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  • July 21, 2020
  • Daisy marshall

That was a sunny day, I still remember. I was lying on the beach sand, my eyes closed and my body absorbing the sun heat. While my skin was turning brown, a question flashed through my mind – can I live off 50% of my income? I immediately jumped to my feet, grabbed my belongings and headed the way back home.

I did not have an idea what exactly I was about to do or what made me plunge to the action, but I did not want to stop myself because I felt that the moment when the question crossed my mind was a catalyst for a change in my financial life. I did not want to let it go.

The first thing I needed was a bank statement to look over how much and where money had been going. I was living in an average apartment and I was working as a software engineer. However, it had been six months to have a full-time job. Before, I had been working as a freelancer. Here is what I found:

My net income (six months) £20,000
My expenses (average) £16,000
Savings £4,000
Saving rate 20%

I wanted to increase the saving rate up to 50%. One of the ways to increase savings was by boosting income. Many mentors and financial counsellors recommend improving income source, but I did not feel that it was worth taking on the burden of projects at the cost of my health. In my opinion, it is absurdity to work more than your body allows just for the sake of money that would go to your medical bills in the end. So, there was only one option and that was cutting back on my spending. I called my friend as he was expert in money-saving strategy.

He told me to classify expenses to get an idea of essential and discretionary expenses. Here is what we found:

Monthly Expenses (Average) Amount
Rent £500
Groceries £200
Utilities £300
Internet £70
Entertainment subscriptions £30
Magazine subscriptions £35
Retirement funds £100
Dine out £100
Commute expenses £150
Insurance £110
Parties and pubs £80
Cinema £100
Clothing £500
Gifts £100
Others (including small debt obligations) £225
Total £2,600

Of course, my monthly expenses were very high, but the other hand I found there would not be a significant change if I whittled down my discretionary expenses. However, the picture did not seem to be the same to my friend. He found several loopholes in my spending behaviour that he suggested that I should live a frugal lifestyle.

Changes I made to my financial lifestyle:

I cut down the grocery expenses to £150 because I started buying some of the food items from a wholesale store. I had to buy in bulk but I preferred buying those items that could last longer. I opted out from magazine subscription and saved additional £100 on utilities because I switched to a cheaper provider.

I stopped going to restaurants at every weekend and refrained myself from calling on clubs and pubs during Saturday nights. Clothing ate up a large portion of my money and that was because I would prefer buying branded clothes. It plunged to £100 since my friend recommended me some thrifty shops.

My commute expenses also dropped down because I started travelling by a public transport instead of my car. Apart from these expenses, there was one thing that helped me achieve my goal. That was debt repayments. Until I saved money on my regular monthly expenses, I often used to find cash shortage in case of unforeseen expenses. As a result, I always found myself taking out no guarantor loans with instant decision. These small loans helped tide over, no doubt, but sometimes it felt a bid hard to pay back on time. After a couple of months, when I reevaluated my spending, I found the following impact:

Monthly Expenses (Average) Amount
Rent £500
Groceries £120
Utilities £150
Internet £40
Entertainment subscriptions £15
Retirement funds £100
Dine out £50
Commute expenses £50
Insurance £110
Parties and pubs £30
Cinema £40
Clothing £100
Others (including small debt obligations) £225
Total £1,530
My net income (six months) £20,000
My expenses (average) £9,200
Savings £10,800
Saving rate 54%

I was glad that I could save up to 50% of my income. Until budgeting, I had no idea that frugality never means what you are going to give up. It means what you are going to gain. If you are planning to save money, you will also learn the ways to live frugally. Instead of luxurious lifestyle or keeping up with the Joneses, you should focus on everything you need and enjoy your lives. However, it does not mean that you will never need to borrow money, but make sure that you apply for a loan for emergency purpose and with a reliable direct lender like One Click Loans .

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