August 5, 2011

Cut Your Spending 1%

Being frugal can feel to some people like an unhappy process of giving up things and a time consuming hassle.  You might spend time clipping coupons to save 25¢ or 50¢.   You could be bagging lunches to save a few dollars a day.  This kind of thing can either be a turn off that makes people give up on frugality or it could lead people into an unrealistic sense of accomplishment.   Either way some attempts at being frugal either fizzle out or simply don't accomplish much.

Rather than going through the various normal frugal processes such as coupon clipping and bargain hunting how about you look at it another way?     How about you instead look at your bottom line and just try to shave off 1%?  If you cut 1% of your spending annually for several years the cost savings will add up big time.

I arbitrarily picked 1% for a goal because it is a fairly practical number to shoot for.   I think that most of us could find 1% to cut off our spending fairly easily if we tried.   Of course you don't want to limit yourself to 1% of easy savings if theres more to be had.   For the first year you might easily find 2% or 3% or 5% of savings.   In subsequent years however you may have a harder time finding easy ways to quickly cut your spending and then finding 1% to cut might be a bigger challenge.

When you go about cutting your spending I'd follow this basic process:
Categorize at all your spending such as housing, gasoline, car insurance, groceries, eating out, clothes, etc.  Then sort the list of categories by the amount spent per year and see what you spend the most on.   Consider each topic and prioritize what is most important for you and what you don't care too much about.  Focus cost cutting in the items that you consider lower priority items but which are most expensive.
 If you need ideas on how to save money you can find lists such as : When Times are Tight: 168 Frugal Tips to Make Your Dollar Stretch

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