Do you look forward to the holidays but dread the havoc it will wreak on your bank account? It might be the perfect time to take an “uber frugal month.” It’s a budgeting challenge in which you strip your monthly budget down to the most basic necessities.
Not only are frugal months a quick way to save, they’re also a great way to develop good spending habits, according to personal finance blogger Elizabeth Thames.
“The whole idea of an uber frugal month is to find out what is the very baseline that you can spend in a month and still survive, and what is the baseline you can spend and still enjoy your life,” Thames tells BETTER. “So while it’s a one-month-long challenge and it’s designed around those 31 days, the idea at the end is to see if you can translate that into the rest of your life.”
“The Frugalwoods” blogger says most of us are wasting hundreds of dollars a month and don’t even realize it. She says we spend even more on the holidays.
The idea is to find out the very baseline you can spend in a month and still survive, and the baseline you can spend and still enjoy your life.
“I think we — and I totally include myself in here — have a tendency to think, ‘Oh, but it’s Christmas, but it’s Hanukkah, but it’s Thanksgiving, so I will spend as much money and eat as much food as I want,’” says Thames. “And that’s when we start to get into a dangerous situation, especially where spending is concerned.”
With the holidays upon us, Thames says now is as good a time as any to give a frugal month a try. Here's how to do it:
Step 1: Determine mandatory vs. discretionary spending
Thames says people often confuse mandatory spending — the things they need — with spending that is really discretionary. She says your rent or mortgage, outstanding debts and healthcare count as mandatory expenses.
“Just about everything else is discretionary,” insists Thames.
“It’s super easy to assume that something like our commute or our grocery or electricity bill is fixed in stone — it’s not,” says the blogger. “It’s largely calibrated off of the decisions that we choose to make.”
Step 2: Examine all your spending and figure out what to cut out
If you are like most people, you’re probably wasting a lot of money on food, according to Thames. She says making her own meals has helped her save thousands.
“For me it was probably close to $1,000 to $1,500 every month that I was able to save just by not buying a latte in the morning, which I used to do every day, not buying a sandwich at the cafeteria in my office, not getting takeout and not going out to eat,” says the blogger.
The next thing people tend to waste money on, she says, is entertainment.
“What are you spending on cable? On Netflix? On any other form of entertainment — going out to concerts, movies, that kind of stuff — tends to be extremely expensive per incident,” she says.
You can also cut back on heat and electricity, she notes, by being better about adjusting your thermostat and turning off lights.
Step 3: Cut back on unnecessary holiday spending
Thames and her husband used to spend hundreds of dollars on each other at Christmas, she says, but now they have a mutual agreement not to buy gifts for each other.
“We stopped doing that many years ago because we realized that what we really want is to just spend time together,” she says.
Thames and her husband also purchase used gifts for their two-year-old daughter.
“I think we can get caught up in this idea that we need to buy our children tons and tons of gifts every year for every holiday, and that’s just not the case,” says Thames.
“It’s also true that kids, especially my kid, are very happy with used toys,” Thames continues.
She says most kids don’t differentiate between toys from a department store or a garage sale, where you can find perfectly good toys for a few dollars or less.
“So I’m spending maybe a total of $5 or $10 versus the thousands of dollars people can end up spending on the holidays,” says Thames.
The 33-year-old doesn’t buy gifts for extended family members. Instead, she bakes them cookies, cakes, and other consumable gifts, which she says they tend to like better than anything she buys from the mall.
“Getting to bake in the kitchen is really enjoyable,” says Thames. “It’s also a chance for me to practice my skills as a baker and I’m giving them something that’s not going to clutter up their house.”
Step 4: Prioritize what’s important to you
Thames and her husband saved thousands of dollars by turning every month into a frugal month — drastically reducing their spending and saving thousands of dollars in the process. Frugal months allowed the former urbanites to save enough money to quit their jobs and move out of Cambridge, Mass. to rural Vermont. Thames wrote all about it in her soon-to-be released book “Meet The Frugalwoods: Achieving Financial Independence Through Simple Living.”
Frugal months allowed the former urbanites to save enough money to quit their jobs and move out of Cambridge, Mass. to rural Vermont.
Frugal months are not about depriving yourself, insists the author. Rather, they’re about finding out what’s really important to you.
“What we do is we prioritize the things that are important to us, we spend on the things that matter to us, and we just absolutely do not spend on things that don’t bring us lasting joy,” she says.
That’s an attitude the mother, who is expecting her second child in February, plans to pass down to her children.
“I think kind of understanding the expectation of children, especially very young children, they learn what the holidays are through you,” says Thames. “You calibrate what Santa — what the holidays — mean through your actions and through your family.”
Thames says not having to worry about money, especially during the holidays, is liberating.
“What I think of financial independence as is really the opportunity to stop worrying about money,” says Thames. “It’s one less thing you have to worry about in your life and it’s something that has enabled my husband and I to pursue our dream.”
How to take a Frugal Month:
- Determine which of your spending is actually mandatory: Don’t confuse mandatory spending — things you need — with discretionary spending. Your rent or mortgage, outstanding debts and healthcare count as mandatory expenses. Everything else is discretionary.
- Find small ways to cut back: People tend to waste a lot of money on food and entertainment. You can save big by cooking your own meals and cutting back on things like cable and going to the movies. Reducing your heating and electricity costs will also help you save.
- Rein in holiday spending: You don’t need to spend a ton of money on the holidays. Talk to your significant other about whether it’s important to buy each other gifts, or whether you would be just as happy spending quality time together. If you have kids, consider buying them used toys. Instead of buying gifts for extended family, consider giving them something you can make yourself.
- Spend only on the things that matter to you: Frugal months aren’t about depriving yourself. When you cut back on non-essentials, you figure out what’s really important to you and take one step closer to financial independence in the process.
Learn more about the free Uber Frugal Month Challenge here.
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