Today, financial planning implies saving and investing in order to take care of major future goals. These goals includes child education/marriage, owning a house, retirement and to leave behind an estate for the next generation. In simple words, ​financial planning involves sacrificing on some of expenses today to build a corpus for the future.

Financial planning does mean living frugally to some extent. But frugal living does not necessarily mean compromising on your living standards. We will elucidate on this aspect in the later part of article.

To live frugally essentially means being economical with your money and living expenses. It means living well below your earnings and then using the money thus saved to invest for building a corpus for your future.

Be a savvy spender:

Having said that, living frugally does not mean that you need to significantly downgrade your lifestyle. But to alter your spending habits and think wisely about how to spend money. It effectively comes down to being a savvy spender.

To be frugal means being proactive & Creative:

To clarify, it means taking control of a situation in order to serve your best interests. Consider for a moment that frugal people consistently look for bargains and therefore will haggle, bargain and negotiate better deals wherever possible. This takes hard work, efforts and time. As such, frugal people must have self-control, determination and patience.

Save money without sacrificing on consumption:

All industry verticals – be it garment shops or footwear shops – have a discount season (one or two months in a year) to clear stocks. During such discount season, you can buy a pair of your same brand of jeans and get another pair for free. We come across many savvy home makers buying full year’s requirement during such discount season. Such approach can helps to halve your expenses on these items, without curtailing on consumption.

Avoid conspicuous consumption:

Whether we openly acknowledge it or not many of us buy stuff to impress others. However, to live frugally means to resist such temptations. There is difference between a NEED and a WANT. What you need comes in the form of life essentials which are important for a comfortable living. What you want comes in the form of luxuries which are designed to make you feel/look better and to impress others. 

Avoid impulse purchases:

Many of us often buy things on impulse. We see something and we get so emotionally absorbed that we make an irrational decision and instantly purchase it. To avoid falling into this trap, simply cool off yourself in order to make a rational purchase decision. You can buy the item if your decision does not change even after the 24 hour cool-off period.

Make cost effective purchase decisions:

• Only purchase second-generation products, particularly when it comes to technology and gadgets.
• Enroll for in-store loyalty programs in order to get discounts and rewards.
• Stock up on certain items when they are available at a heavily discounted price.
• Shop online to save on prices and/or to compare prices.
• Avoid purchasing extended warranties for consumer durables. The standard warranty is normally enough.
• Avoid purchasing one-off disposable items such as plates, cups, cleaning wipes, and paper towels. Focus on buying “reusable” items instead.

To sum up ‘Frugal living is a mindset and way of life. It is not compromising on living standards’.