| Real Life Strategies for Building Wealth
Budget like a Boss: Three Stages to Successful Budgeting and Using Them to Your Advantage

Budget like a Boss: Three Stages to Successful Budgeting and Using Them to Your Advantage

People often ask me how I budget.

Fair game; I am in personal finance and I have a personal finance blog on which I’ve written a fair bit about successful budgeting.

I’ll be completely open with you:

Most of the time my budgeting system looks exactly like the picture above.

Heck; this is a picture of the first stage of my budgeting system that involves putting all receipts in a folder for a month and creating, what looks like, a mighty mess.

I’d even go a step further and tell you that for the first six months or so my budgeting really sucked. Do you know why? It sucked because it didn’t simply start with a mess of receipts and a record of spending; it ended with it.

Things have changed since that time of chaos, missed targets, broken promises and debt. My budgeting system has become a finely tunes instrument making then sounds of perfect money management music.

There are three things I figured out to move from the chaos of receipts to a system that helps me know where our money comes from, where it goes and how to optimise the flows up to the nearest £30.

#1. There are three stages of successful budgeting;

#2. You need the tools to make decisions about your spending, earning and balances; and

#3. Successful budgeting is not about money; it is about the life you live and the life you want.

Today, I’ll tell you about these and I’ll try to keep it straight forward. You really don’t need complexity at this stage. One thing I’d ask though is that you don’t read this post as you’d read a novel: please read it as if you are revising for a test. This means you need a piece of paper, a pen and downloads of the tools I’d be mentioning.

Oh, my successful budgeting also means that I work with proper numbers (which is very good for a woman who comes from a country where people still measure distance by the number of cigarettes you could smoke while getting there).

In our family it is John who says things like ‘yes, it will cost us several hundreds’. If you are like John please stop reading this post now. Go away and learn something about numbers and how to use them; apply this knowledge to your money. Are you ready? Now you can continue reading what I have to tell you about successful budgeting.

All that I’m telling you here was worked out through trial, failure and persistence. My first budget was a failure of major proportions: it not only made me feel like my life has been bundled into a straitjacket but also took me halfway to giving up the whole budgeting and getting out of debt lark. (I’m very happy I didn’t give up but it was very tempting at first.)

Here are the three stages of budgeting and the tools and approaches you’d need to implement them.

Stage One of Successful Budgeting: Get to Know Your Money

This stage of successful budgeting is about describing your money. This means that you need to gain detailed knowledge of what you earn, what you spend and what you spend your money on. Sounds banal and boring – and to a degree it is – but without doing that any attempt to budget becomes akin to writing fiction for delusional adults.

Let’s begin.

Okay, let me ask you a question: do you know exactly how much money you make per month?

You do? Great. Because you won’t believe this but many people think that they know when they underestimate their monthly (and yearly) income considerably. Sometimes people underestimate their income by as much as 10-15%. This is a lot, you know. If I were you, I’d check again; and I’d make sure that I include all my income while I’m at it.

Now, let’s move to something more advanced: do you know exactly how much you spend per month? Do you know what you spend your money on?

Ah, you are not so sure. You should be.

Using my system may help. It consists of three steps:

#1. Collect and keep all your receipts for several months

If in doubt, have a look at the picture above. Don’t panic though: you can stuff all these receipts in a bag somewhere and forget about them until you’ve been through, and completed, the next step on this list.

#2. Look at your bank statement for six months

Are you ready to give up? I know how you feel but please stick with me. This one sounds much worse than it is. Particularly if you have electronic banking (and I’m thinking that most people today bank electronically.)

If you don’t have electronic banking you should do. Go on your bank’s website and check it out. Once this is sorted you can continue working on the successful budget that will transform your finances.

If you already use electronic banking, I can tell you exactly what I did yesterday. Here it is:

  • Went on the site with my current (checking) account;
  • Downloaded the data of all transactions for the last six months;
  • Saved the data as an Excel workbook;
  • Saved all monthly expenses as separate sheets in the Workbook;
  • Colour coded the main categories like utilities, mortgage, CCs, insurance, food etc.
  • Went back to the ‘source’ spread-sheet and mad a note of all income streams.

This took me approximately an hour; and I kid you not.

#3. Use The Money Principle Monthly Budget Planner to record all you spend

successful budgeting

Once I had all this data sorted out I entered the numbers in The Money Principle Monthly Budget Planner. (And a big thank you to the good people from Currys-PCWorld for helping making this look much more professional.)

Just as a reminder, TMP Monthly Budget Planner works by bundling up the expenses in three groups: fixed or the expenses that you have to pay and can’t negotiated easily; changeable or the spending that you can negotiate; and variable or the monthly spending that you can change very fast like spending on food, treats etc.

You can download TMP Monthly Budget Planner here.

Now you know your money and are ready to move to the next stage of successful budgeting.

Stage Two of Successful Budgeting: Make Hard Decisions about Your Money

Stage one of successful budgeting is very important but matters very little if you stop there. This was one of my failing when I started budgeting – I knew what we earn and what we spend and…nothing. We continued to earn and spend exactly what we did and the debt was piling up.

This changed when I started making hard but well informed decisions about spending our money. You see, most people would tell you that frugality is the way to go; test yourself and how much deprivation you can take before you fold it.

I don’t do frugality very well. There has always been a part of me believing that life is to be lived to the full and enjoyed. In fact, I believe that our life has one purpose: to leave the world a better place than we found it or, failing that, not to cause damage. Guess what? This is so much easier to achieve if you love your life.

This is why I had a problem when I started out. On the one hand, I had to find ways to reduce our spending and by a lot. On the other hand, I don’t do simple frugality and deprivation for me is as pointless as jumping bare-bottomed in a field of thorns.

Coming up with the ERR system for money management solved my problem; and it can solve your problem with making decisions about your spending as well.

What is the ERR system for money management?

You can read in detail what the ERR strategy is and how to use it to male your money go further here. As a brief reminder, the ERR strategy stands for:

  • Eliminate (waste);
  • Replace; and
  • Reduce (consumption).

You remember the spread sheets that you ended up with at stage one of successful budgeting?

Now it is time to get back to them and look with the eyes of an ERR strategy master.

What are you wasting?

You may find that there are many different kinds of wistfulness in your budget (and your life). Look, for instance, at all your direct debits and standing orders: do you use what you are paying for? (A hint: if you are like most people around, you are paying for services you’ve long forgotten you have access to. Cancel the direct debit because this is waste.)

How much are you paying on insurance? Are you overpaying and under-insured? Are you over-insured? Do this right because it is a waste.

How much are you paying for food? Do you use all you pay for or you throw away most of it?

You already get the drift of how to tackle waste and what to look for. Let me tell you though that when I first did this exercise the waste ran into hundreds of pounds (in the higher hundreds to be more specific).

Next, look for items you can replace. These are usually items for which you are paying more than you should be; or things that you can still get but a lot cheaper. You may wish to have a look into the ways to become a frugal artist as well.

Last but not least, have a look at your spreadsheets with a view to reducing your consumption. Don’t tell me you don’t over-consume – we all do in capitalist societies. After all, we’ve been cast as consumers for well over half a century now and that is what we do – consume. Make sure you don’t consumer more than you feel comfortable with.

Stage Three of Successful Budgeting: Dream the Life You Want

When talking about budgeting most people will talk to you only about money. This is rubbish, friend. Your budget – as in the decisions you make about what you spend your money on – is not about money; it is about what you want your life to be.

In other words, the third stage of successful budgeting is about putting your money where your mouth is.

Are you dreaming of traveling the world?

Then you should probably stop spending your money on booze and cigarettes. (Not a joke at all. The money you’d spend on drink and smoke for a year will be more than enough for several months traveling around the world. Do the maths!)

It is up to you to decide what you really want in your life though; I can’t help you much there.

I can only urge you to do the dreaming exercise; you know, the one where you close your eyes and allow yourself to dream in great detail. You should do this while keeping out ‘the critic’ and ‘the accountant’. For more on how to use this technique you can read this.

Once you’ve worked out all things you want in your life, place them in three groups: a) things without which your life has no meaning; b) thing which you’d like to have in your life but can wait for; and c) thing that you’d like in your life but they are optional.

You know which list you should hold in hand when you go through your spreadsheets again, don’t you?

(Hint: make sure that all things that are at the top of the first list are still in your life. If your life will be meaningless without running interesting races, make sure that you travel around and race never mind how hard up for cash you may be. Cut out something else to make your budget work.)


Successful budgeting is no rocket science; it is simple. You have to make sure that you earn more than you spend at all times.

In this post, I tackled the spending part of this equation; will tell you about earning some other time. For now, it is important to remember that to budget like a boss you need to:

  • Know your money;
  • Know how to make decisions about your spending; and
  • Know your life since this is what make budgeting make sense.

Now get on and do it! There is nothing stopping you, is there?

19 Tested Ways to Reduce Energy and Utility Bills Using the ERR Strategy

19 Tested Ways to Reduce Energy and Utility Bills Using the ERR Strategy

When I got back from work today a letter from our water company was waiting for me. Rather unexpectedly it said that our bill is going up. Again.

This made me have a good, hard look at the rest of our energy and utility bills and it seems they are all going up.

Now, I know that energy is expensive and I’m informed enough to know that we can only expect it to become even more expensive. Still, we did manage to reduce energy and utility bills once and I really want to do it again.

So, I decided to use the Money Principle ERR strategy for money management to develop a checklist to reduce energy and utility bills.

Here is the list:

Just to remind you that the ERR strategy for money management is about three things:

  • Eliminate (waste);
  • Replace (change the way in which you do things); and
  • Reduce (consumption).

Here is what actions you ought to take, I believe, under each of these to keep your energy bills under control.

Eliminate: 7 easy ways to eliminate waste and save on energy in your home

Here are seven easy and straight forward ways to eliminate waste and save on energy in your home.

Some of these you can implement immediately, others may need to wait; some are cheap to put in action, others not so much.

All are very much worth doing: by eliminating waste of energy you can save hundreds per year. And it feels so great!

#1. Pull the plug. Okay; how many of your electrical appliances are left on standby? My guess will be ‘many’. And this is waste of energy you really don’t need – most appliances will be perfectly fine if you pull the plug (watch for some TVs and recording devices because these may lose their memory if plugged off). Word on the street is that, depending on how many devices you us, you can save between £35 and £50 per year by simply un-plugging. Doesn’t sound much but this is: one week of food, couple of pairs of trousers, a pair of shoes or a nice little chip off your debt (or contribution to your ISA). So, think again.

#2. Put out lights. My Dad used to drive me mad when I was little by sending me back to put out the lights. I thought he is un-necessary stingy. Now I do the same (except when I forget the lights on which annoys John terribly). Leaving lights on when there is no one who needs light is a waste of the worst kind. So, put the lights off; and teach your kids to do it as well.

#3. Get yourself some draught excluders. I know, I know. These look very silly and you can trip in them. They help keep the heat in, though. Which is kind of important during the winter – after all, why would you willingly choose to heat the universe; and pay for it. While you are at it, you may wish to get some heavy curtains as well.

#4. Carpet is better than wood. This is the bane of our marriage: I like wooden floors and John wants to stick with carpets. There is a mixture of flooring in our house but I’ll have to say that carpets do keep the house warmer.

#5. Get some more insulation. I’ve come to believe that insulations is a bit like shoes: one can never have enough of it. We have cavity wall insulation (needs renewing), loft insulation…all kinds of insulation. It makes a very big difference and it not only keeps the heat in: in summer it keeps it out better as well.

#6. Double glazing. Yes, it is true: in the 21st century, some houses in the UK still don’t have double glazing. When it comes to eliminating waste and saving on energy, this is essential.

#7. Check for drips. Sounds trivial, I know. But dripping water can really lead to very large waste of both water and energy (to heat and move it around the house). And it is annoying!

Replace: 7 easy changes to save on energy

You can save on energy a lot by eliminating waste; you can save even more – and more sustainably – if you change the way you do things when it comes to energy use.

Here are seven changes that can lead to large energy saving gains:

#1. Change your light bulbs. Yes, get yourself some energy saving bulbs. They don’t come cheap but they also pay for themselves from savings within several months. This doesn’t mean that you should start leaving the lights on but it won’t be so bad if you occasionally forget them on.

#2. Buy new appliances. New white goods are generally much more energy efficient that the ones made 5-10 years ago. The interesting question is, what you do if a very old appliance that sucks energy like a thirsty man on a bottle of cold beer is still working. In such cases, I do the maths: how long would it take for the more energy efficient and new appliance to pay for itself? This helps decide what to do.

#3. Get/use a dishwasher. It is only natural to believe that washing by hand is more energy efficient than using a dishwasher. As most natural beliefs, this is wrong. A full dishwasher load uses 4 gallons of hot water per cycle (and this washes eight full place settings). An average faucet flows at 2 gallons per minute. This means that you can hand wash more economically than a dishwasher if you can wash eight place setting in two minutes. You see?

#4. Change your energy supplier. We’ve been doing this one with some regularity over the last five years or so. It certainly pays off to be an energy shopper – getting cheaper energy complements nicely the other actions you can take to save on energy. Even only moving from a variable tariff to fixed one can save you up to £250 per year. There are three steps to efficient energy shopping. First, you have to take stock of your energy bills; then you have to shop around; and lastly, you have to take control and act on your research.

#5. Install solar panels. Installing solar panels is an important change when you wish to save on energy. This is something that needs an initial investment, though. If you’d like to know more based on our experience with installing solar panels you can read it here. What I want to mention is that out solar panel generate annually over £700 worth of electricity (about 12% ROI) in ‘sunny’ Manchester.

#6. Change your heating controls. We’ll need to do this one – our heating controls are so ancient that we often find the heating on when it shouldn’t be. Sometimes, I’m freezing because the heating has not come on. Now there are advanced heating control systems that allow you to time your heating precisely, heat different parts of the house at different times, etc. Certainly worth a second thought.

#7. Change your shower head. I always suspected that our drench shower is more efficient than the movable head. It turns out I’m right. Look into changing your shower head with a water saving one – this way, you can have a decent shower and save on water and the energy to heat it.

Reduce consumption: 5 things to remember

You will reduce your energy consumption substantially by implementing all the ways to eliminate waste and change your energy use.

Further, you can think whether you are over-consuming.

For instance, you need to remember the following:

#1. You don’t have to wear only t-shirt in the winter. This sound ridiculous, I know, but there are people who’ll have their thermostat on high and the windows opened because they are too hot. You don’t have to walk around your house in a t-shirt in the winter, you know; just put a jumper on.

#2. Your oven doesn’t have to be heated an hour before the meal is ready to go in. Again, sound funny but even I do this one from time to time. I start preparing the meal and put the over on; trouble is the over takes 7 minute to heat and the meal 25 minutes to prepare. You see what I mean? (A variation on this one is heating a kettle when you need a cup and having the heating on in rooms you don’t use.)

#3. Empty rooms don’t need light. This has really started to annoy me. My son leave all lights on, all the time. (It also makes me realise that I’m becoming like my father at his most annoying; still, he had a good point it seems.)

#4. Showers are to get clean. Showers are to get clean and this takes approximately 6 minutes (sorry to sound like Jack Reacher here but this is my limit; I’ve times it). Both my husband and my son tend to use the shower for other purposes like to get warm, or to have some pleasant thinking time. This is over consumption.

#5. Double check the water tabs. Yes, we do this one. John and I forget them on; our son at some point couldn’t be bothered. So much so that I had to resort to non-traditional measures (see photo above).


It seems to me this is a great check list to save on energy and keep our energy bill under control. Are you curious which ones I’m not really good at?

Here they are:

  • I keep my appliances on standby.
  • I forget (occasionally) the lights on.
  • I need to change the heating controls.

How do you manage to reduce energy  and utility bills? Which of the points in this post you have implemented and which you intend to implement?

Still Overspending? You Need to Change the Way to Control Your Money

Still Overspending? You Need to Change the Way to Control Your Money

Do you believe that you have mastered the way to control your money?

So did I, so did I. After turning around our financial destiny so dramatically, I developed this sense of personal finance invincibility.

You know the one, surely. This is the feeling when you have the fundamental conviction that you have mastered your spending and are making the best of your earning. This is the satisfaction you feel when you see your monthly cash flow increasing, your savings growing and your investments starting to pay off.

I’m finding that I’ve been wrong, my friends; and you may be wrong as well.

Yesterday, I was casually looking through our bank statements, as you do on a sunny Sunday afternoon if you are a personal finance nerd, when I notices something interesting.

I already knew that our spending has gone up a bit. What I noticed yesterday was quite a few small spends; these are all under £10 and many are below £5. These spends were made in the café at work, at airports or in supermarkets. What they have in common is they were all made electronically.

It adds up, you know.

What is important here, more important than the increase in spending, is why my trusted system to control money has broken down; and why the system you use to control your money may be outdated as well.

If you are still overspending and failing to control your money this is not because you have neglected important rules of personal finance but because these rules have been rapidly changing.


Let me explain.

For some time now, I used a combination of two approaches to control every day spending.

First, for my personal spending – small amount of ‘blow’ money and a bit to spend on going to work – I’ve been using cash for the last five years or so.

Second, to control household spending we’ve transformed planning into a cult. We plan weekly menus, visits to concerts and the theatre, breaks, holidays and school trips.

Where did I go wrong?

Well, my increased spending is mainly from not using cash any longer for work related spending.

I stopped doing this several months back: I find that carrying around cash is rather risky and using contactless payment is all too easy.

You see, before contactless I would have had to keep to cash: after all, getting your card in a reader, remembering your pin code and entering it is too much work for small purchases. Hence, the problems with carrying cash are more than matched by the bother of using the card.

Contactless payments are a different ball game all together. They are easy: you just wave your card at the card reader. With the introduction of ApplePay (and similar payment systems) it became even easier bypass cash.

Change here is mainly technological. Still, contactless technology has made it very easy to spend relatively small amounts of money.

When spending is easy, there is little time to reflect on what we spend and what we get. It is a bit like scoffing food: somehow your brain doesn’t register eating when you do it very fast and don’t really enjoy it.

This is why, I started this post by telling you that if you are like me and you are still overspending, it is not because you lack discipline or because you don’t know better. It is because, how you spend has changed.

Which only means that you have to match this change with changing the way to control your money.

Here are three ways to help you improve how you control your money.

#1. Control your money: keep planning…

Planning what you spend and what you spend it on is the key to good money management.

Remember that planning your spending is not about thrift and deprivation: it is about increased control.

What this means is that your planned spending should not be restricted to necessities and ought to include your preferred entertainment, sports and holidays. (Naturally, the kind of fun you plan would depend very much on your current financial situation; still, there should always be some of this planned.)

#2. Control your money: make time…

There was time when shopping was a ‘slow lane’ activity and it naturally allowed time for decisions.

Today, we shop in the fast lane – we can buy furniture by pressing a button on an internet site. Only the other day, plagued by jetlag and insomnia, I bought a pair of shoes at five o’clock in the morning using ‘one click’. Yep, this is what I’m talking about!

And just like your body knows that you’ve been scoffing – even if your brain refuses to recognise it – your bank account would know you’ve been shopping in the fast lane even if you try to forget.

To avoid debt and disappointment always make sure you give yourself time to decide on your purchase.

One trick I’ve started using is the following:

When I feel the urge to buy something on Amazon (one click) I make myself get up, walk about and count to 100. If I still want it after that I press the button.

#3. Control your money: learn to control your ‘wants’

Anything you want, wand don’t get, can easily become an obsession and a temptation much greater than it should be.

I’ve written about this before but it is so important that I feel the need to mention it again.

Most personal finance counsels you to identify your needs and look after these. Most personal finance is about supressing your ‘wants’.

I’ve always believed that money mastery comes from learning to control your wants. This means the following:

  1. Learning to distinguish between the ‘wants’ that are important to you and the ones that are not that important.
  2. Making sure that you allow yourself the wants you see as important; you can ignore the ones that are not important.

This is also known as essentialism and I’ll be wring about it more in the future.


If you find that you are still overspending, as I’ve been doing over the last six months or so, this may be because the way in which you spend your money has changed.

Long gone is the time when ‘cash was king’. Today, using internet shopping sites and advanced electronic means to pay, we spend our money in the fast lane.

To avoid debt and disappointment you need to change the way in which you control your money by planning your life and spending, always allowing yourself time to decide on a purchase and learning to control your wants.

photo credit: TheTruthAbout Apple Pay via photopin (license)

How To Be a Frugal Artist Without Even Trying

How To Be a Frugal Artist Without Even Trying

frugal artist

Yesterday I was training with my personal trainer. Great lad!

We got talking. I told him that my strength to weight ratio has gone completely the wrong way because of my writing.

You see, the more I write, the less I move; the less I move the heavier and less strong I get.

‘What are you writing?’ – my trainer asked.

So I told him about The Money Principle.

I told him that The Money Principle stands for:

He was quiet for a while and then said:

‘I just paid £800 for my car to pass MOT.’

I dropped the dumbbell on my toe.

‘You just wasted £800? For this and the money you could get for your old car you could get a new one.’

You see, I didn’t use to think like that. Five years ago, I would have paid £800 without further ado.

Then I discovered how to be a frugal artist.

Do you know what the main marks of a frugal artist are?

A frugal artist breaks out of the immediate situation

Five years ago, if told that my car needs work for £800 done on it to pass its MOT, I would have thought about whether I have the money.

Or I would have asked myself where to get the money.

But I wouldn’t have thought about whether or not having the work on my car done worth it.

In other words, I would have asked myself:

‘How can I do this?’

…rather than

‘Is this the right thing to do?’

See the difference?

One question keeps you within the situation and the other questions the situation itself.

A frugal artist looks for alternative solutions

My trainer accepted that the only solution to having a working car is to pay £800 for its repair. This is what I may have done five years ago.

Now, I automatically look for different solutions.

Could I make do without a car for some time? Can I sell my car? What can I get for slightly over £1,000? Who can help me find a reliable car for this price? Shall I use some of my investments to buy a slightly newer car?

A frugal artist looks into the future

A frugal artist knows that a car that needs £800 spent on it to pass its MOT is likely on its last legs.

So, I’d ask myself: how long before I need to spend even more to keep this car on the road. How much I’d waste in the long run (including high petrol consumption, high road tax etc.)? How much time I’ll spent dealing with these matters?


You see, it makes sense!

Being a frugal artist can save you money and improve your life. You just have to remember to break out of situations and think (and act) creatively.

Money management: use the ERR strategy to make your money go further

Money management: use the ERR strategy to make your money go further

Your money never goes far enough, uh?

This sucks.

I still remember the time when a month was almost by eternity longer than our monthly income.

This is when we got in debt. I didn’t look at my payslips, I didn’t look at my bank balance and I didn’t care what things cost.

Irresponsible, you think? Dumb?

May be. But most of all it was fear.

When I finally looked, we were in so much debt that fear was irrelevant: I either had to do something about it or we were going to the bankruptcy court.

I was only grateful that there are debtors’ prisons any longer; otherwise my son would have been growing up like the Little Dorrit.

And I did something: I read, I studies, I analysed and I number crunched.

I played around and I used my knowledge of chess (however much I had forgotten about the game) to experiment with strategies for money management. More importantly, I applied these strategies.

As I‘ve said before we made our money go further (and paid off all our debt in three years) by doing these two things:

  • We increased money management; and
  • We increased the amount of money to manage.

Today, I’ll introduce you to the ERR strategy for money management.

I developed it; used it to get out of debt; and still use it because I know that winning the game of wealth is about how much you keep, not how much you earn.

The ERR money management strategy is about three things:

  • Eliminate (waste);
  • Replace (activities and the way you do these); and
  • Reduce (consumption).

Of course, using it assumes you already have a budget.

When you are serious about winning the game of wealth – irrespective of whether you are paying off debt or building capital and investing – you need a budget (Note: I’m planning to publish a guide on budgeting and budgeting tools within a fortnight).

A budget doesn’t have to be a whalebone corset; it can be like a comfortable shoe.

If you don’t have a budget already, stop reading; go away and come back when you have one. You can use this budgeting tool to budget.

If you’ve done this one right, you’ll know:

  • Exactly how much is your income (weekly, monthly and yearly);
  • How much you spend (it is important that you have this to within couple of pounds; no approximations); and
  • On what you spend your money.

Simply knowing all this is great but not enough to get where you wish to be financially. You have to use this information to make decisions about what to eliminate, what to replace and what to reduce.

One: Eliminate (waste)

Most of us waste a lot. We did! We used to waste over £2,000 every month; gosh, this is £24,000 per year. No wonder we had so much debt.

You are likely to waste a good chunk of your money as well. Great thing that you have a budget now; scout it for waste.

In my experience, up to 80% of the waste in household budgets is on

  • Food;
  • Insurance; and
  • Entertainment

Do you waste food?

To find this out you don’t need systematic research and days of number crunching.

Just look in your bin(s): if you need to empty these often and they contain the food for which you paid good money a week ago you are wasting.

We found that we were wasting up to £400 every month on food. We were in a cycle of buying food, not cooking it and eating out or getting ready meals instead.

All I had to do to cut down our food waste down to an acceptable level – the occasional limp salad – was to realise that we are not imaginative cooks. This means, we can’t look at ingredients and make a meal; we need to start with a recipe.

Instead of buying food and then thinking about the meals, we started planning our meals and buying ingredients for what we’ll cook. We also cook more than we need for one meal and freeze the rest. This way, we use what we buy and we always have ready meals.

This is how within couple of months we were spending on food a third of what we used to spend.

Do you waste on insurance?

Being insured is prudent; being insured when you have dependents – young children and a partner – is a must.

Overpaying for insurance though is not necessary. It is time to make an inventory of all insurance you carry. Notice how much you pay for it and when was the last time you changed the insurer (house and car mainly). If you have not changed in the last couple of years you are over-paying.

The solution is simple: shop around for house and car insurance every year. You will always find a cheaper deal than if you simply renew. And you know what? You just need to tell your current provider you found a cheaper deal and, more often than not, they’ll match it.

Do you waste on entertainment?

I come from a hedonistic culture; I love having fun. I believe that you shouldn’t forget the Cinderella rule of personal finance: have fun and budget for it. But entertainment can become a lot like hard work.

Look at your statements and check how much you spend on entertainment; how many times you eat out, how much you drink, how many times you go to the theatre and the cinema.

Then ask yourself whether you enjoyed it all or some of it felt like hard work?

Cut out everything that felt like hard work. It is your life after all and when it comes to entertainment it should be fun; otherwise it is waste.

Two: Replace activities and routines

If you wish your money to go yet further, the next thing to do is to look for the items on your expenses list that you’d like to continue doing but can change the way you do them.

This is where the fun really begins. Because ‘replacement’ is not simply about being frugal; it is about becoming a ‘frugal artist’.

There were many things we never gave up when we were in debt; we just learned to do them differently. Here are some examples:

  • We started making all our bread; this way we always have fresh bread, I know what is in the bread, it relaxes me and it costs a fraction of what we’ll pay for inferior bread. No brainer.
  • We entertained more at home rather than go to restaurants. It is cheaper, you can really chat to your friends and can include your children. You can also add some spice to having dinner parties to take off the pressure: I had a bet with our friends that I can serve three course French menu dinner for £1.50 per person. I won!
  • We still went skiing. It is just that we booked a cheap flight, borrowed a friend’s house and I bought half price ski passes at mid-day. This was also character building.
  • I kept my exclusive gym membership by bartering it for writing and business consulting.

I can expand the list but you already get the idea. You know the best thing about learning to ‘replace’? It stays with you long after you’ve paid off your debt because it is fun and brings a great sense of achievement.

Three: Reduce consumption

We all over-consume. You need clothes, I agree; you may even convince me that you need labels in your wardrobe.

But do you really need fifteen outfits?

Do you need forty pairs of shoes; twenty handbags?

I love my shoes and my handbags as much as the next woman. I used to have forty pairs of shoes. Then I got rid of 38 pairs and bought three new pairs.

You got it! Now I have five pairs of high quality shoes, including my running shoes.

When you look carefully at what you do, and how you do it, you’ll probably find that you over-consume on many fronts.

I am far from a minimalist and still I’ve reduced consumption in almost all areas of my life. Better for me, for my bank account and for the environment.

Try it. It is very liberating.


Okay, enough writing. I’m off to apply the ERR money management strategy to our budget again.

And I am ready to make a bet with you that I’ll trim between 15% and 20% from our monthly spending again (yeah, I haven’t done this for about a year).

Would you like to play?

We can use the ERR money management strategy together over the next week. I’ll let you know how I got on next Tuesday and you can share in the comments.

What do you say? Shall we play the Game of Wealth?

photo credit: Brother O’Mara via photopin cc

The Manifesto of a Frugal Artist

The Manifesto of a Frugal Artist

Editor’s note: My regular readers may be under the impression that we don’t do frugality very well, or very willingly; and they may have good grounds for that. On The Money Principle we emphasise the importance of living life to the full, making sure that your money nourishes your life and building wealth. But that will be wrong: we practice frugality of a different kind. We are ‘frugal artists’! This article of mine sets out the differences between ‘extreme frugality’ and ‘frugality as an art form’ and was first published as guest post on Miss Thrifty blog.

When the going gets tough, frugality gets more frugal; or at least it becomes that much more popular. In fact, during our collective adventures in the economic realm of double and triple dip depression – which sounds and feels to me like we’ve spent the last five years in an on-going crisis – frugality has become so widely spread that even people who don’t have a frugal bone to their body have been dipping their toes in.

I, myself, am finding that when it comes to frugality my intellect and my actions appear somewhat disconnected. My intellect is telling me that frugality makes little sense and that it, when brought to an extreme, can make life unpleasant, difficult and, worst of all, very wasteful. I have been known to write about my take on frugality and argue that frugality is not the answer.

Where is the contradiction you may ask? Well, the contradiction in the fact that we have not bought bread for close to three years now: I bake all of it. We have ciabatta, pita bread, naan bread, rye bread, wholemeal bread with hazelnuts, brioche and all sorts of artisan bread. Making our bread at home saves up to two thirds of the cost (so a loaf that will cost over £2 in M&S I can make for about 70 pence). It all adds up and I am very proud of myself – over the month we probably save about £30.

What is even more important though is that the bread I make has only four or five ingredients and any increase doesn’t include anything beginning with ‘E’. As to the bread we buy at the shops, I have been known to stand in M&S and count the ingredients in their wholemeal bread. Take a guess? The particular loaf I was looking at had fourteen ingredients in it!

I also make pizza from scratch – no cheating, no buying ready bases, no buying pastry. Sometimes I even make the dough by hand: this not only adds taste (my twelve years old son said that my pizza is almost as good as Domino’s) but it is also very therapeutic. After days of touching only the keyboard, making something that gets my hands dirty feels so good.

Difference is that Domino’s pizza costs £16.99 for ten slices; I reckon with a growing up pre-teen, a high metabolism husband and a starving me, we’ll need at least two pizzas. Gosh, this is £33.98 for a junk meal! My pizza costs less than £5, including high quality toppings, and doesn’t have to be fatty junk.

You see, I can get rather excited about this frugality lark; in fact, the other day I spotted a younger colleague having supermarket soup.

‘Why are you eating this stuff’ – I asked – ‘If you make it at home it costs a fraction of what you paid and it contains only edible ingredients; none of this preservatives rubbish.’

‘Oh, I don’t have time’ – she said – ‘ I am not a good housewife, I suppose.’

I am not buying this! My work schedule is about three times heavier than hers, I run a successful blog, have a pre-teen son and run marathons. Am I a super woman? No! I am just very frugal with my time – even in the darkest despair of debt I had someone to do the ironing and clean.

How is this frugal? Easy; an hour of my time costs about £40 and an hour of cleaning costs me £12. In effect, by having a cleaner I ‘save’ £420 per month. Even if I use the time for recreation!

This is not looking good, does it? I don’t seem to live what I preach. If frugality is not the answer how come I take so much pride in saving £30 on our daily bread?

Not as bad as one may think, though. Because I most certainly draw the ‘frugality’ line above:

  • Cutting my own hair. Give what I do this may turn out to be very wasteful through loss of employment.
  • Sitting in the cold to save 50 pence. In the long run this is wasteful since illness and discomfort have been known to lower productivity.
  • Making own shampoo or cleaner. This may be OK for most people but knowing myself I’ll probably get something wrong; it is dangerous.
  • Driving for two hours to tank up with petrol that is 3p per gallon cheaper. This one is a bit obvious, really.
  • Driving around to buy a can of beans that is 5p cheaper than the corner shop. See the one above.

To put it simply, I make a difference between two kinds of frugality. One is what I call ‘frugality as an art form‘ and the other one is ‘extreme frugality‘. I welcome and practice the former; as to the latter this is most certainly not for me. Or for anyone, for that matter; but this is a private decision.

Frugality as an art form

This kind of frugality is more about ‘stretching the pound’ without loss of quality of life. Decisions are usually made on the basis of different factors and broad considerations. For instance, making bread for me is never only about saving £30 per month; were it only about that it probably won’t be worth it. Making bread is also about the quality of bread and me relaxing. Similarly, having a cleaner makes sense in terms of frugality only when all other considerations – like my very long working days and the difference between the hourly rate of pay – are taken into account.

Also, a frugal artist considers long term prospects. Outsourcing household labour allows me to focus on developing different skills and competencies that in the long run will pay off handsomely. No additives (and sugar) in our bread and meals is most certainly healthy in the long run.

Extreme frugality

Extreme frugality, on the other hand, doesn’t usually build on broader thinking and wider concerns. Driving for 35 minutes to save 30 pence off your shopping misses the point that you spend much more on petrol; because your thinking focuses solely on the saving. Making your own bread, or lunch, may seems as a cumbersome shore because of purely financial reasoning.

Cutting your own hair, or saving on internet, telephony and computing, will reduce your outgoings for the moment; but in the long run each of these can seriously diminish your ability to earn more.

Two kinds of frugality in a nutshell

These are differences between the two kinds of frugality in a nut shell:

  Frugality as an art form Extreme frugality
Thinking Complex thinking accounting for a number of factors. Absolute thinking considering very limited factors.
Considerations Broad concerns including quality of life and relationships. Narrow financial concerns.
Time horizon Long term prospects. Short term gains.


I am frugal; but I believe in, and subscribe under, the kind of frugality that brings different kinds of value to my life, the one where I can get the maximum value out of my money without compromising my quality of life.

I am a frugal artist; how about you?