How to adopt a frugal approach to your spending and save money
Spend less and increase your ability to save with these tips
The COVID-19 pandemic has changed many aspects of American life, including how many people approach their finances. According to a recent survey by the Harris Poll on behalf of Empower Retirement and Personal Capital, 83% of Americans want to minimize their financial worries, with 70% aiming to save more as a way to feel more financially secure.
One way to save money and increase the amount you can put into savings is to limit your spending. Here are three ways to develop frugal habits, spend less and increase the amount of money you can save each month.
Focus on personal fulfillment over material items
Adopting a frugal approach to spending starts with looking beyond money for personal joy and fulfillment, says wellness expert Deepak Chopra. Many people view money and material items as tokens of success. But to embrace a frugal mindset, Chopra advises, you may need to redefine success in terms of personal growth via your career and relationships. Of course, money can bring joy by allowing you to buy new experiences or products that enhance your life. However, if you look to money as your primary source of personal fulfillment, you may be tempted to constantly spend.
Limit and track your spending
Allocate a certain amount toward discretionary spending every month and hold yourself accountable to that limit. You can track your purchases through online tools or mobile apps —like the Personal Capital Dashboard — that record each purchase and show you how much you’ve spent in specific categories. Tracking purchases can also help you practice mindfulness with your spending, which is key to adopting a frugal approach, Chopra says. For instance, if your app says you’ve already spent this month’s clothes budget, you might take some deep breaths and consider whether you really “need” that new pair of jeans right now.
Wait 24 hours before making a purchase
If something you want but don’t need catches your eye, pause before buying and consider these questions:
- Is this something that will bring me joy? Or is this an item I am interested in for appearances or to impress others?
- How much will I use this item?
- Does it serve a purpose, or is it purely for fun?
Research has found that the rush of happiness felt when shopping only lasts momentarily.1 But the financial effects of impulse buying can wreak havoc on your budget, limiting your ability to save money and pursue more long-term financial goals. If you’re still thinking about an item 24 hours later, it may be worth buying — if it fits in your budget.
Spending less can help you save more. Focusing on personal fulfillment over material items, tracking your spending and pausing before making purchases can help you adopt a frugal mindset and dedicate more of your income towards savings.
Help your savings grow with an Empower Investment Account
1 Cornell Chronicle, “Doing makes you happier than owning – even before buying,” 2014, news.cornell.edu/stories/2014/09/doing-makes-you-happier-owning-even-buying.
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