Tips for Being Frugal: National Association
of Personal Financial Advisors

When looking for tips for being frugal, keep in mind that frugality means something different to everyone. However, the basic principles are the same: don’t spend more than you make, evaluate the way you spend, and change your mindset accordingly.

Eileen Freiburger, CFP and President of ESF Financial Planning Group

LoveToKnow Save contacted the National Association of Personal Financial Advisors to learn more ways for being frugal. Members Eileen Freiburger, CFP and President of ESF Financial Planning Group in Manhattan Beach, California, and Jana Davis, CFP at ESF Financial Planning Group, took time to share their insight.

When some people hear the word frugal, they think it means clipping coupons and making lamps from string and oil. What is a better way to adopt a frugal mindset?

There’s really no better place to start revamping the frugal mindset than going to Webster, which defines Frugal: “characterized by or reflecting economy in the use of resources”.

Frugal is learning to live within your means, to take a step back and say, “You know, I don’t need that newest gadget just yet.” It’s about finding a balance between spending for fun and spending wisely. You can have both, but the fun must come only when spending sensibly has become the rule, not the exception.

Living a frugal life does require patience and thought, but it can become a worthwhile habitual practice.

In your experience, what is the largest hole that people fall into financially, and how can they take steps to get out of it in a frugal manner?

I would say the largest hole people fall into is turning on the credit spigot and then allowing it to get out of control.

Debt has its place, but too many people are paying minimum balances on credit cards, not because an emergency situation had caused them to build an unhealthy balance-due, but because they didn’t take the time to save for big ticket items or to look for those zero-percent interest deals and use those deals wisely. The frugal way to get out of this hole is to deal with the credit card balances head on. Do not put them away in hopes they will go away.

Another frugal method is to start treating those credit card charges as if they were debit card charges. If you spend it, mark it in your checkbook register. For some people, if they see a lower balance in the checkbook, they are more apt to spend less.

As for those credit card balances, sit down and come up with real payment plans where highest interest rates get paid off first and so on. The safest bet is to sit down, list out the debts, list out the interest rates being charged and get a payoff plan started immediately.

What tips for being frugal do you have that create a noticeable difference in a family's budget in just a couple of months?

Family’s budgets can be tight. Determining where to trim the fat isn’t always as obvious as you’d hope it would be. But, there are a few places a family can look to for some instant results.

One of the first places I look at is the food bills and expenses for dining out. Dedicating a little time to think through a weekly menu for the family can help make your trips to the grocery store more sensible, and can help turn expensive lunches into sensible sack lunches. Prepping dinners in advance can help you avoid the I’m-running-late-and-am-too-tired-to-plan-a-meal crises, which causes us to spend more on meals out than what we could make at home.

Another area I think can help trim the budget is to get the kids involved. There is the pressure to keep up with your peers with the newest fad, the latest gadget. But when parents just buy these things, the value is lost.

Getting kids to earn through chores and save for what they want will not only slow down that expensive habit of filling their toy chests but also help create a more frugal child who will be encouraged to find the best deal that gets his or her desired object the quickest. We don’t always have time to shop the best deal, but give a child the incentive and he or she will have the time to find that deal for you.

What is the first thing people should do right this instant if they’re interested in more frugal living?

Act on my first recommendation. Food prices are getting higher and higher. Sit down and plan a weekly menu before the rush of the workweek is upon you. Get out of the last-minute-meal habit.

There's obviously a concern in the current economic climate about saving money. What advice do you have for people wondering if they should invest in their 401K plans and other investments verses sticking cash under a mattress?

First and foremost, you’ve got to consider your individual time frame. Do you have 5 years to retirement or 50? The longer you have, the more able you are to sustain these ups and downs and continue to save utilizing investments in a well-diversified portfolio.

Secondly, you need to consider the quality of your 401k plan. What kinds of investment options are available to you? Is there a company match? A company match is essentially money you are leaving on the table by not participating in the plan, even if you’re decision is to invest it into the cash equivalent option in your plan, it’s still wise to try to contribute enough to get that full match. I’ve found that the 401k does work because automatically taking this investment out of a person’s pay check means they don’t have time to miss the money.

No one has a crystal ball for our markets and where they are going or when they will turn around. It does take a steel stomach to continue to add money to investments with the headlines screaming the death of equities. But this is the time for those not faint of heart to be buying low and then hopefully in the long run selling high. I’m staying in the market. I’m continuing to add to my Roth 401k. And though it will take some time, I believe in the long run the returns will be there in a diversified portfolio.

Many people feel that if they're not near retirement age, they don't need a financial advisor. How do financial advisors help regular folks manage money more effectively?'

A financial advisor can serve so many roles. Each person’s situation is unique and an advisor that can recognize this and provide individualized services.

I think more than anything, financial advisors can help regular folks (and we’re all regular folks) to get thinking and talking about money matters. By following financial advice and forming a plan, people can get a better sense of where they are and where they are going and even get them thinking about where they want to be. At the end of the day, an advisor that has helped a client give their hard earned cash a purpose and has helped a client see a strategy to reach goals has provided an essential service.

It’s not always just teaching people how to save and where to invest, but providing a strategy that answers why they are saving and what their investments represent. It doesn’t matter if you have $1,000 dollars to work with or $100,000, everyone can benefit from having a plan for their money.

At press time, the National Association of Personal Financial Advisors is on a bus tour throughout the U.S. called “Your Money Bus Tour”. Members of the organization are traveling from city to city offering free financial advice and education. Talk with experts to learn more tips for being frugal and ways to start a financial plan.

Find out if the tour is coming near you by visiting the Your Money website.

~Tracey L. Kelley

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