According to a poll of more than 3,000 respondents conducted by YouGov, UK consumer confidence dropped to an 18-month low during the last quarter of 2018.
This decline came against the backdrop of Brexit and the continued impact of heavy borrowing by UK households, with confidence levels falling to -9% from -7% in the previous quarter.
With this in mind, it’s increasingly important that people adopt a frugal lifestyle in order to save money and live more comfortably. Here’s our five-step guide to achieve this:
1. Budget Your Finances
You need to start by carefully budgeting your finances, in terms of balancing the amount of cash that you earn each month with your outgoings.
It’s important to deal in pence rather than pounds when budgeting, as this enables to leverage accurate data and gain a greater insight into your precise financial circumstances.
While you can use a simple spreadsheet or banking app to complete your budget, you may be better served by using a comprehensive mobile budgeting tool instead.
2. Determine How Much Disposable Income You Have
While budgeting can help you gain control over your finances, it also allows you to determine precisely how much disposable income you have each month.
By inputting accurate data and carefully subtracting your outgoings from your total income, you’ll be left with a fixed amount that can be classed as disposable and used as you wish.
This is an extremely important calculation, and one that can lay the foundation for effective planning and debt management.
3. Make Sure You Are Paying Your Debts
When budgeting, you should include any existing debt repayments as part of your monthly outgoings.
However, it’s important to review your credit report to ensure that you’re on top of your outstanding debts, particularly in terms of the amount being repaid and the level of interest associated with each account.
If you’re struggling to reduce your debt burden or simply want to commit to living more frugally in the future, you could take a percentage of your disposable income and use this to pay off more of your debt on a monthly basis.
4. Save as Much as Possible
On a similar note, you may want to achieve greater long-term frugality and financial security by maximising the amount that you save each month.
As a rule, you should try to commit at least 10% of your earnings to savings, but we appreciate that this is hard if you have mounting debts and an inflated cost of living.
However, if you do have disposable income, we would recommend that you commit as much of this into savings as possible. This can genuinely boost your finances and create a viable safety net for the future.
5. Focus on Saving Through Everyday Expenditure
The final step in our guide revolves around your spending habits, as you look to live more frugally and discover sustainable savings.
While you may be tempted to eliminate costly purchases and larger items from your budget, a more effective strategy is to reduce your everyday expenditure on items such as groceries and utilities.
The small but weekly savings accumulate quickly over time, and will help you to reduce your spending in a way that does not compromise your standard of living.