6 Rules for Living Frugally

We humans have a knack for complicating the simplest ofideas. Our lives are filled with shortcuts that aren't short, tips and tricksthat trip us up, and helpful hints that are anything but. The same is true whenit comes to frugality. Let's scrap all the circular talk and bottom-line it.Here are the only six rules of frugal living you need to know.

1. Know Your Money

By whatever means necessary, become ridiculouslywell-acquainted with how much you earn, how much you spend, and where everydollar goes. It's the foundation of frugal living. Without this baselineknowledge, successful budgeting and saving will always be out of reach

2. Live Below Your Means

Living within your means is a great start, but living belowyour means is where the real magic happens. The surplus it generates is thecapital for saving and investing and the fuel behind long-term wealth building.If you're unable to run a surplus a majority of the time — either by cuttingexpenses or growing your income — you'll never get ahead of the game.

3. Know the Difference between Spending and Investing

Spending and investing might feel like the same thing, butthey're completely different animals.

Investing is the outlay of cash in exchange for a tangibleasset (think job training, a primary residence, or shares in a mutual fund).Spending, on the other hand, is the outlay of cash for something that willlikely depreciate in value and not provide any long-term benefit (think dinnersout or a new summer wardrobe).

Being frugal doesn't mean you always have choose investingover spending (after all, spending is part of living), but it does require thatyou understand the difference and know how to put your income to work amajority of the time.

4. Buy for Quality

Frugality isn't about always buying the cheapest productit's about diligently seeking out the best value. Sometimes that means choosingquality over price. A pair of shoes that cost $20 might seem like a great deal,but they're not if you have to replace them every three months. A $75 pair thatwill last two or three years will be a far better value in the long run.

5. Avoid Consumer Debt

Frugal folks know it: Interest on consumer debt is a taxpeople pay for living beyond their means. And while a credit card can save theday from time-to-time, embracing easy credit as a way to pad your lifestyle canhave disastrous consequences. Interest and other charges will bleed your budgetand choke your chances at real financial security.

6. Know the Difference between a Want and a Need

As I write this, there are throngs of advertisers plottingnew ways to help consumers confuse wants and needs. It's big business. Inreality, our needs are fairly straightforward (nourishing food, secure shelter,good healthcare, etc.).

But what about that self-cleaning, solar-powered,lavender-infused kitty litter box that you can control with your smart phone?What sort of primitive existence would you be reduced to without thislife-changing gadget?

Let's face it: Being able to distinguish what we want fromwhat we need is a prerequisite for making wise buying decisions. If you can'tmaster this skill, your needs will be endless and your paycheck will never keepup.

Here's the curious thing: Today, when we talk about therules of frugal living, aren't we really talking about basic financialliteracy? It seems over the past couple of generations, common fiscal sense hasbeen reframed as an extreme lifestyle. Maybe it's time to change theconversation about saving and managing money — and make frugal living a farmore fundamental skill.

Source: http://www.msn.com/en-us/money/everydaymoney/6-rules-for-living-frugally/ar-BBrwO5l?li=BBnbfcN#page=1

Image Source: https://besmartwithyourmoney.files.wordpress.com/2011/04/living-frugal-loving-it_featured_article_628x371.jpg

Vocabulary Words:

1. Knack - (noun) a special skill or ability that you havenaturally or can learn

2. Frugality - (noun) a way of living in which you use onlyas much money or food as is necessary

3. Within one's means - (idiom) without spending more thanthe money you have

4. Outlay - (noun) the money that you have to spend in orderto start a new project

5. Depreciate - (verb) to become less valuable over a periodof time

6. Disastrous - (adj.) very bad, harmful or unsuccessful

7. Throng - (noun) a crowd of people

8. Straightforward - (adj.) easy to do or to understand notcomplicated

9. Primitive - (adj.) very simple and old-fashioned,especially when something is also not convenient and comfortable

10. Prerequisite - (adj.) that must exist or happen beforesomething else can happen or be done

Discussion Questions:

1. How important do you think it is to save money? Why?

2. Do you think lifestyle tips like the ones above actuallyhelps? Why do you think so?

3. From the tips above, which one can you actually do inreality and why?

4. In your own opinion, how do you save money?

5. Is it right or wrong to live frugally? Why do you say so?