Frugality is about getting the most value out of your money, but a lot of us aren't good at it. If you want to learn to be more frugal, start with the ERR strategy.
Australian money photo by Shutterstock
This article was originally published 16 December 2014.
The folks over at the Money Principle call it a strategy for money management, but it's actually great for learning where to cut back and how to optimise your spending. It consists of three basic principles:
E: Eliminate waste
R: Replace activities and routines; and
R: Reduce consumption
I agree with The Simple Dollar's take on frugality: it's about cutting back on the stuff you don't care about so you have more money to spend on the stuff you do care about. The ERR strategy is a great guideline for doing this. Let's take a look at what each guideline means.
Eliminating waste is about making sure you use all of the stuff you spend money on. Don't spend money on groceries you don't use, for example. Proper meal planning can help with this.
Replacing your routines is mostly about finding cheaper ways to do the things you already do. If you enjoy going to the movies, you might consider going on a discount day to save money. This is just one example. The point is you can look for simple, frugal ways to approach your everyday habits. And, sure, you could really save money by not going to the movies altogether, which brings us to the final principle -- reduce consumption.
Most of us could probably stand to buy less stuff. The Money Principle uses clothes shopping as an example -- you probably don't need 40 pairs of shoes. But you can also embrace this principle by picking the spending areas that matter to you most, and then reducing your consumption greatly in all other areas.
Check out the full article for more detail on each of these principles, and for some solid overall budgeting advice.
Money management: use the ERR strategy to make your money go further [The Money Principle via Rockstar Finance]