could buy them and show them off to my family and friends, right?
But the honest truth is that cheap souvenirs are a complete waste of money. How often do we look at them and reminisce about our amazing trip? Most often we use them to just hold up old Christmas cards.
Instead of wasting money on cheap souvenirs, create a document of memories with pictures and videos. Or spend that money on some amazing food you can’t get at home. Then take a picture of it so you can remind your family of all the cool food you bought them next time they start complaining about never going anywhere.
In the Kim family, we have a hard and fast rule. Whenever we travel, never waste money on souvenirs - Yes, is it harsh on my 6 and 9-year-old kids? But I tell them I would rather spend that money on buying them some cool food or experience they want to try rather than a silly key chain we see at souvenir stores.
08 - Reconsider Gifts
It is estimated that average consumers spend up to $1,000 annually on gifts and other holiday items. Gary Chapman talks about in his book, The Five Love Languages, how we all give and receive love in 5 different ways. And gift giving is just one of them. The other four are words of affirmation, acts of service, quality time, and physical touch.
I used to think buying and giving gifts was the only way to express love. And consumer-centric marketing machines perpetuate this myth because it's best for the company’s bottom line. Not your bottom line.
However, if we genuinely want to express love to our family and friends, it actually serves them better to find out if they actually like receiving gifts. And most often, you’d be surprised to find that gifts might not be on top of their list.
I realize this with my own family - I don’t know if it has to do with our life stage or just personal preference but I realized that my parents didn’t really care for gifts that much. Rather, they wanted more quality time with the family during holidays or birthdays.
And even with my wife, you will definitely judge me for doing this, but we came to an agreement that cold hard cash is the best form of gift for both of us. We get to pick what we really want and don’t have to stress out about trying to guess what the other person really wants.
Yes - am I unromantic? Do I have no style? Guilty to all of them. But it’s worked for us the past 10 years, and cross my fingers, hopefully for the next 50 years as well.
09 - Know Your Priority
When you ask 100 people what their priority is, I'm sure you'll get 100 different answers. My 8-year-old son would say - the money to buy all the legos at Target. My wife would say - the freedom to enjoy her coffee quietly, without any interruptions. My aging parents would say - the physical health to watch their grandchildren graduate from high school one day. You must decide what rich means to you so that you can prioritize your spending.
“Spend extravagantly on the things you love, and cut costs mercilessly on the things you don’t.” - Ramit Sethi
Essentially, it's okay to spend unapologetically on things you love - as long as you cut back mercilessly, on the thing you don't care about as much. For my wife, good coffee is one of her key priorities. So she spends freely on the best coffee beans she can find. But in order to do this, she cut costs mercilessly on things she doesn't value as much - a new car, the latest tech gadgets, and designer wear shoes.
Smart frugal habits really begin with knowing what our priorities are. What do we really value and what does not care too much about? Then we can start designing our lives and money around that priority. If you like to learn more about frugal living and how you can be frugal, without being miserable, please check out my post here.
