Thou Shalt Live Within Your Means (for financial happiness)

During a recent family vacation, I spotted a sign in front of a church parking lot that said: “Thou Shalt Not Park Here.”  That sign gave all of us a good laugh – and it also gave me the (divine) inspiration for this week’s topic.  Whether you’re looking for ways to get out of debt or strategies to stretch your hard-earned dollars just a little bit farther, these “commandments” will help you live a financially virtuous life:

Commandment 1:  Thou shalt stop spending money on “wants.”

One of the keys to frugal living is the ability to tell the difference between needs and wants – and the willpower to stop spending money on things that aren’t actual “needs.”  Think of it this way:  “Needs” are the basic things we must have for survival:  we need food and shelter; we need clothing; we need a way to get to work or school and back again.  “Wants” are things that we can live without, like the very latest electronic gadgets; a fancy new SUV with all the bells and whistles; restaurant meals; and designer clothing.  More often than not, the things we think we “need” to buy aren’t really needs at all.  In some cases, there are lots of cheaper alternatives that will work just as well.  In other cases, we could go entirely without them and get along just fine.

Don’t get me wrong:  I’m not saying that you should never splurge on something really, really nice.  And I’m not saying that it’s a sin to treat the family to a nice dinner or to buy that new TV you’ve had your eye on.  I’m just saying that, on a day-to-day basis, you should try to limit your spending to very basic needs.

Commandment 2:  Thou shalt not treat credit cards as an additional source of income.

I’ve spent hundreds of hours working with people who are struggling to pay down mountains of high-interest credit card debt – and in many cases, their troubles began because they tended to view their credit cards as a source of extra money.  Instead of creating budgets and learning to live on what they earned, they more or less bought whatever they wanted – and when they ran out of cash, they used their credit cards.  And they kept using them.

Credit cards are not cash.  They aren’t a source of income.  While there is a lot to be said for responsible credit card use, the truth is that when credit cards are used irresponsibly, they can wreak havoc on your finances.  Instead of using credit as a safety net, create a budget.  Adjust it until it works for you.  Stick to it.  Make sure you leave yourself some money for entertainment and a few impulse purchases.  If you don’t have debt, keep it that way.  If you do have debt, start paying it down as soon as possible.

Commandment 3:  Thou shalt look for a better deal.

Being frugal means being a good bargain hunter – and good bargain hunters rarely pay full price for things they need.  Frugal people don’t just go out and buy things.  They wait for sales.  They search for coupons.  They scan classified ads and swap meets for secondhand bargains.  They trade with friends.

You can see where I’m going with this one.

Commandment 4:  Thou shalt buy for quality – not just low price.

All too often, people mistake “cheap” for “frugal” – but there’s actually a big difference between the two.  Truly frugal people look at more than price when deciding to make a purchase.  A cheap price tag might mean a lower initial investment, but it might also mean that you’re getting an item that wears out twice as fast or will require more maintenance or attention than a similar, higher-quality item.  Buying a slightly more expensive (but better-made) item might save you more money over the long haul.

Commandment 5:  Thou shalt do it yourself (usually).

When it comes to things like home improvement, repairs, and car maintenance, frugal folks are more likely to do the work themselves, rather than paying someone to do it.  Sure, it’s often easier (and faster) to pay someone to do it for you – but think of the money you’d save if you did those things at home instead.  Learn to do one or two new things yourself – check out a book from the library or surf YouTube for a few instructional videos.  You’ll learn something new, and you’ll have more money in your wallet.

Have any other “commandments” you’d like to add to my list?  How do you stay frugal?  Leave me a comment and let me know.