The following is a guest post from Sara of OnSimplicity.net, one of my personal favorites in the simple living genre. Be sure to visit her site, and sign up for free updates via feed or email while you are there.
So you’ve been working incredibly hard at being frugal, but your bank account looks no better for the effort. In fact, your situation seems worse off than before. What went wrong?
You may have fallen into the trap of going broke by being frugal. If your extra efforts are leaving you with no extra cash, check for these culprits before throwing in the towel.
High Start-Up Costs
Some frugal habits have a break-even point that’s a few years in the future. If you’ve racked up expenses, try to determine whether these costs will be made up in the future. Club memberships (such as Costco) might be one start-up cost that will take a few months to work in your favor. Similarly, it can take years to break even after cutting out the lawn service and investing in a good mower, or purchasing a fuel-efficient vehicle.
The Solution? Estimate your break-even point (the time when the savings incurred will likely outweigh the expenses). Use that number to decide if your new frugal habit is truly worthwhile. If it is, take comfort in the savings you’ll be banking in the future. If not, it may be time to rethink your strategy.
Not Shopping for a Bargain
Even if a frugal habit can save you money in theory, you may still need to make an effort to save. Take sewing as the perfect example. With a sewing machine and some practice under your belt, you can sew fantastic items for a few bucks apiece. On the other hand, between expense fabrics and non-sale patterns, you can also wind up paying $50 to make a dress you could have purchased for $25.
The Solution? Make sure that you shop around for components and equipment, whether you’re gardening, cooking, sewing, or doing your own auto maintenance. Look for combinations of high quality and low to reasonable prices to boost your bottom line.
Rewarding Your Efforts Too Often
You’ve been really good this month, so you totally deserve to splurge a little, right? Perhaps. Splurges and indulgences are a key part of keeping yourself satisfied and on-track, but if you’re not watchful, they can quickly erode any savings you’ve accrued—and then some.
The Solution? Keep track of your splurges. Put a smiley face on the calendar each time you indulge, keep a monthly tally sheet, or write it in your journal. If your frugal habits aren’t helping you make any financial headway, check back and see if “deserved” treats are eating up the savings you would have built up. Then, continue as before or scale back as needed.