Analyze Your Spending Habits and Adjust to Stretch Your Dollar Further

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Recent tough economic times have brought common sense back to appreciating what a single dollar can buy these days. The art of a frugal lifestyle has now become a daily challenge for everyone, but frugal need not mean cheap. Focusing on what your true priorities are is an ongoing process that can only begin once you are aware of your personal spending tendencies.

There is an abundance of helpful websites that communicate simple tips for saving money with coupons, cooking tasty meals for less, and growing a crop of mouth-watering vegetables in your own backyard. However, before being tempted to buy things that you do not need, the prudent path to effective spending patterns is to first become aware of your personal inclinations. Prepare an analysis of your expenses over the past six months, paying careful attention to allocate credit card purchases, break down cash spending by category, and obtain enough granularity to understand where unnecessary spending occurs.

The impact of prior overspending is all around you in the form of “clutter”. Go through each room (garage, basement, and attic included), removing what you do not use, and have a yard sale or list the offending purchases on ebay for auction. More cash is always good to have, and it will help you develop new priorities after seeing your previous mistakes. Breaking old habits is never easy, but your future financial security is at stake.

Your revised budget should begin with an allocation for savings from your monthly net income after taxes. Consistent savings over a long period of time is the proven path to long-term financial security and proper money management. It is also often easier to focus on making more effective small purchases, but do not become “Penny wise and Pound foolish.” Your large ticket items, i.e., automobiles and housing, offer the greatest opportunity for “applied” frugality. Always comparison shop, and always negotiate. Salesmen are more open in these tough economic times to accept discounts if it means a sale.

Living frugally is all about living the lifestyle you want with what you have. The “have” part is defined by your choice to consider more options, rather than bend to the latest consumer trend to buy something that you do not need. Know your personal spending tendencies and define what your new priorities must be going forward. Enjoy the process, and then enjoy your life more.

Tom Cleveland is a market analyst and writer for ForexTraders, an online resource for currency news and investment.

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