I've always been a frugal person, but since the birth of my 3rd child 3 years ago, I've had to become even more so. I don't know why exactly, but we really started feeling the financial pinch after she was born! For one thing, we started having more definite goals, like buying a house and starting an IRA and going on vacation and buying a second car. All of these things would cost a lot of money and we didn't want to completely drain our savings account to pay for them. Here are the 5 main things I started doing to attain my dreams without hemorrhaging my life savings away.
I made a budget
I know personal finance books and blogs are always saying this, but it bears repeating: CREATE A BUDGET. I would say that creating a budget was the single most important thing I did in my quest to save more money. All I did was to figure out our monthly income after taxes ($3600) Add up all of our set monthly bills ($1300) and subtract the $1300 from the $3600. Then I took that number ($2300) and divided it by four ($575), because there are about 4 weeks in every month. Then I figured out how much money I would need every week for food ($125), gas($30) and miscellaneous expenses ($170). My weekly expenses add up to $325 per week, which I take out in cash and divide into separate envelopes. Using cash to pay for these expenses really helps us to stay on track. It's too easy to overspend when using a debit or credit card.(At least it is for us!) Anyway, if you add up my weekly money and set bills money, it comes out to $2600. This is $1000 less than my $3600 income. My goal is to save $500 per month and with this budget, I almost always meet that goal. Even if something unexpected happens (And it does...Every month) I still have a $500 buffer zone.
I bought a smaller house than the bank said I could afford
When my husband and I first went to the bank to apply for a loan, the loan officer said we could afford a mortgage payment of $1700 per month!!! On a $3600 a month income! Luckily, we knew that was crazy, but I still can't believe the bank people tried to convince us of that! We opted instead for a $805 a month mortgage with no PMI because we were able to put 20% down. The house we bought wasn't the biggest or the nicest house we looked at. It doesn't have 4 bedrooms or a finished basement, or big bathrooms. It DOES have a big kitchen and 2 porches and a huge backyard. Most importantly it has a mortgage that we don't have to struggle at all to pay every month. That peace of mind is worth more than 2500 square feet and separate bedrooms for each kid.
I started shopping at sams club and walmart for groceries
I never used to want to shop at these places because I am a total food snob. I wanted to shop at the gourmet store for aged beef and exotic grains and European butter! What I realised about a year ago is that I could save hundreds of dollars every month by shopping at walmart and sams club instead. Now I only go occasionally to the gourmet store to pick up hard to find items, and then only if it falls within my grocery budget.
I learned how to make expensive foods myself
I used to buy turnovers and scones and artisan bread and brownies and lemon curd and preserves at the store for a hefty and ridiculous price. It was mainly ridiculous because these items and many others are easy and cheap to make at home! With a little practice, pretty much anyone can be a gourmet cook.
I put up a clothesline
Last Summer my dad put up a clothesline for me in my back yard. The first month I used it instead of my dryer, my electric bill went down by $35! In the fall, spring and summer I use the clothesline for everything except my towels. Towels dry really stiff if you don't put them in the dryer.