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Why should you bother? Because, Fool, your retirement will need to be financed somehow, and unless you intend to work until you're 90, it'd be smart to begin planning for it now. Don't you want to be lounging around by the pool reading trashy novels in a big floppy hat when you're 70? There are other reasons besides retirement for living below your means. Maybe you have kids and you're saving and investing for their college education. Perhaps you're paying off credit card debt and want to cut back in other places so that you have more money each month to put toward becoming debt-free. Any number of reasons can lead you to the conclusion that living frugally and saving and investing money is an intelligent way to live.
Here at the Fool, we have an entire discussion board dedicated to sharing ideas and advice on the best methods to live below your means. This is the Foolish Mecca for all things fiscally responsible and frugal. Below, I'll lay out some of the most popular tips gleaned from the board. Remember, there are lots more there, too.
First of all, start by trying to get a handle on your spending. Carry around a small notebook and write down all of your expenditures for a month. Only when you fully understand where all of your money is going can you begin to efficiently spot places to cut back. Using this information, you should be able to come up with a realistic budget for yourself or your household. Many Fools swear by financial and budgeting software like Quicken or Microsoft Money as a way to track spending. These programs allow you to categorize where every cent goes each month, and can be helpful in sticking to your budget. (Check out the Fool's Budgeting discussion board, too, for more on budgets.)
Now you're ready to look for places in your financial life to spend less and save more. One of the most repeated tips on the board involves eating out: Don't do it! Or at least, don't do it as often as you probably have been. Cooking at home can save you tons of money. Along that same vein, take your lunch to work instead of eating out for lunch every day. And drink more water -- it's cheaper and healthier than soft drinks. You'll be shocked at how much you aren't spending just by following this one suggestion alone.
Keeping up the maintenance on your car is also often cited as a great way to live below your means. Making sure that the brakes work and that the oil's been changed before you hear that grinding noise or smell smoke will make for cheaper upkeep in the long run. In the words of message board contributor jtesh, "Cherish your belongings. Don't treat everything as a consumable. Take the time to maintain your car; it will last longer and hold its resale value."
Shopping at garage sales and thrift stores can save Fools lots of money. You know that old saying about one person's trash and another person's treasure? There's a great deal of truth in that. Also, when and where you can, buy the generic version of foods at the grocery store. Many times, you won't notice any difference, except for the cheaper price tag. Think about buying in bulk, too, from someplace like Costco or Sam's Club, when and where it makes sense. You can save lots of money by doing this, and you'll cut down on your number of trips to the store. Finally, make a shopping list and stick to it!
There are lots of suggestions on the board for ways to keep a handle on your spending habits. Make a wish list for items that you'd like to buy. Implement a "waiting period" for your wish list, and honestly examine your wants versus your needs. Don't buy anything from your list until the waiting period's up. Try to treat every expense as unaffordable unless you've planned for it. Don't buy on credit, unless you're prepared to pay off your balance every month. Interest charges can make even the most frugal purchase's price skyrocket.
Check out places in your budget where you can potentially cut back. Can you bank cheaper? How about your insurance? Get new quotes to see if you can get your current coverage for less. Is your phone service the cheapest possible? Do you really need super-duper-unleaded gas for your car? Would the quality of your life be greatly affected if you no longer had your current cable package -- or cable at all? What about that cell phone? Do you really need it? Look carefully at every category in your budget and ask yourself how you can do it for less. In many cases, you'll be able to either cut back an expense, or eliminate it altogether.
Another suggestion that often comes up for people looking for ways to cut back is to quit smoking. What a fantastic idea, Fools! Not only will you save all that money you've been laying out for ciggies, but you'll be literally saving your life as well. Check out the Fool's Quitting Smoking discussion board for help with this one.
There are also tons of very specific tips on the LBYM board -- things like using fluorescent bulbs and dimmer switches for your lights in order to save energy and money. These can be found throughout the board, as well as by reading the list of LBYM tips put together last year by Recovering Fool.
There are a few contentious issues with living below your means. First of all, how much is too much? Sacrifice and deprivation are not synonymous. Try to strike a balance between saving and investing for the future and having a fulfilling life now. Nitpicking over every single last penny will only exhaust you and those around you. It's not worth it to be that stressed out -- you could make yourself so unhealthy you won't even make it to see the retirement you're giving so much up for now. Charity is another issue. Should people striving to live below their means try to set aside money for charity, or should they just continue to save it all? It's up to each individual or family to decide what's right for them.
Sport-utility vehicles (SUVs), believe it or not, seem to be even more divisive than the charity issue. Some argue that SUVs couldn't possibly be consistent with a lifestyle of living below your means. After all, they are expensive and they, as a rule, get awful gas mileage. Others take the position that whether or not SUVs are LBYM kosher is a situation-to-situation decision. Someone with lots of kids or dogs or both would have a hard time driving through life in a Honda Civic, no matter how great the gas mileage. As with the charity issue, it's important to remember that living below one's means is not a static philosophy. It's adaptable to each person's particular situation.
Charity or no, SUV or sub-compact, take the time now to look at your life and your expenses. Coming up with a budget and learning to live below your means will pay off in the end. Visit the Living Below Your Means discussion board to share your suggestions or to get advice on your situation from fellow Fools. Your 70-year-old self will thank you for it!
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